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The following article is for general information only. Slight changes in facts or procedures at trial can have a substantial impact on the conclusions or reports suggested in this article. This is not a legal opinion on your case. Before making any decision or taking any action, the reader is instructed to seek the advice of an attorney who is licensed in the jurisdiction in which your property is located or where the transaction was consummated.
I offer my insight here as a guide to attorneys and to homeowners who need to know that when they use words, they probably don’t know the meaning of the words they are using.
A good example came in from a reader who asks “is the effective date of an assignment the 1) date it was signed; 2) date it was notarized; or 3) date it was recorded?”
As simple as this question appears it actually is missing facts, and assuming that the assignment was “effective” at any time. So first let me say that an assignment is not effective in any sense of the word if the assignor didn’t possess any rights or ownership that could be enforced by the assignor. The existence of the assignment does not raise the status of non-ownership. It is like a Trust: if the trust exists on paper but doesn’t have anything in it, the trust instrument is not effective in relation to any money or property or other rights. If the assignment is from a party who has nothing, then the instrument purporting to assign something is not effective. But presumptions arise in processing evidence in court that could result and often does result in finding the assignment valid and that the assignment is effective in creating rights now owned by the assignee.
The only “exception” to this is that if someone pays for a negotiable instrument in good faith and without knowledge of the maker’s defenses then the risk of loss does shift to the maker (borrower on a note). So the sale of a note that was in fact executed by the maker DOES raise the status such that a fraudulent “transaction” that could not be enforced by the “holder” of the note becomes, by operation of law, a valid claim against the maker. Such a transfer might be called an “assignment” or “endorsement”. The maker may still sue the intermediary parties asserting claims of fraud or other matters but the note can no longer be contested because the transaction was not consummated — thus making the transfer “effective” even though the prior party who was the assignor, endorser or transferor had absolutely no right to enforce the instrument.
An assignment is presumed to be a valid transfer of rights if it is facially valid. It is effective upon delivery, as I understand the laws governing negotiable and/or security instruments (like mortgages). The date of the assignment is generally presumed to be the date it was delivered. All of this can be rebutted by (a) discovery into what transpired in the assignment and (b) proof (admissible evidence) showing that nothing was actually transferred because no payment was made or because of other reasons that might defeat the assertion that the instrument is a negotiable instrument.
The date the document is notarized might be evidence that the date of the assignment was incorrectly stated or it might not. If the signor acknowledged his signature after the date it was signed, the date of notarization changes nothing. If the date of notarization was years later then there is at least reason to propound discovery or requests to the other side seeking to discover if the assignment was backdated AND seeking to discover whether the assignor had anything to assign. If an assignment is backdated it may or may not mean anything. If the actual date of the assignment is much later than the actual transaction in which the note and mortgage were transferred it would only be relevant if the foreclosure started before the assignment was executed. This is not universally true in all states. The issue of when a foreclosing party can initiate the proceedings (before or after the receipt of the assignment instrument) is in the process of being decided by several courts across the country.
The date the document is recorded is potentially relevant. If the document was recorded years after the date of the assignment, that might be evidence of backdating or that the assignment was fabricated. The instrument itself is effective as to all people who know about it, starting from when they knew about it. Upon recording, it is effective as to the world, if it is a valid assignment in fact.
If all this sounds convoluted to the reader, it s proof that the days of pro se litigation are nearly over with respect to the defense of false claims for foreclosure.
The “effect” of an invalid assignment cannot be improved by the fabrication of an instrument that explicitly or implicitly refers to a transaction in which the paper was acquired. The effect of such an invalid assignment also cannot be improved by notarization or recording. A recording gives notice of the existence of a claim of an interest in real property.
The existence of the claim doesn’t mean the claim is valid. Judicial notice of the existence of the recorded assignment is appropriate ONLY to the extent that the Court recognizes that the assignment exists in the public records of the county where deeds and mortgages are recorded. What is written on the recorded instrument is hearsay subject to objection by the opposing party. So the assignment would not be “effective” in court as to proving the matters stated in the assignment; BUT if no objection is made, the proffer by the assignee of the instrument as to both existence and content will probably considered to be accepted into the record as evidence.