We all knew that whether you have the original Mona Lisa or a copy matters. Now we know this matters with mortgage releases, too – even if the original may not exist. Sabina v. JPMorgan Chase Bank, N.A., 2016 ME 141.
In Sabina, the Law Court, in a 4-2 split decision, ruled that under the mortgage discharge statute, 33 M.R.S. § 551, a mortgagee who timely records a release of its mortgage and informs the mortgagor of its recording violates § 551 when the mortgagee sends to the mortgagor a copy of the recorded release, rather than the original recorded document. Send the copy and not the original, and the mortgagee (defined to include any servicer who receives final payment on a mortgage) faces exemplary damages of $500 per violation as well as court costs and reasonable attorney’s fees in any action to enforce the statute.
Maine law requires a mortgagee to do two things after a mortgagor fully performs his or her obligations under a mortgage. First, the mortgagee must record a release of the mortgage within 60 days. 33 M.R.S. § 551. Next, upon receipt of the recorded release from the registry of deeds, the mortgagee must send the release by first class mail to the mortgagor within 30 days. Id. These statutory requirements serve two purposes: (i) removal of a cloud upon the mortgagor’s title; and (ii) notice to the mortgagor that the cloud has been removed. In filing their class action law suit against JPMorgan Chase Bank, N.A. (“Chase”), Alec and Emma Sabina, represented by Portland law firm Bernstein Shur, didn’t argue that Chase, represented by Morgan Lewis & Bockius, of Boston and Miami, violated § 551 by failing to timely record a release or by failing to timely inform the Sabinas that the release had been recorded. (Pierce Atwood represented Bank of America, N.A. in a companion case that raised the same issues brought by plaintiffs who were also represented by Bernstein Shur. That case was dismissed with prejudice and was not appealed.) Instead, the Sabinas argued that Chase violated the statute because it mailed them a copy of the recorded release rather than the original.
Justices Gorman, Mead, Hjelm and Humphrey agreed. The statutory language provides that “[w]ithin 30 days after receiving the recorded release of the mortgage from the registry of deeds, the mortgagee shall send the release to the mortgagor’s address.” 33 M.R.S. § 551 (emphasis added). The majority concluded that “[t]he Legislature’s use of the definite article ‘the’ as opposed to the indefinite article ‘a’ or the phrase ‘a copy of’—indicates that it intended to require the mortgagee to mail the same document that it receives from the registry of deeds.” 2016 ME 141, ¶ 9. This language, the majority said, was clear, so there was no reason to go any further.
Justices Jabar and Alexander dissented, reasoning that this interpretation “leads to an absurd result” and penalizing a mortgage for “noncompliance” where the statute’s purposes are fulfilled is illogical. Id. at ¶¶14, 17.
This decision has left lenders in a tizzy because, among other things, it’s unclear what they are supposed to do now. The ruling clearly instructs that when a mortgagee records a release in paper form, the mortgagee better send the mortgagor the original “wet ink” recorded release it receives returned from the registry of deeds, not a photocopy. But many registries now accept electronic recording and many mortgagees use it, eliminating “wet ink” original documents from the process. Where a mortgagee records electronically, the registry receives only an electronic copy of the original release and, in turn, provides only an electronic copy of the recorded release to the mortgagee. Over time, this will undoubtedly become the predominant if not exclusive means of recording mortgage discharges. So what constitutes “the release” that a mortgagee must mail to its mortgagor to comply with § 551 in the case of electronic filing?
It appears that the Court presumed that when the mortgagee records its release electronically, the registry still returns to the mortgagee a recorded release in paper format and, consequently, the Court didn’t explain what a mortgagee must mail when it receives the recorded release from the registry only in electronic format. 2016 ME 141, at ¶11 n.5. The Court did suggest that “the Legislature may wish to clarify how a mortgagor could ‘send the release by first class mail’ to a mortgagor,” if registries return the release only in electronic format.
Interestingly, on the “the” versus “a” front, there’s a lot of law that says use of the indefinite v. definite “suggests specificity.” Sutherland, s. 21:16. This doesn’t seem to me to be a ringing endorsement that the use of one versus the other is always clear, end of the story. Am. Jur. thinks not (Statutes, s. 150: “The indefinite article ‘a’ may be substituted for the definite article ‘the’ in the proper case,” citing Vinton v. Hoskins, 174 Or. 106, 147 P. 892 (1994).) In any event, the Law Court went beyond the simple general v. specific to find it clear that “the” meant an original paper document (although there might not be one). I haven’t found any Sutherland rule or case for that.
In any event, this was all clear to the majority of the Court, which is all that matters.