In an interlocutory appeal from the Court of Common Pleas of Delaware County, the Commonwealth Court addressed whether 21 P.S. §351 (“Section 351”) imposed a requirement that all mortgages and mortgage assignments be recorded, and whether county Recorders of Deeds (“Recorders”) have the right to enforce such a requirement. The Commonwealth Court concluded that no such requirement existed, and, even if it did, Recorders had no right to enforce it.
MERSCORP owns and operates a national electronic registry system (the “MERS System”) for mortgage loans secured by residential real estate. MERSCORP serves as a mortgagee of record for the loans registered in the MERS System. While the promissory note associated with a loan can be transferred between members within the MERS System, MERSCORP remains the mortgagee and title holder of the mortgage. In 2015 the recorders of deeds for several Pennsylvania counties filed suit against MERSCORP. The Recorders’ suit claimed that each time promissory notes were transferred within the MERS System without being recorded in county land records—and without paying the associated recording fees—MERSCORP violated 21 P.S. §351 (“Section 351”). Following the trial court’s denial of joint preliminary objections, the Commonwealth Court granted interlocutory review to consider: (1) whether Section 351 requires the recording of all mortgages and mortgage assignments; and (2) whether the Recorders have a right of action to enforce Section 351.
On appeal, the Commonwealth Court held that Section 351 does not contain a blanket command that all conveyances must be recorded, and, even if such a requirement existed, no language confers authority upon the Recorders to enforce it. Rather Section 351 merely informs property owners of the steps necessary to safeguard their interests. The Court reasoned that because Pennsylvania recognizes the validity of unrecorded interests in property, failure to record would be of little consequence other than against subsequently filed interests.