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MERS Wins a Key Lawsuit Against County in New York

In a nod to the legitimacy of MERS, the Appellate Division of the Supreme Court of New York on Dec. 19, 2005 issued a unanimous 4-0 decision that requires county clerks to record all mortgages, assignments and discharges naming MERS as the mortgagee or as nominee for a lending institution (in the matter of MERSCORP Inc. et al. v. Edward P. Romaine et al. 2005 NY Slip Op 09728).

In its recent decision, the court ruled that the clerk has no independent authority to refuse to record MERS instruments, stating, "The clerk has a statutory duty that is ministerial in nature to record a written conveyance if it is duly acknowledged and accompanied by the proper fee. Accordingly, the clerk does not have the authority to refuse to record a conveyance which satisfies the narrowly drawn prerequisites set forth in the recording statute."

As a result of the ruling, MERS has informed all New York counties of the Appellate Court's decision and has instructed all affected members on steps to refile all previously rejected lien releases.

"This is a great victory for MERS," said R.K. Arnold, president and CEO of MERS. "We expected to win, but it's gratifying to get more clarity around our status in New York. I believe that this will set an important precedent nationwide."

In addition, the Appellate Division also rejected the trial court's holding that the clerk's duty to record did not extend to MERS assignments and discharges. The Appellate Division ruled, "There is no distinction between MERS mortgages and MERS assignments or discharges for the purpose of recording and indexing."

The Appellate Division ordered that the Trial Court's judgment and order be modified "by adding a declaration that the mortgages, assignments, and discharges which name MERS as the lender's nominee or the mortgagee of record are acceptable for recording and indexing."

The decision comes after over four years of litigation that started when the Suffolk County clerk announced that, as of May 1, 2001, he would no longer accept MERS instruments that listed MERS as the mortgagee or nominee of record. With approximately 3,600 counties nationwide, this case was the first and only instance in which MERS has had to file a lawsuit to compel a clerk to abide by their statutory duty to record valid MERS security instruments.

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