Court Report

A Pennsylvania federal court has made landmark conclusions in a contentious battle between a recorder of deeds in Montgomery County, Pa., and Mortgage Electronic Registration Systems Inc. (MERS), in which the recorder alleged that MERS circumvents the need to record the transfer of the note each time a property is sold, violating state law and unjustly enriching the members-only registry for recording and tracking conveyances of property interests. The court issued a formal declaration that the assignment or transfer of a promissory note secured by a mortgage on real estate is, in Pennsylvania, equivalent to a mortgage assignment, and that MERS’ failure to create and record documents evincing the transfers of promissory notes secured by mortgages on real estate in Pennsylvania “is, was and will in the future be in violation of the Pennsylvania Recording law.”

In an unpublished decision issued in June, the Court of Appeals of Utah affirmed a district court’s finding in favor of First American in a case where an investment firm attempted to sell a property containing a strip of land owned by an adjacent property owner to a newly divested portion of its company, which the court ruled was not an insured party.

An escrow company from Missouri can now be held up as a cautionary tale for other companies to do all they can to protect their escrow funds from cyber theft. After internet fraudsters stole $440,000 from their escrow account, they sued their bank to recover the lost funds. The bank counterclaimed for attorney’s fees. The district court held that the escrow company should bear the loss of the funds from its account.

A California magistrate declared that a lien on land owned by a property management firm should be given priority over a government tax lien, while also finding that First American Title Insurance Co. wrongfully diverted in loan proceeds that were subject to the tax lien.

A complex case involving a legal description dispute on property in Oregon will proceed to a Rule 16 conference to consider pending motions to dismiss filed by multiple defendants, after a district court previously abstained from exercising jurisdiction over the claims while a state court claim was pending.

Chain of title to property in Los Angeles remains muddled after a California appellate court reversed a previous court’s order of dismissal.

On appeal from a judgment dismissing an action by the Bank of Idaho seeking to recover under a First American Title Insurance Co. policy that insured the failure of a developer to construct a four-plex on a specific lot, an Idaho court vacated the judgment of the district court.

After failing to sell their home because of defects in the title, a New Jersey couple filed suit against their title insurer. While the insurer resolved the title defects in the couple’s favor, the couple argued that the title insurer breached the title insurance contract by failing to uncover the defects and that the company’s efforts to cure the title defects were not prompt and reasonable. The case eventually made it to the 3rd U.S. District Court of Appeals.

After discovering the City of Portland owned a 10-foot strip of land at one edge of their property, purchasers of a historic home sued the seller and their title insurer. They argued that the legal description in the warranty deed from the seller was not an accurate description of the property.

A real estate software developer who created a Pennsylvania Title Insurance Rate Calculator sued a law firm who the developer argued infringed on his copyright by placing a version of the rate calculator on its website. The U.S. District Court for the Eastern District of Pennsylvania heard the firm’s motion to dismiss.