August 24, 2016 Insights from the Trenches

Massachusetts High Court Allows Attorney’s Affidavit to Clear Technical Mortgage Defect

The case is Bank of America, N.A. v. Casey.

by Kendra L. Berardi

The Massachusetts Supreme Judicial Court (SJC) recently held that an attorney’s affidavit pursuant to chapter 183, section 5B, of the Massachusetts General Laws (MGL) can be used to cure technical defects in mortgages. The court’s decision in Bank of America, N.A. v. Casey, 474 Mass. 556 (2016), reversed the course of cases allowing bankruptcy trustees to invalidate mortgages that had been executed by mortgagors who enjoyed the full benefits of the mortgage loan due to technical defects in the notary acknowledgments.

The mortgage at issue in Casey was initialed and signed by both borrowers, and those signatures were notarized. However, the notary failed to fill in the borrowers’ names in the acknowledgment. Several years after the recording of the mortgage, the closing attorney discovered the error in the acknowledgment and recorded an attorney’s affidavit pursuant to MGL chapter 183, section 5B, in which he stated that he witnessed the execution of the mortgage and subsequently recorded the mortgage at the registry of deeds and that the names of the parties had been omitted from the acknowledgement inadvertently.

One of the borrowers later filed for bankruptcy, and the bankruptcy trustee filed an adversary complaint in the bankruptcy action seeking to void the mortgage, alleging that it contained a material defect in the acknowledgment. The bankruptcy court granted summary judgment to the trustee, concluding that the material defect could not be cured. The U.S. District Court for the District of Massachusetts reversed this decision and granted summary judgment to the bank. The trustee then appealed to the First Circuit Court of Appeals, which certified two questions to the SJC: (1) whether an attorney’s affidavit recorded pursuant to section 5B can correct the omission in the acknowledgement and thereby cure the material defect and (2) whether the attorney’s affidavit provided constructive notice to a bona fide purchaser of the existence of the mortgage.

Although the bankruptcy trustee did not dispute the accuracy of the attorney’s affidavit, she nonetheless asserted that the mortgage should be voided on the basis that the doctrine of functus officio denies a public official, including a notary public, further authority or legal competence concerning duties and functions that have been fully accomplished. The court rejected the application of this doctrine on the basis that the statutory authority in section 5B supersedes the common law principle.

The trustee next asserted that a title defect can only be cured through MGL chapter 184, section 24 and, therefore, the attorney’s affidavit was of no consequence. However, the court disagreed, holding that although MGL chapter 184, section 24 effectively establishes a statute of repose, it is not the sole method of curing defects in a notary acknowledgement.

Finally, the trustee argued that the defect in the acknowledgment prevented the mortgage from being legally recorded. Therefore, there was no duly recorded mortgage that could be clarified by the attorney’s affidavit. The court again disagreed, holding that curing the defect in the acknowledgement also cured the defect in the original recording. To that point, the court also held that, despite the well-understood rule that a mortgage recorded with a materially defective acknowledgement is not properly recorded and does not provide constructive notice, where an attorney’s affidavit cures the defect in an acknowledgement and refers to the previously recorded mortgage, the affidavit, in combination with that mortgage, is constructive notice to a bona fide purchaser.

Kendra L. Berardi is with Robinson & Cole in Boston, Massachusetts.

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