I can see the problem. However, it doesn't seem to be caused by the recording of the mortgage or whomever may have recorded it. The problem here was directly caused by the settlement company disbursing funds before it had someone do an update to ensure that there were no intervening liens.
For example, even if Joe Abstractor signed for the delivery and recorded it, there was no harm done. The settlement company still could have gotten an update that showed the recording and verified that there were no intervening liens. Even if someone else recorded the mortgage by mistake, it was on record. Nothing would have prevented them from asking their regular abstractor to update the title and check for liens before disbursing.
Of course, if they did get an update from someone that didn't show the IRS lien in question, that person may have some liability regardless of who recorded the mortgage. I think the person who recorded the mortgage could only be liable for the cost of releasing it, and maybe reimbursing them for the mortgage recording fee.
Best,
Robert A. Franco
SOURCE OF TITLE
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