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Lawyers for a private electronic registry of real estate transfers told the Pennsylvania Supreme Court on Wednesday that there is no legal mechanism to hold liable parties that refuse to report their transactions with county recorders of deeds.

The arguments explored whether parties to transactions have a legal duty to report conveyances of properties to county recorders of deeds, on pain of a liability finding.

Robert Brochin of Morgan, Lewis & Bockius, the attorney representing Merscorp, which electronically records conveyances, said public officials may not find individuals liable if they use a private recorder.

The case was captioned Merscorp v. Delaware County, Pennsylvania, Recorder of Deeds.

“Recording mortgages and mortgage assignments have never been mandatory in Pennsylvania,” Brochin told the four justices who heard arguments in the case.

The Supreme Court in November agreed to hear arguments addressing whether electronically registering transfers “systematically evade” 21 P.S. Section 351, which governs the failure to record conveyances, and whether the county recorders of deeds have standing to bring their claims. According to the questions raised in the Supreme Court's one-page per curiam order, at issue are “many thousands of conveyances” across the state, and “conduct that undermines the public land recording system.”

The position of the recorders of deeds in the case is that Section 351 mandates counties assign and record every mortgage and every assignment. That requirement, the county officials contend, further means Merscorp must pay the recording fees.

Joshua Snyder of Boni, Zack & Snyder, who represented the recorders of deeds from four counties, said the system was envisioned to be “open and public.” Allowing Merscorp to internally track conveyances without registering them with county officials creates a system that is “closed off and private,” he said.

According to Snyder, the case is the most consequential case yet to come before the justices regarding land recordings. He asked the high court to remand the case back to the trial court so discovery could be taken about the intent behind the company.

The justices, however, questioned how the recorders of deeds had any standing to sue over the system.

Snyder responded that, not only do the counties have a financial interest in recording each conveyance, failing to register each transfer can cause confusion and exacerbate problems when title is contested, or a property is foreclosed on. He added that finding in the company's favor would essentially make recording any land transfer optional.

Several justices said that failing to record conveyances seemed to be “at the peril” of the purchaser, who might face problems if the property is sold out from under them. But that alone does not make the law mandatory, or give the counties standing, several justices suggested.

“If someone tries to sell a property from under me, then it's a problem, but I don't have to record,” Chief Justice Thomas Saylor said.

After Justice David Wecht told Merscorp's attorney it appeared that Pennsylvania had not wanted an “opaque” process for recording deed, Brochin agreed.

“All true,” Brochin said. “But you don't violate the statute by not doing it. Why do people record the deeds? So you can preserve your title claims.”

Toward the end of arguments, Saylor noted that the law does not identify when the deeds must be recorded, or who is responsible for recording the transfer. He also noted there is no enforcement mechanism outlined in the law.

“There's a lot of things missing for this to be considered a mandatory regime,” Saylor said.

Justices Max Baer, Debra Todd and Sallie Mundy did not hear arguments in the case.