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Adam Leitman Bailey, P.C. Secures Second Circuit Victory Validating Mortgage Documents With Missing Notary Stamp

Adam Leitman Bailey, P.C. obtained a decision from the U.S. Court of Appeals for the Second Circuit affirming that a recorded mortgage or other real estate document signed before a notary public is valid even where the notary’s “stamp” with his or her name and other identifying information is missing from the recorded copy of the document.

An investor purchased a condominium unit at a foreclosure sale, subject to a first position mortgage on the unit. He then filed a quiet title action seeking to void the first mortgage based on technical defects in how the notarization of the mortgage documents appeared in the recorded copies available from the New York City Register. In his most significant claim, he asserted that because the notary’s stamp on the City Register’s scanned copy of the mortgage documents was missing or illegible, the documents were not validly recorded and thus not liens encumbering his interest in the condominium unit.

If the investor prevailed, he would have thrown New York’s entire real estate recording system into disarray, because the validity of a recorded document would then be determined not based on whether the documents were actually signed before a notary (which the investor admitted the documents at issue were), but rather whether the recording officer’s scanned copy of the document had a clear enough copy of the notary’s stamp. The validity of a document would not be based on whether parties and notaries followed the required procedure, but on how well the county clerk or City Register reproduced the notary’s stamp. This would have invited litigation by virtually any property owner claiming that a deed or mortgage was invalid because the notary’s stamp was insufficiently legible on the document as it appears in the public record.

Adam Leitman Bailey, P.C. argued that a section of the New York Executive Law protected valid notarization, even where the required information from the notary’s stamp was missing. As a result, the Second Circuit held that, even if there were technical defects regarding the notary’s stamp, these defects would not invalidate the official act of a notary, who actually took the acknowledgment. In so doing, the Second Circuit preserved the integrity of the real estate recording system and kept the floodgates closed.

Jeffrey R. Metz, Esq. and Jackie Halpern Weinstein, Esq. of the Appellate Practice, Title Litigation, and Foreclosure Litigation groups of Adam Leitman Bailey, P.C. represented the lender in this successful Second Circuit appeal.

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