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WHITE PAPER
June 2011v. 3
HARBINGER
ANALYTICS
GROUP
MERS: The Unreported Effectsof Lost Chain of Title on RealProperty Owners
WWW.HARBINGERAG.COM
Harbinger Analytics Group v2 05/12/11
FORWARD
It has been widely reported that MERS
1
has broken or severely diluted
2
the chain of titlefor real property records, but what does this mean? To understand the importance of the chain of title to a property and the complexities of land boundaries we need to look no further than theadvice given to practicing attorneys.
“To properly evaluate a case, counsel and survey experts often must examine chains of
title for all properties subject to the dispute. In the case of a boundary dispute, it may benecessary to search the chain of title back to a patent to determine paramount title or to
locate true boundaries.”
3
As is readily apparent, a broken chain of title will have adverse effects on adjoiningproperties and in many instances the boundaries of properties within an entire neighborhood.Attorneys are
advised to “
seriously consider not taking the case or withdrawing from it.
”
If
attorneys are advised to “seriously consider” withdrawing, h
ow will the common victim of MERS (by proxy) get relief?The complexity of the problem is obvious. As lenders and title insurers passresponsibility back and forth, property owners who purchased a foreclosed property that hadbeen in the MERS system (and now have broken chains of title) and their neighbors will beforced into expensive and complex litigation in order to determine their boundaries.
Who will be financially responsible for the litigation to quiet title?This White Paper documents the importance of a chain of title and thefar reaching effects of a lost chain of title.
1
When referencing MERS in this report, the author refers to MERSCORP, Inc. and its 5000 plus members and theMortgage Electronic Registration Systems, Inc. (a subsidiary of MERSCORP, Inc.).
2
The terms broken and diluted a
re used interchangeably in this White Paper. Chains of title are “diluted” when the
historical indexing systems and proper public recordings are not utilized (along with back dating and forging of legaldocuments , ie. robo-signing) making a chain of title impractical to recreate.
3
Continuing Education of the Bar (CEB),
California Easements and Boundaries, Law and Litigation
(July 2010) §§10,11, 10.32, pgs. 471-472, 489-
490. According to the Checklist: Dos and Don’ts in Boundary Location Dispute
contained in this treatise, attorneys are advised to:
Remind clients that boundary location disputes are usually expensive to litigate (a client willsometimes fight to the last dollar).
Do not enter an appearance in any boundary litigation unless counsel is confident about handlingboth the emotional and legal issues.
If there is continued doubt about the boundary location, research, read, and review again; usuallythe answer is buried somewhere [in the chain of title].
If enormous doubt persists on location or validity of the boundary, seriously consider not takingthe case or withdrawing from it.See
Exhibit G
for a complete list.
Harbinger Analytics Group
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ABOUT THE AUTHORS
David E. Woolley is the author of this white paper. Mr. Woolley is a California LicensedLand Surveyor and Certified Fraud Examiner with over 24 years of experience and is theprincipal in Harbinger Analytics Group. Mr. Woolley’s firms specialize in investigation of commercial real property boundary disputes, land survey fraud, land title insurance fraud andtheir cumulative effects on mortgage loans. Harbinger Analytics provides land title surveyauditing and quality control programming, fraud investigation and technical report productionpertaining to land survey and land title fraud. Harbinger Analytics Group also provides litigationsupport services in the form of expert witness opinions regarding standard of care, professionalnegligence, negligent misrepresentation and breach of representations and warranties. A copy of Mr. Woolley’s curriculum vitae is attached to this report as
Exhibit I
.Lisa D. Herzog is the editor and legal research analyst for this white paper. Ms. Herzogis a California Licensed Attorney with over 14 years of professional legal experience in the fieldsof business litigation, employment litigation, discrimination litigation and business transactionsand agreements. Prior to attending law school, Ms. Herzog worked in the fields of humanresources and labor relations management for several multinational corporations. Additionally,Ms. Herzog is an adjunct professor for Pepperdine University Graziadio School of Business andManagement in Malibu, California. Ms. Herzog is also a writer, editor and consultant forHarbinger Analytics Group.
DISCLAIMER
The information contained in this document is the proprietary and exclusive property of Harbinger Analytics Group (except as otherwise indicated).The information contained in this document is subject to change without notice.This information in this document is provided for informational purposes only.Harbinger Analytics Group specifically disclaims all warranties, express or limited, including,but not limited, to the implied warranties of merchantability and fitness for particular purpose,except as provided for in a separate license agreement.Nothing in this article may be construed as offering legal advice. Legal information isnot legal advice. The article is for basic informational purposes only and does not contain legaladvice or legal opinions by the authors. Any substantive legal questions should always beaddressed to competent licensed legal counsel. As such, Mr. Woolley and Ms. Herzog, are not,and cannot, be liable for offering any legal advice or opinions in this informational article.Additionally, the authors’ use of the word “fraud” is meant in its everyday use. It is understoodthat the legal cause of actions encompassing fraud must be proven by specific elements in a courtof law (including a determination of intent).
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