The Supreme Judicial Court of Massachusetts (SJC) recently answered certified questions from the First U.S. Circuit Court of Appeals regarding the power and effect of an attorney affidavit in relation to a mortgage containing a defective certificate of acknowledgement. The First Circuit was hearing a case in which a bankruptcy trustee was trying to invalidate the mortgage based on the defect.
The case is Bank of America NA v. Debora Casey (Supreme Judicial Court of Massachusetts, No. SJC-11943).
Alvaro and Lisa Pereira acquired title to property in New Bedford, Mass., on Sept. 29, 1999. They refinanced the property on Dec. 27, 2005, granting Bank of America a $240,000 mortgage. Though they initialed the certificate of acknowledgment, their names do not appear in the acknowledgment itself. Their attorney, Raymond Quintin, notarized the acknowledgment.
Later, on Jan. 19, 2012, Quintin recorded an attorney’s affidavit stating that he witnessed the execution of the mortgage and certified that he witnessed their signatures on the mortgage. Six months after that, Alvaro Pereira filed a petition for Chapter 7 bankruptcy relief. The bankruptcy trustee, Debora Casey, sought to avoid the mortgage because of the defect. The bankruptcy court granted summary judgment to the trustee, but the U.S. District Court for the District of Massachusetts reversed and granted summary judgment to the bank.
Casey appealed to the First Circuit, which determined that a proper resolution of the appeal turned on undecided issues of Massachusetts law.
The First Circuit certified the following questions to the SJC:
- May an affidavit executed and recorded pursuant to [G. L. c.] 183, § 5B, attesting to the proper acknowledgment of a recorded mortgage containing a Certificate of Acknowledgment that omits the name of the mortgagor, correct what the parties say is a material defect in the Certificate of Acknowledgment of that mortgage?
- May an affidavit executed and recorded pursuant to [G. L. c.] 183, § 5B, attesting to the proper acknowledgment of a recorded mortgage containing a Certificate of Acknowledgment that omits the name of the mortgagor, provide constructive notice of the existence of the mortgage to a bona fide purchaser, either independently or in combination with the mortgage?
The SJC answered yes, in certain circumstances.
It addressed the first question first, noting that Casey does not question that Quintin witnessed the execution of the mortgage agreement, but that the affidavit legally cannot cure the defect reflected in the acknowledgment. The court disagreed.
First, Casey argued that the doctrine of functus officio prohibits a notary public from unilaterally recording a formal re-acknowledgment of the mortgage agreement.
“We conclude that the principle of functus officio does not apply here for two reasons,” the court stated. “First, it is doubtful the principle continues to be recognized outside the arbitration context. Second, § 5B, by its terms, appears to contemplate that an attorney’s affidavit prepared and recorded in accordance with the requirements of that statute, by ‘clarifying’ the chain of title, will necessarily alter at least in some respect that chain of title as it is reflected in the documents previously recorded. In other words, when its requirements are met, § 5B effectively supersedes any continuing common-law functus officio principle in this arena."
Casey also argued that the omission of the mortgagors’ names in the acknowledgment is a material defect that renders invalid the recording of the mortgage to which the acknowledgment is affixed and that G.L.c. 184, Section 24, prescribes the only means of curing such a defect.
“We disagree with the premise of the trustee’s argument that § 24 provides the sole means by which to cure a defect in an acknowledgment of a mortgage; rather, as the federal district court judge concluded, § 24 in effect creates a statute of repose to protect the chain of title to real property from attenuated challenges,” the court stated. “The 10-year period stated in § 24 simply allows those individuals whose rights have been affected by the purported conveyance to commence a proceeding to vindicate their rights, but once 10 years have elapsed, the rights of those parties to challenge the validity of the conveyance are lost. Nothing in the language of § 24 states or implies that it defines the exclusive permissible method of curing any and all defects that may exist in an acknowledgment. Indeed, the Legislature has enacted statutes in addition to § 24 that provide solutions to certain types of problems relating to acknowledgments; in this regard we consider § 5B to be another example of such a statute, providing a method to correct certain types of errors that may affect the validity of an acknowledgment that accompanies or is annexed to a recorded deed or mortgage.
“Here, the undisputed facts indicate that the § 5B attorney’s affidavit recorded by Quintin was sufficient to correct or cure the defect in the acknowledgment and, in turn, the recording of the mortgage given by the Pereiras to the bank,” the court continued. “The defect in the acknowledgment was the omission of the names of the mortgagors; Quintin’s attorney’s affidavit supplies the missing information and confirms that all the steps necessary to acknowledge the mortgage properly were taken, namely, that the mortgagors, Lisa M. Pereira and Alvaro Pereira, personally appeared before the affiant, Quintin; that Quintin confirmed their identities; that he witnessed them execute the mortgage agreement; and that they did so voluntarily. The affidavit also attests that the omission of the mortgagors’ names was inadvertent, and, finally, references the book and page number of the previously recorded mortgage – a step that enables the two documents to be connected, thereby effectuating the intended clarification of the chain of title.”
Casey also argued that because the defect in the certificate of acknowledgment precluded the mortgage from being legally recorded, the mortgage did not enter the chain of title relating to the property.
“We disagree. As indicated previously, we have accepted the premise on which the First Circuit’s questions are based, namely, that the omission of the names of the mortgagors in an acknowledgment is a material defect,” the court stated. “It follows that under G. L. c. 183, § 29, the defect should operate to preclude the legal recording of the mortgage. For the reasons previously discussed, however, an attorney’s affidavit filed and recorded pursuant to § 5B that supplies the omitted names of the mortgagors, explains the circumstances of the omission, and confirms that in fact the affiant did witness the voluntary execution of the mortgage by the mortgagors on the date stated operates to cure the original defect in the acknowledgment. The curing of the defect in the acknowledgment also cures the defect in the original recording of the mortgage, and the mortgage thereafter is properly considered within the mortgage property’s chain of title.”
In answer to the second question, the court said that “as applied to the chain of title to real property, constructive notice arises by operation of law under G.L.c. 183, Section 4, in any case where the mortgage is properly recorded.”
“If a deed or mortgage is recorded without an acknowledgment, it is not properly recorded, see G. L. c. 183, § 29, and does not provide constructive notice,” the court stated. “Similarly, a mortgage recorded with an acknowledgment that contains a material defect is not properly recorded and does not provide constructive notice of the mortgage.
“As our answer to the first question indicates, where, as here, the attorney’s affidavit complies with the formal requirements of § 5B, attests to facts that clarify the chain of title by supplying information omitted from the originally recorded acknowledgement, and references the previously recorded mortgage, the affidavit – not by itself but in combination with that mortgage – provides legally adequate constructive notice to a bona fide purchaser or, here, a trustee in bankruptcy,” the court stated. “This is so because the prior recording of the mortgage has been remedied and is deemed proper through the curative effect of the affidavit.”