Thursday, June 23, 2011

Robo-Signing and the Salem Registry of Deeds

Essex South Register of Deeds John O'Brien has done some great work rooting out flawed or fraudulent documents created as part of the "robo-signing" practice by some major national lenders. In this context, robo-signing refers to the practice of any number of employees of the lender (or its subsidiary corporate agent) signing an authorized individual's name to a document without any apparent legal authority to execute such a signature. A woman named Linda Green has become the poster child of this practice. She was the authorized signatory for one company, yet dozens of other employees scattered around the country routinely signed her name to documents that often recited that Green was signing based on her "personal knowledge of the facts stated therein." Register O'Brien is in possession of about 20 variants of Green's signature on documents already recorded in Essex South.

Believing that these documents bear fraudulent signatures and are therefor void, O'Brien has instructed his staff to refuse to record any document purportedly executed by Linda Green or any one of two dozen other individuals whose names have been identified as robo-signers. O'Brien returns the original document to the sender with a proposed affidavit whereby the sender would certify under the penalties of perjury that the document proffered for recording contained a valid signature. Thus far, no affidavits have been sent back, only re-executed documents signed by other authorized individuals.

This matter was discussed at length at the Registers of Deeds Association meeting held earlier this week in Worcester. Although the group took no position on the issue, there was a valuable discussion. My own view is that this registry will not (for now) reject any documents for robo-signing reasons. While I don't doubt that some documents were signed by individuals other than the one purportedly signing, I also believe the law of agency is complex, particularly in the areas of actual and implied authority and of ratification. This causes me to question my ability to make an ironclad determination of fraud and its legal consequences, and without such a determination, I believe it important to err on the side of recording the document and let those who rely upon it in the future do so for whatever value they ascribe to it. In the meantime, I commend John O'Brien for tackling this issue so aggressively. Robo-signing fraud carries with it huge implications to home ownership, title insurance, and many other areas of real estate law. By pushing this issue, O'Brien sets himself up as a test case that would ultimately result in legislative or judicial clarification of the consequences of robo-signing, an outcome that would be beneficial to us all.


donald gotshalk said...

What difference does it make who signs or does not sign this document?
If Mickey Mouse signed the document does that mean something?

Dick said...

If I sign your name to a deed selling your house without being authorized by you to do so, the deed is void and doesn't convey anything. The same principal holds true for an assignment or discharge. If a person with no legal authority to sign it does sign it, the document doesn't accomplish what it purports to accomplish. The person harmed is some innocent third party who purchases the property sometime in the future and then discovers a title defect that takes a lot of time, stress and possibly money to straighten things out. That's why who signs a document makes a difference.