More on National Lumber

The Registers of Deeds Association is working with the Secretary of State’s office on an appropriate response to the National Lumber v Lombardi case that we’ve written about previously. To review, National Lumber sought to establish a mechanics lien against the Lombardi family back in 2002 when registry recording volumes were at their all time peak. Instead of bringing the necessary and time sensitive document to the registry to be recorded, National Lumber sent it to the registry (not this one) by Fedex. The document joined the flood of other mail that was waiting to be recorded. While the registry received the document within the time limits for establishing the lien, it was not recorded for several weeks which put the time of recording outside the time for establishing the lien. The homeowner argued that the lien was ineffective since it was not recorded on time. The appeals court ruled disagreed, saying that MGL c 36, s 14 established the time of recording as the time the document was “received” by the registry. In this case, the registry employee’s signature on the Fedex receipt set the time of receipt by the registry. According to the Appeals Court, in other words, a document’s priority within the recording system is set by the time the registry receives the document, not be the time the document is actually recorded in the registry’s recording system. While this is probably a correct interpretation of chapter 36 as it now exists, it really throws our entire recording system into chaos. Here’s a hypothetical to illustrate this statement. Let’s say you’re representing the buyer of a house. You do a title exam and find no mortgages or encumbrances. You do the closing at the registry the next morning, do a rundown on the registry’s computer system – still nothing to effect your locus – and go directly to a recording terminal where your deed is indexed and issued an instrument number and a time of recording which, for our example, let’s say is 9:05 A.M. But at 9:03 A.M., a registry employee in our Customer Service office signed for a Fedex package that contained a mortgage on that very premises. We record that mortgage at 9:15 P.M. The way everyone but the Appeals Court views our system, your deed would prevail over that new mortgage, because the deed went on record first. But under the National Lumber case, the mortgage has priority over your deed because it was “received” by the registry prior to your deed being recorded. It seems that the proper way to remedy this situation is to amend chapter 36 to make the “receipt” by the registry synonymous with the act of recording with the essential step being the issuance of an instrument number and official time of recording.