Third Circuit Court Rules in MERS’ Favor in Pennsylvania County Recording Case

The U.S. Court of Appeals for the Third Circuit on Monday ruled in the favor of MERSCORP Holdings that the company was not duty-bound by the Pennsylvania recording statute to record all land conveyances, according to an announcement from MERS.

The Third Circuit Court's ruling reversed an earlier decision from the United States District Court for the Eastern District of Pennsylvania in the case of Montgomery County v. MERS. The county recorder was seeking to recover millions of dollars in unpaid recording fees, claiming that MERS System members violated Pennsylvania state recording laws by failing to record the transfer of promissory notes as mortgage assignments.

"This is a significant ruling for the mortgage finance industry in the Commonwealth of Pennsylvania. MERS has always maintained that no Pennsylvania law, including the recording statute imposes a duty to record the transfer of a promissory note," MERSCORP Holdings VP for Corporate Communications Janis Smith said. "We are pleased the Court of Appeals for the Third Circuit finds the county recorder’s arguments to have ‘no merit.'"

The Third Circuit Court noted in its ruling that their decision to rule in MERS' favor in this case is in accord with opinions issued by other courts in similar cases, namely the courts in the Fifth, Seventh, and Eighth Circuits.

"Because we conclude that Pennsylvania’s §351 imposes no duty to record all land conveyances, we will reverse the July 1, 2014 order of the District Court which granted the Recorder’s request for a declaratory judgment and denied the MERS entities’ motion for summary judgment," the Third Circuit Court wrote in its decision.

Also in its ruling, the Third Circuit Court denied the request by Montgomery County by certify questions to the Pennsylvania Supreme Court. The Court stated that "the answer to the issue of state law that decides this case … is so clear that we would be abdicating our responsibilities by punting."

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