Real Property — Mortgages – MERS Filings – Statutory Remedy – First Impression

Listen to this article

Kubic v. MERSCORP Holdings, Inc. (Lawyers Weekly No. 010-023-16, 10 pp.) (Kaye Hearn, Acting Chief Justice) Appealed from Beaufort County Circuit Court (R. Lawton McIntosh, J.) S.C. S. Ct.

Holding: The language of S.C. Code Ann. § 30-9-30(B) makes clear that it is incumbent on registers of deeds to accept and record appropriate filings, and any dereliction in that duty is actionable by the party who filed the document. When the General Assembly delineated who would be able to bring a suit pursuant to § 30-9-30(B), it chose not to afford that right to government officials.

We reverse the circuit court’s denial of defendants’ motion to dismiss.

When member-lenders of the Mortgage Electronic Registrations Systems, Inc. (MERS) record a mortgage, MERS is listed as the grantee in the public index, despite the fact that MERS holds no security interest in the associated promissory note. This allows a lender to retain priority with MERS as the nominee without having to record each time there is an assignment of the mortgage when the promissory note is transferred.

MERS essentially provides a convenient framework through which members can transfer notes amongst themselves without having to record each exchange. However, as a result of this system, the public index may not accurately reflect who has an interest in the real property, as the note has been severed from the mortgage.

Several county administrators and registers of deeds filed suit seeking, among other things, a declaratory judgment stating that defendants had caused damage to the public index in recording false documents. The circuit court denied defendants’ motion to dismiss because the action raised a novel issue of law.

Although this court has held that important questions of novel impression should not be decided on a motion to dismiss, this general rule does not apply when the determinative facts are not in dispute. Where, as here, the question is one of simple statutory construction, a trial court should not deny a meritorious motion merely because the question is one of first impression.

Section 30-9-30(B) says a register of deeds can remove or refuse to record a document “if he reasonably believes that the document is materially false or fraudulent or is a sham legal process.”

This language clearly states that it is incumbent on plaintiffs to accept and record appropriate filings, and any dereliction in that duty is actionable by the party who filed the document. It is the “person presenting the document” who is entitled to “commence a suit in a state court” to require the clerk of court or register of deeds to accept a document for filing or to prevent him or her from removing a document.

When the General Assembly delineated who would be able to bring a suit pursuant to § 30-9-30(B), it chose not to afford that right to government officials. We decline to imply language into a deliberate silence because to do so would be to rewrite the statute.

Additionally, the statute already provides a remedy to government officials by allowing them to remove or reject any fraudulent records.

Reversed.