Another Decision by Semantics

The Eleventh Appellate District Court in Geauga County, Ohio, held up the Geauga Country Court of Common Places dismissal ruling in the case, State of Ohio, ex rel. Flaiz, Prosecuting Atty of Geauga County, Ohio, et al.  v. MERSCORP, Inc., et al., which alleged that MERSCORP was liable for damages in unpaid filing fees for failing to record mortgages and mortgage assignments in the county recorder’s records.

The county’s (plaintiff) position was based off an interpretation of a phrase in Ohio recording statutes R.C. 5301.25 and R.C. 5301.32 that say mortgages and mortgage assignments “shall be recorded” mandates a legal obligation to record with the county recorder’s office. As the county is legally permitted to charge a fee for this service, the plaintiff’s notion was that, pursuant to R.C. 309.12, which authorizes prosecutors to file suit when “money is owed to the county,” the case should be reheard.

MERSCORP argued that the language did not constitute a statutory obligation to file with the county, and that because there was no obligation, any money that was allegedly owed was potential rather than a liability or settled obligation.

The trial court sided with MERSCORP, saying:

“Mortgagees and assignees have very strong reasons to record mortgages and mortgage assignments; the recording of those instruments provides notice and establishes at least the presumption of priority. It would seem that only a foolhardy mortgage assignee would choose not to record a mortgage assignment with the County Recorder and run the risk of another entity filing a subsequent mortgage assignment and claiming priority. And yet, that is exactly what the Defendants have chosen to do with the MERS system. Without giving too much credit to financial institutions that have been substantially responsible for the recent recession, those financial institutions have chosen the benefits of the MERS system over the protections of the public recording statutes. The laws of the State of Ohio as presently constituted permit those financial institutions to make that choice.”

The Eleventh Appellate District Court, in a 2-1 decision, held up that opinion.

This isn’t the first decision MERSCORP has won when it comes to similar statutes. The company has also been victorious in, Union County, Illinois v. MERSCORP, Inc., Montgomery Co., Pennsylvania v. MERSCORP, Inc., and County of Ramsey v. MERSCORP.  

“We are pleased the court affirmed that Ohio law does not impose a duty to record mortgages or assignments of mortgages,” said MERSCORP Holdings VP for Corporate Communications, Janis Smith. “This ruling is consistent with the purpose and intent of the recording statute, as courts across the country with similar state statutes have concurred.”