Opinion ID: 2112722
Heading Depth: 2
Heading Rank: 3

Heading: Mis-indexing

Text: Maryland's general indexing requirements are found at Md.Code (1974, 2003 Repl.Vol.), § 3-302(a) of the Real Property Article, which provides: § 3-302. Indexes. (a) In general.  The clerk of the circuit court of each county shall make and maintain a full and complete general alphabetical index of every deed, and other instrument in a well-bound book in his office. The index shall be both in the name of each grantor, donor, mortgagor, and assignor, and each grantee, donee, mortgagee, or assignee. It shall include the book and page of the recordation of every instrument designating these names. The clerk shall index every deed or other instrument retaining a vendor's lien both as a deed and as a vendor's lien, in the same manner as mortgages are indexed. [Emphasis added.] We have gleaned from the various cases of other states' requirements that a notice of lis pendens, in order to provide constructive notice, must be current, must directly relate to a disputed property, and must describe the property to a sufficient degree to identify the affected property and, generally, must be properly indexed. A notice which cannot be discerned or found, is no notice at all. The question at the crux of the instant case is who should bear the loss when the notice intended by lis pendens is inadequate as the result of an indexing error. The illustrative case in Maryland on the results of mistakes in indexing is this Court's recent opinion in Waicker v. Banegura, 357 Md. 450, 745 A.2d 419 (2000), in which the judgment in favor of appellants, alleged to constitute a lien against appellees' real property, was indexed under Banegu n a instead of Banegu r a. [18] The Clerk of the Circuit Court for Baltimore County mailed a copy of the notice of recordation to the Waickers showing the incorrectly indexed judgment. The Waickers took no action to correct the mis-indexing. When the Baneguras later contacted Mystic Investments, Inc., in order to refinance their property and to satisfy other judgments, a search by Mystic revealed no judgments entered against the Baneguras. After the refinancing transaction was completed, the appellants sought to enforce their judgment and contended it had priority over Mystic's Refinance Deed of Trust based on the earlier filed notice. This Court affirmed the ruling of the Circuit Court for Baltimore County that Mystic had a priority interest over appellants because the indexing error caused appellants' judgment lien to fail to attach to the property. In Waicker we concluded: We hold that notice will be found for judgment liens against a particular property, which are indexed under incorrect or misspelled names only when the facts and circumstances are such that the subsequent party has actual knowledge that the judgment is indexed under an incorrect or misspelled name, or has actual knowledge that an owner of property being subject to search has, or is commonly known by, the alternate name. Waicker, 357 Md. at 477, 745 A.2d at 433. Our additional Waicker explanation is instructive in the instant case: A party who records a judgment in a judgment index has the duty of ensuring that the name entered into the index is spelled correctly and indexed correctly in order to protect the priority of their lien. Future persons involved with the property simply have no way to ensure the accuracy of indexing. Waicker, 357 Md. at 479, 745 A.2d at 434. We see no reason why a lesser standard should apply to notices of potential liens than applies to notices of actual liens. In the present case, the lenders urge that this Court must consider whether the mere filing of the suits [in Montgomery County and in Prince George's County] with respective clerks is sufficient to establish constructive notice on the part of the two Appellants. Appellee contends that such a position overlooks the express language of Md. Rule 12-102(b) which requires only filing of the notice of lis pendens and that is precisely what the Receivers did. This Court undertook a similar examination in Waicker wherein we summarized the recording and indexing provisions of Md.Code (1974, 1996 Repl.Vol.), § 3-302(a) of the Real Property Article, and explained: The system of indexing and recording judgment liens is designed, at least in part, to provide an organized and efficient method by which the general public can effectively determine whether there are money judgments that act as liens on a particular parcel of land. In the absence of actual knowledge, indexing and recording give constructive notice of any and all liens that may affect real property. To promote this goal, judgment liens are indexed and recorded alphabetically by surname. If there is more than one judgment indexed under the same surname against different persons, then they are organized alphabetically by first name. Additionally, if there is more than one judgment indexed under the same surname and first name against different persons, they are organized alphabetically by middle name. In other words, indexing and recording is done in basic alphabetical order. See Md.Code (1974, 1996 Repl. Vol.), § 3-302(a) of the Real Property Article (`The clerk of the circuit court... shall make and maintain a full and complete general alphabetical index of every deed, and other instrument in a well-bound book in his office.' (Emphasis added.)). The indexing requirement of alphabetizing of names in judgment indexes is the foundation by which judgment liens are researched. The reason is simple. If a judgment is not indexed in the proper fashion, i.e., in alphabetical order, a searcher may never find it. Waicker, 357 Md. at 463-64, 745 A.2d at 426. The appellee urges this Court to affirm the Circuit Court's determination: Rule 12-102 (b) having been completely and correctly complied with so as to perfect constructive notice of the lis pendens, and no other requirements being set forth in either the Maryland Rules or in any Maryland statute ... this Court should uphold the ruling of the Circuit Court. The Receiver emphasizes the fact of his proper and strict compliance with the stated language of Md. Rule 12-102(b) and he observes that [t]he Rule makes no reference to the indexes nor does it place any condition on the creation of constructive notice pertaining to the indexes. That is, according to appellee, there is no additional requirement for indexing of notices of lis pendens. It is only the filing, according to appellee, that provides the constructive notice, not the indexing. We disagree. When the constructive notice is not realized as intended, and cannot be reasonably discerned because of improper indexing, the constructive notice is never manifested. As to the triumvirate  the lis pendens filer, the clerk, and the party to be affected by the notice  at the time the lis pendens is filed, only one party has no power to ensure that the lis pendens is filed and indexed correctly and that is the future party for whom the notice is intended prospectively. He, she or it may not even be in existence at the moment the notice of lis pendens is filed but mis-indexed. According to the appellee, the lenders have confused constructive notice with actual notice, only the former of which is provided through Md. Rule 12-102(b). This position, if correct from a technical and semantic basis, equates the procedure of the Rule, in respect to filing notices of lis pendens, with the purpose of our real property recording system which is designed to provide notice. Minimal compliance with a Rule that does not specify indexing (when relevant statutes require recorded instruments affecting title to be indexed), fails to in and of itself, achieve the aims of recording a notice of lis pendens. We cannot escape the fact that, in the present case as between the parties, only the receiver was in the position to assure that notice would be readily available, discernable, identifiable and reasonably capable of being located in the land records should any future party make an inquiry. If the party seeking to establish the lien or potential lien fails to verify its correct flow through the recording and indexing system, who then assures that it will provide notice in the future? The appellants correctly observe that once the party seeking to establish the lien has filed the notice of lis pendens, [t]he issue then evolves into what degree of diligence is required of the party seeking to give constructive notice of the lis pendens. Appellants note that section of our Waicker opinion where we echoed the language of the Pennsylvania Supreme Court's conclusion in Roberts, 392 Pa. at 586, 141 A.2d at 400, by imposing upon the party seeking to establish the lien an obligation to ensure accuracy beyond the mere filing of the notice. The Roberts court succinctly stated: It is the duty of a person offering an instrument for record to see that it is both properly recorded and properly indexed. Id. at 586, 141 A.2d at 400. Appellee takes issue with the Roberts' language that appellants have borrowed from Waicker as appellants' apparent attempt to graft onto Md. Rule 12-102(b) an affirmative duty on the part of the party seeking to create a notice of lis pendens to ensure proper indexing. Appellee urges that no such obligation can be read into Md. Rule 12-102(b) because, unlike the statutory requirements imposed on the recording and indexing of money judgments, no similar statutory requirements exist for the indexing of notices of lis pendens. We disagree. The purpose of the Rule was, at least in part, to address the procedure for complying with the relevant statutes (and the common law); statutes that we have held require indexing. The Rule and the statutes, read together, require indexing. If the particular rule had never been adopted, the statute would still have required accurate indexing. As we have indicated, Maryland statutes require instruments affecting title to be recorded and recorded documents to be alphabetically indexed. As was stated in Waicker, The only way to conduct research in the judgment lien index is by the name of the title holder of the land as that name is reflected in the land records  this is why the information included, especially the surname, needs to be accurate. Waicker, 357 Md. at 477, 745 A.2d at 433. It is our explanation in Waicker that shapes the basis of our holding in the instant case: [Appellants, i.e., the party seeking to enforce their judgment] were the only party who knew or could have known, and who should have known, of this [spelling, and thus, mis-indexing] error; they were the only party in the position to correct this error, and they failed to do so. Id. at 478-79, 745 A.2d at 419. Thus, we hold that a party who records a judgment or a notice of lis pendens in a judgment index or lis pendens index has the duty of ensuring that the name entered into the index is spelled correctly and indexed correctly in order to protect the priority of that party's lien or potential lien. The person filing the notice does so to establish constructive notice in order to protect himself or the interests he represents. Thus, it stands to reason that the onus should be on him in order to assure that the notice is not only filed, but also recorded and indexed correctly, in order to provide the greatest protection. Unless he has some exogenous knowledge or actual notice of other names or name variants by which to search, an examiner who searches the index for recorded instruments of judgment or other litigation, i.e., lis pendens, will search for the name under which the property is titled. The examiner must be able to rely upon the ability to match the name he or she seeks with names properly recorded and correctly listed in the index. [19]