Bankruptcy – Mortgage – Certificate of acknowledgement

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Where a mortgage contained a certificate of acknowledgement that was defective under Massachusetts law because it did not include the names of the mortgagors, two questions must be certified to the Massachusetts Supreme Judicial Court in order to determine whether the defect could be cured by affidavit under G.L.c. 183, section5B.

“The outcome of this federal bankruptcy case turns on interpretations of two different state statutes, each of which concerns defects in real estate titles. In time, those interpretations may affect considerable numbers of Massachusetts foreclosure proceedings. In this case, those interpretations affect who will benefit from the estate’s real property assets: a bank, or the debtor’s other creditors as represented by a bankruptcy trustee. For the reasons stated below, we decide to certify two questions to the Supreme Judicial Court (SJC) of Massachusetts.

“Debora Casey, a Chapter 7 bankruptcy trustee, filed this action to avoid a mortgage held by Bank of America. 11 U.S.C. section544(a)(3). The parties both assume that the 2005 mortgage contains a material defect: the certificate of acknowledgement does not include the names of the mortgagors. … After the mortgage was recorded, the notary on the mortgage, presumably at the behest of the bank, executed an affidavit under Mass. Gen. Laws ch. 183, section5B, later recorded, attesting that the debtors had signed the mortgage personally and voluntarily. The debtors went into bankruptcy later that year, in 2012.

“The legal issues presented are whether, under Massachusetts state law, that section 5B affidavit can cure the defective acknowledgement, or otherwise provide constructive notice to a bona fide purchaser. If not, the bankruptcy trustee can avoid the mortgage under 11 U.S.C. section544(a)(3).

“The state law questions in this case are dispositive, and they are unresolved by the Massachusetts SJC. They also implicate ‘significant policy concerns better suited for resolution by the’ SJC. …

“For the above reasons, we certify the following questions of Massachusetts law to the Massachusetts Supreme Judicial Court:

“1. May an affidavit executed and recorded pursuant to Mass. Gen. Laws. ch. 183, section5B, attesting to the proper acknowledgement of a recorded mortgage containing a Certificate of Acknowledgement that omits the name of the mortgagor, correct what the parties say is a material defect in the Certificate of Acknowledgement of that mortgage?

“2. May an affidavit executed and recorded pursuant to Mass. Gen. Laws. ch. 183, section5B, attesting to the proper acknowledgement of a recorded mortgage containing a Certificate of Acknowledgement that omits the name of the mortgagor, provide constructive notice of the existence of the mortgage to a bona fide purchaser, either independently or in combination with the mortgage?”

In Re: Pereira, Alvaro M. (Lawyers Weekly No. 01-168-15) (15 pages) (Lynch, J.) (1st Circuit) Appealed from a decision by O’Toole, J., in the U.S. District Court for the District of Massachusetts. Adam C. Ponte, with whom Mark S. Foss and Fletcher Tilton were on brief, for the appellant trustee; Mark B. Johnson, with whom Kathleen M. Heyer and Johnson & Borenstein were on brief, for appellee Bank of America, N.A. (Docket No. 14-2115) (June 26, 2015).

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