The Importance of Notary Acknowledgments in Light of the Weiss Decision

Some alarm has been raised among the real estate bar by the recent decision of the United States Bankruptcy Appellate Panel for the First Circuit in Steven Weiss, Chapter 7 Trustee, v. Wells Fargo Bank, N.A. rendered on October 1, 2013.  The Court determined that a 2007 Massachusetts mortgage granted to Wells Fargo was fatally defective because the notary acknowledgment failed to properly indicate that the mortgage was the mortgagors’ free act and deed as required by Massachusetts law.

Let’s point out, first, what the Weiss decision does not do.  It does not question the continued use of the notary acknowledgment form promulgated by former Massachusetts Governor Romney’s Revised Executive Order No. 455 issued in May 2004 which, for many real estate practitioners, has replaced the statutory forms found in Mass. Gen. Laws chapter 183.  Although the Executive Order form was used in the Weiss mortgage, it was not the form itself, but the manner in which the notary public completed the form, which proved defective.  In fact, the Weiss decision goes to pains to quote from the seminal Massachusetts notary acknowledgment case of McQuatt v. McQuatt, 69 N.E.2n 806 (Mass. 1946) which emphasized that “[n]o particular words are necessary as long as they amount to an admission that [the grantor] has voluntarily and freely executed the instrument.”

The notary’s fatal misstep in Weiss came from the fact that the mortgage to Wells Fargo was executed on behalf of the mortgagors by an individual to whom they had granted a limited power of attorney. The notary in Pennsylvania, where the mortgage was executed, was faced with a preprinted acknowledgment based on the Executive Order form which she partially completed as follows:

On this 11 day of June 2007, before me, the undersigned notary public, personally appeared Shawn G. Kelley and Annemarie Kelley by Shannon Obringer as Attorney in Fact, proved to me through satisfactory evidence of identification which was/were ________________ to be the person(s) whose name(s) is/are signed on the preceding document, and acknowledged to me that he/she/they signed it voluntarily for its stated purpose.

The Weiss court found that the use of the preprinted form, combined with the notary’s failure to attend to the blank space and cross out the inapplicable verbiage, created an ambiguity as to whether the mortgage was the free act and deed of the mortgagors (the requirement) as opposed to that of the attorney in fact (which is insufficient).   The notary public could have turned for guidance to the Massachusetts statutory forms of acknowledgment or to the Massachusetts Land Court Guidelines on Registered Land, both of which make clear that a signatory acting under power of attorney must acknowledge the document to be the free act and deed of its principal(s), in this case the mortgagors. Of interest is that the Weiss court found that the mortgage was not rendered defective by the fact that the notary (i) rather unartfully described the person appearing before her as “Shawn G. Kelley and Annemarie Kelley by Shannon Obringer as Attorney in Fact” (it would have been clearer to have said “Shannon Obringer, attorney in fact for Shawn G. Kelley and Annemarie Kelley”) and (ii) failed to fill in the blank describing the evidence of identification presented by the signatory (the requirement for evidence of identity having been imposed only by the Executive Order and not by statute).

The Weiss decision is not the first time in recent years that a bankruptcy court sitting in Massachusetts has invalidated a mortgage due to a defective notary acknowledgment. Weiss references Agin v. Mortg. Elec. Registration Sys., Inc. (In re Giroux), 2009 WL 1458173 (Bankr. D. Mass. May 21, 2009) in which the notary failed to fill in the name of the mortgagor in the acknowledgment, and DeGiacomo v. CitiMortgage, Inc. (In re Nistad), 2012 WL 272750 (Bankr. D. Mass. Jan. 30, 2012) in which the notary entered an incorrect name for the mortgagor in the acknowledgment.

The Weiss decision is a salutary reminder that those lender attorneys preparing mortgages, and those borrower attorneys issuing enforceability opinions, must carefully review the final, completed notary acknowledgment to make sure that any mortgage of Massachusetts property comports with Massachusetts law.  To do otherwise is to risk having the mortgage voided upon motion of a vigilant bankruptcy trustee.