“A rose by any other name would smell as sweet.” We certainly should recognize this famous quote from William Shakespeare’s play – Romeo and Juliet, but is this always the case? While that sentiment may be true in the literary world, the misspelling of one’s name (especially the sur name) can lead to unwanted stress and complications in your real estate transactions when such spelling errors appear in recorded Judgments. This week we wanted to provide some color and guidance on clearance obligations where a recorded Judgment against a purported property owner or purchaser appears in your Title Report, but also includes a spelling/typographical error in the actual Judgment document that was submitted for recording.
While New York case law has determined that an error in the spelling of the debtor’s name(s) in the recorded Judgment will vitiate the constructive notice that the proper docketing would otherwise provide (See Berkowitz v. Dam, 122 Misc. 143 (1923) copy of case attached)), however that may not be the end of the story from the an Underwriters’ perspective. In situations where we determine that the Judgment, notwithstanding the spelling/typographical error, is, in fact, against a party in the transaction (typically confirmed by common addresses, SS#s, or other extrinsic documentation or communications), the Home will still likely require the parties to address and resolve the recorded Judgment before issuing its Policy. While the judgment-creditor may ultimately be unsuccessful in enforcing the Judgment as a result of the misspelling, the potential for litigation against an Insured by a judgment-creditor seeking to none-the-less enforce the Judgment could, under certain circumstances, give rise to an obligation for the Title Underwriter to defend under the Policy. As you know, the Title Company’s primary goal is to insure clean, unencumbered Title to its Insured and, to the best possible extent, avoid potential claims under its Policies. The costs associated with defending potential litigation in these situations is sufficient justification for the Underwriter to require the satisfaction of the Judgment at the outset of the transaction which will effectively eliminate all of the risk and any uncertainty accompanying a future claim or litigation. We certainly do rely on our litigation colleagues to use their best efforts to properly document and record their Judgments which is the best way to avoid this issue. That said, understanding how a Title Company evaluates the risks and clearance requirements associated with recorded Judgments containing typographical/spelling errors will hopefully serve you well in getting your deals closed as smoothly as possible.
https://mcusercontent.com/684414a9e2c939c9532812949/files/c4b1e072-0a4a-17ad-cbc2-b822c992a126/Case_Berkowitz_v._Dam_Error_in_Judgment_Vitiates_Constructive_Notice_aff_039_d_in_2nd_Dept._in_1925_.pdf
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