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Newark, New Jersey – Any land record system, whether public or privately maintained, should be expected to have some errors in copying and indexing of documents. These errors can make it impossible to find a document no matter how diligent the search. After First American insured a second mortgage for $71,000 the mortgage document was duly recorded in the Office of the County Clerk, at Book 5515, Page 085. The original document with this recording information was returned to the lender. But the mortgage never got posted to the grantor/ grantee index in the Clerk's office. As a result no evidence of the mortgage can be found in the public records. |
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| The Property: This four-story commercial building (center) is in an older neighborhood of downtown Newark |
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After two years the loan went delinquent and the lender ordered a title search in contemplation of foreclosure. This search disclosed that the insured mortgage was "missing," and there were five subsequent mortgages securing a total of $152,200. None of the subsequent mortgagees knew of the insured mortgage when their interests were created. Since the law in most states, New Jersey included, considers a mis-indexed document to be ineffective against subsequent purchasers or lenders without notice, our insured lender suffered loss of priority and total failure of its security. |
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| A Lost Sock: The insured mortgage was duly recorded, but later can't be found in a search of the public records. |
First American paid the lender $71,000 plus legal and other expenses of more than $10,000.
The risk of mis-indexing and other errors in public records is generally covered by title insurance, but not by typical attorney opinion letters or other forms of title assurance.
