What Came First, Comes First: the Chronology of Real Estate Law

by Isaac Benmergui, Esq on February 12, 2014

We all love the ancient and unsolvable riddle about “which came first, the chicken or the egg?”. Unparalleled accounts of wisdom have sprung from that very question, and quite honestly, real estate law is no different. In a nutshell, to put it simply, the original filing, whatever it may be – regardless of how far it goes into higher courts or other issues – stands as the governing force behind a decision.chicken egg

Take, for instance, this case with Option One Mortgage Corporation and Aurora Loan Services, LLC. of the Mortgage Electronic Registration Systems (MERS). We’ve got two adjacent lots in this case regarding the apparent property of the owner. Sound simple enough? Wrong. Read on.

This is what happened: the property owner of the two lots, of course, mortgaged the property to Option One Mortgage Corporation, but then also conveyed one lot to an individual, who then in turn granted a mortgage to MERS. That’s where we have a problem. Option One ended up filing a complaint, stating that a declaration was necessary for a valid first lien encumbrance on that one lot. In other words, Option One Mortgage had the original mortgage on the entire property; therefore, no other entity would have the rights to any division of that property.

Needless to say, a hearing justice granted that summary judgment for Option One, and the Supreme Court also affirmed, stating that because Option One Mortgage Co. had the first mortgage on both lots, their mortgage stands as the valid mortgage, which prohibits the person property owner conveyed that one lot to from filing for his or her own mortgage on that specific property. Fair enough, problem solved. There’s still one more question to ask…. Which party in this case is the chicken, and which is the egg?

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