Editor: David Reiss
Brooklyn Law School

March 13, 2013


By David Reiss

Dustin Zacks has posted Revenge of the Clerks: MERS Confronts County Clerk and Qui Tam Lawsuits, a short article that reviews litigation brought by “county clerks and private qui tam actions assert that MERS has cheated county recorders out of millions of dollars in recording fees.” (17)  Zacks writes that “the most imminent legal threat to MERS is the spate of lawsuits filed by county clerks” and that “[c]ommon to most clerk lawsuits is their assertion that all changes in beneficial ownership of home loans are required to be recorded in the public records.” (18) He reviews the arguments raised in those suits:

  • State Laws Required All Assignments to be Recorded
  • MERS Uses Deceptive Language to Avoid Recording
  • Unjust Enrichment, MERS is Evil, and Other Such Arguments (18-19)

Zacks notes that nearly all of those cases have failed to survive a motion to dismiss, with one exception.  (20)  A Pennsylvania court held that Pennsylvania’s statute “was unambiguously clear in requiring assignments to be recorded”.  (20); see Memorandum and Order, Montgomery County, PA Recorder of Deeds v. MERSCORP, Inc. , No. 11-cv-6968 (E.D. Pa. Oct. 19, 2012) at 12-15.

While Zacks is skeptical of this type of anti-MERS suit, he notes that

banks and their advocates must remain wary of these seemingly unending matters. Just as the tobacco lawsuits were initially met with skepticism and ridicule, one large win was all it took to turn regular routs into an industry-changing victory. Here, one verdict in favor of a clerk in a class-action suit could result in a ruling that MERS must go back and, for example, record innumerable assignments or pay millions of dollars in avoided recording fees. This, in turn, could result in a new appraisal of the viability of MERS’ manner of business. (21)

This seems to be the right assessment of where things stand.


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