MERSCORP, Inc. v. Romaine, 8 N.Y.3d 90 (2006)
A county clerk has a ministerial duty to record and index mortgages, assignments of mortgages, and discharges of mortgages involving Mortgage Electronic Registration Systems, Inc. (MERS) when the instruments comply with the formal requirements of the recording statutes.
Summary
MERSCORP, Inc. and Mortgage Electronic Registration Systems, Inc. (MERS) brought an action to compel the Suffolk County Clerk to record and index mortgages, assignments, and discharges naming MERS as the lender’s nominee or mortgagee of record. The County Clerk had refused to record certain MERS instruments, arguing they did not comply with Real Property Law § 321. The Court of Appeals held that the County Clerk has a ministerial duty to record such instruments if they meet the statutory requirements for conveyances, and that MERS’s role as nominee or mortgagee of record does not invalidate the instruments for recording purposes. The Court emphasized that the Clerk lacks the authority to look beyond the face of the instrument.
Facts
In 1993, the MERS system was created to track ownership interests in mortgages electronically. MERS members, including lenders, agree to appoint MERS as their common agent on mortgages registered in the system. The initial mortgage is recorded with MERS named as the lender’s nominee or mortgagee of record. Beneficial ownership or servicing rights may be transferred among MERS members without public recording; these transfers are tracked within the MERS system. The mortgagor is notified of servicing transfers, but not necessarily of beneficial interest assignments. The Suffolk County Clerk stopped recording MERS instruments in April 2001 following an Attorney General opinion questioning their compliance with recording statutes.
Procedural History
MERS initiated a proceeding to compel the County Clerk to record and index the instruments. The Supreme Court initially ruled that the Clerk must record MERS mortgages but could refuse MERS assignments and discharges. The Appellate Division reversed, holding that there was no valid distinction between MERS mortgages and MERS assignments or discharges. The Court of Appeals granted leave to appeal.
Issue(s)
Whether the Suffolk County Clerk is required to record and index mortgages, assignments of mortgage, and discharges of mortgage naming MERS as the lender’s nominee or mortgagee of record, when these instruments otherwise meet the formal requirements for recording.
Holding
Yes, because sections 291 and 316-a of the Real Property Law impose upon the Suffolk County Clerk the ministerial duty of recording and indexing instruments affecting real property if they meet the formal requirements of the recording statutes.
Court’s Reasoning
The Court emphasized that Real Property Law §§ 291 and 316-a impose a ministerial duty on the County Clerk to record and index instruments affecting real property if they are properly acknowledged. The Clerk lacks the statutory authority to look beyond an instrument that otherwise satisfies the limited requirements of the recording statute. The Court rejected the County’s argument that MERS, as a nominee without a direct financial interest, is not a proper “mortgagee” for recording purposes. Regarding assignments and discharges, the Court noted that Real Property Law § 321 requires the discharge to either list assignments in the chain of title (if recorded) or state that the mortgage has not been assigned “of record.” The Court reasoned that MERS discharges comply with the statute by stating that the “mortgage has not been further assigned of record.” The legislative history of the 1951 amendment to § 321(3), adding the term