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Source of Title Blog

I'd Like To Buy A "P" for $150,000, Pat.
by Robert Franco | 2008/06/05 |

This is a classic case that demonstrates why an owner's policy of title insurance is so important.  A county clerk made a typo in the index that may cause an Ohio family to lose their home. 

Source of Title Blog ::

According to an article in the Columbus Dispatch, Andy Mateja bought his home for $320,000 in 2001 and has made all of his mortgage payments on time.  In August 2007, he was served with foreclosure papers.  The previous owner, Dr. Subbarayudu Koppera, had a $150,000 second mortgage to Chase that was never paid.

The Chase mortgage went on record in 1998 but due to a typo by the Muskingum County Recorder's office it was indexed as "Koppepa" instead of "Koppera."

Muskingum County Recorder Karen Vincent, whose office made the spelling mistake, testified that a correction was made in 2006. Vincent told the Dispatch that to her knowledge, it was the first time an error has been made, but she declined to comment further.

The first time?  I seriously doubt that.  Mistakes seem to be all too common these days.  I blame the computer systems that have been adopted by counties.  In the old book indexes, I doubt this lien would have been missed.  First, "Koppera" and "Koppepa" would have most likely been indexed on the same page and the abstractor would have most likely caught it, even it was spelled wrong.  Second, the method of entry in the books provided a forced error checking procedure.  The entry was made initially in the books before the volume and page had been assigned.  Then, when the volume and page was ready, a different county employee would have had to find it in the index to enter the volume and page. 

With the computer systems, that "double checking" is not being done - at least not effectively.  The first time the information is entered, the volume and page is assigned.  Someone else may "look at it" to make sure it is right, but they aren't forced to "search" for it to make sure it can be found.

Though Mateja paid for a title search, it is clear why it did not disclose the existence of the Chase mortgage.  Had he purchased an owner's policy of title insurance, it would not matter why the lien was missed - he would have had a valid claim and his clear title would have been protected.  Unfortunately, in many areas of Ohio, owner's policies are not customary - perhaps they should be.

Dr. Koppera has since moved to New Albany, Ohio where he purchased a $682,000 home in 2004.  He even modified the Chase mortgage in 2004, long after he sold the home encumbered by the lien.  Apparently he had been making payments on it for quite some time.  Unfortunately, Koppera and his wife have been slapped with several civil judgments for unpaid debts and federal, state and county taxes.  There probably isn't a good chance that he is in a position to pay Chase at this point.

He believes the title company made a mistake. "They should've known it and stopped right there so the lien was clear. Instead of me taking the cash, I would've paid the lien," Koppera said regarding the sale of the house. "They didn't do their job, and they should pay for it."

Seriously?  He failed to notify the title company that he also owed on a mortgage to Chase and he thinks the title company should pay for it now?  Even after he continued to make payments, he never contacted the title company to alert them to the fact that the mortgage was missed.  The lien was misindexed.... though it could have possibly been found, had a search been done with first few letter of the name (KOPP*), it is not the examiner's fault for failing to find a misindexed document.  "Koppera" and "Koppepa" are not idem sonans (alike sounding names). 

So, Chase has a valid mortgage and a right to foreclose on the collateral.  It is not their fault that it was misindexed and missed on the title search.  The title company did not discover the lien during the course of their title search, and I do not believe that it was due to negligence on their part.  Regardless, the new owner opted NOT to purchase an owner's policy of title insurance.  Clearly, Koppera owes Chase the money and he should pay it, but unfortunately, it appears that he is unable to do so.  Clearly the county recorder's office was negligent in their duty to properly index the mortgage.  So, to what extent may the Recorder be held liable?

In Ohio, the recorder is required to give a bond in the amount of $10,000 conditioned for the faithful discharge of the duties of his office. (ORC 317.02).  If the county recorder does or omits any other act, contrary to Sections 317.01 to 317.33 of the ORC, the recorder shall be liable solely on the recorder's bond to any party harmed by the improper conduct. (ORC 317.33).  If that covers a negligent misindexing, it would appear that the potential recovery would be limited to the $10,000 bond.

However, this is from a 1970 Attorney General's opinion that deals specifically with negligent errors and omissions.

County recorders and common pleas court clerks and their deputies are liable, both personally and on their bonds, to the persons who may have been injured through their negligent errors and omissions, including those arising from indexing and filing of papers within their respective offices. The principle of sovereign immunity does not apply to protect public officers and their deputies from personal liability in the performance of ministerial duties: OAG No. 70-077 (1970).

Personally, I believe the $10,000 bond is woefully inadequate.  Typically abstractors and title agents carry limits of $500,000 to $1,000,000 on their E&O policies.  County recorders and their deputies can cause losses just as severe and often times, there mistakes render it impossible for those searching the records to ever find a misindexed document. 

This is certainly an unfortunate situation for Meteja and his family.  He does not deserve the consequences that have been befallen him.  Owner's policies should be the norm and hopefully this story will enlighten people to the value of title insurance.  Though there are many people who tell homebuyers that they do not need title insurance, such advice is reckless at the very least.

This is probably the most expensive "P" anyone has ever typed. It's too bad Pat Sajak only sells vowels!

Robert A. Franco
SOURCE OF TITLE




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Categories: Foreclosures, Public Officials, Public Records, Title Problems

1476 words | 5638 views | 8 comments | log in or register to post a comment


Timely Post, Rob

This harkens back to one of your earlier posts, Bring Back the Books!  I think the old Russell Index Key Letter System (l-m-n-r-t) was a much better system which covered a multitude of sins.  An example I always use is a potential problem with a name very common in these parts: Shreckengost.  There are at least 19 different spellings of the name (Schreckengost, Shreckongost, Schrecongost, Shrecengost, etc.) and Russell Index makes it possible to find them all.  I know that when I have difficulty locating an entry that I know should be there, I use the "less is more" approach (KOPP*) you referenced above.

 
by Scott Perry | 2008/06/04 | log in or register to post a reply

Actually I would do it this way,

Kop for the last name and sub for the first name should cover all possible indexing of that name.

 

Ron

 
by Ron McPherson | 2008/06/05 | log in or register to post a reply

Unless...

The last name were indexed as "KUP**", in which case even Russell Index wouldn't find it...no Key Letters in that last name!

 
by Scott Perry | 2008/06/05 | log in or register to post a reply

Proper Indexing

As you know, I am from South Carolina, so I guess everything is different here.  It is my understanding that if any instrument is not properly indexed, it is not considered recorded at all.  I agree with having books to back up computers.  In fact, in South Carolina, it is a law that a hard copy index be provided, even if the computer is available.  Unforturnately, some Clerk of Court officies, do not do this.  It sure does create a problem, when names are misspelled.  I would probably use "Kop" as my search name, and I never use a first name, usually just the first letter of the first name, and sometimes not even that.  Also, what about nicknames.  I was caught once by not finding a judgement under a nickname for "Elizabeth".  Do you know how many nicknames there are for Elizabeth.   Anything filed in a nickname is not legal, at least in the state of South Carolina.  Of course, I pointed all of this out to the attorney,  who was trying to bill me for his time, at $150.00 per hour to reopen the foreclosue in this instance, and serve the judgment holder. And, of course, I basically told him to stick it.  Have a nice day!!!!

 
by Janis Talbot | 2008/06/06 | log in or register to post a reply

In Upstate New York

In most of New York State, we have certified and guaranteed abstracts of title, paid for by the seller and updated to the time of recording of the deed, which are used on (almost) every sale of property.  The only exceptions are sales of HUD-owned properties.  In most of the state, the companies have no limit on liability for mssed liens.  If an abstract of title had been provided, the company certifying the abstract would have been liable for the missed mortgage.

 
by Brendan Byrne | 2008/06/06 | log in or register to post a reply

Typo by Clerk or Vendor?

I was wondering if the Clerk's office actually did the typo or if her vendor did. Some counties have allow their imaging contractor to take over the entire process. The companies image, and then index the records based on examination by OCR software and outsourced workers (often in  foreign countries).

While elected officials will seldom announce they have outsourced the job they were elected to do, the practice isn't uncommon especially in smaller counties. I first learned of this when I asked a county clerk to correct an error I found in the index. She couldn't!.

If Muskingum County has outsourced the indexing in the same way then Vincent may not be aware of previous mistakes made by her vendor. She likely doesn't know how the company indexes. It might also mean that the vendor could be held accountable for the homeowner's loss.

The issue seems to be further complicated by the Muskingum County web site disclaimer which introduces several more questions as to how the search was conducted. If it was performed online by an abstractor that chose to ignore the disclaimer, then the negligence rests with the abstractor.

 


Muskingum County web site disclaimer

While the Recorder's Office has attempted to preserve the accuracy of this online version, these records are not official and the Muskingum County, Recorder will not be responsible for any inaccuracies that may be encountered. Only the Official Public Records of Muskingum County provided in the Muskingum County, Recorder's offices shall be referenced as the Official Public Records.

 
by David Bloys | 2008/06/06 | log in or register to post a reply

RE: Janis and Brenden's comments

Janis:  There may be liability on the part of the abstractor, even if it is not indexed correctly.  I believe that it depends on whether a diligent search of the public records should have uncovered the document.  At least in Ohio, and I believe it is fairly common, abstractors are liable for failure to discover alike sounding names, even if they are not spelled correctly.  (Idem Sonans).  This made sense when we had book indexes - the misspellings would have still been indexed on the same page of the book.  However, computer indexing has made these items much more difficult to locate.  This is an instance where the standards have not kept up with technology.

Brenden: I don't think an abstractor could be held liable for missing an item that was misindexed, unless there was some reason that it should have been found through the diligent efforts of the abstractor.  It would depend on how badly it had been misindexed, I suppose.  An abstractor is liable for negligence, but if he wasn't negligent in failing to discover a document I do not think there would be any liability.  That is precisely what title insurance is for.

 
by Robert Franco | 2008/06/06 | log in or register to post a reply

Typo in indices

I have been trying for over a year to get several leaders in the Ohio Land Title Association to induce the legislature or members of  the Recorders' Association to indicate a "date of Change" in their  computerized indices when a misspelling or other error is corrected.  So far I've been unsuccessful in this endeavor.  It just seems common sense to me that as keepers of the records, they should publicly announce when changes are made.  If anyone can assist me in this endeavor, please contact me.  Thank you.  Carol Bicking, Blacklick, Ohio

 
by Carol Bicking | 2008/06/11 | log in or register to post a reply
Source of Title Blog

Robert A. FrancoThe focus of this blog will be on sharing my thoughts and concerns related to the small title agents and abstractors. The industry has changed dramatically over the past ten years and I believe that we are just seeing the beginning. As the evolution continues, what will become of the many small independent title professionals who have long been the cornerstone of the industry?

Robert A. Franco
SOURCE OF TITLE

 

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