• May 10, 2010

There is no doubt that notarizing a document in the absence of the person who signed it violates Minnesota law as to the duties of a notary.  Indeed, it is a criminal act (though a mere misdemeanor).   On the other hand, so is speeding.

If someone admits to having signed a document but further establishes that it was not notarized in his presence, should this permit him to void a $275,000 mortgage loan transaction?The issue is squarely before U.S. District Court Judge Paul Magnuson (D. Minn.) who recently concluded a two-day bench trial on the subject.  (Trial briefs and a follow-up letter brief to the court are here, here, and here.)

From time to time functioning as counsel to lenders, Minnesota Litigator confesses a personal/professional bias.  That said, it simply seems absurd that such an error, even an intentional one, by the notary should have such inequitable consequences.  All the more so when the sloppy notary, in almost every case, will be someone with absolutely no tie to the lender that, some time later, might find itself without recourse for a substantial defaulted loan.

Plaintiff’s counsel strongly argues that the harm in the Ofor v. Ocwen Loan Servicing, et al., case did not arise from the false notarization, per se, but from the related fact that the borrower was absent from the closing and, he alleges, the terms of the mortgage loan transaction had changed from when he had first been told about the deal.

The lender, on the other hand, points to several recent analogous cases in which the “non-signing” spouse attempted unsuccessfully to avoid the consequences of a mortgage loan transactions based on the lack of signature (though the spouse was fully aware of and approved of the transaction) (the most recent being National City Bank v. Engler, 777 N.W.2d 762 (Minn.Ct.App. 2010)).

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