Court Opinion

ID: 9688513
Source: CourtListenerOpinion
Date Created: 2023-08-24 17:53:02.617187+00
Date Added: 2024-06-11T18:18:39.890604
License: Public Domain

SCHELLHAS, Judge
(concurring in part, dissenting in part).
Because the majority is reversing the district court’s grant of summary judgment to respondents, I concur with its conclusion that the issue of whether appellants had actual notice of respondents’ mortgages should be remanded to the district court. But I respectfully dissent from the majority’s reversal of the district court’s grant of summary judgment to respondents. I disagree that the district court erred in its determination that re*906spondents’ mortgages are prior and superior to appellants’ mechanics’ liens.
Minnesota law provides that a mechanic’s lien attaches to land at the time that the first item of material or labor is contributed and has priority over any encumbrance not “of record” at that time, unless the mechanic’s lienholder has actual notice of the encumbrance. Minn.Stat. § 514.05, subd. 1 (2008). Here, the Hennepin County Office of the Registrar of Titles accepted Lind Homes’ warranty deed to Lot 4 and respondents’ mortgages for registration and assigned document numbers to them at 11:00 a.m., on June 28, 2005. For reasons not in the record, the registrar did not issue a new certificate of title to Lot 4, certifying Lind Homes as the fee owner, and did not enter memorials of the mortgages on the existing certifícate of title to Lot 4.
Scherer and Southview contributed their first items of material or labor to Lot 4 on October 13, 2005 and May 17, 2006, well after respondents filed their mortgages with the registrar but before memorials of the mortgages were entered on the certificate of title. Thus, as the majority notes, the issue here is whether the mortgages were “of record,” under Minn.Stat. § 514.05, subd. 1, at the time they were filed with the registrar.
As the majority notes, an interest in Torrens property is established upon the registration of that interest, Minn.Stat. § 508.47, subd. 1 (2008), and mortgages take effect upon the title to registered land only from the time of registration, Minn. Stat. § 508.54 (2008). Minnesota Statutes, section 508.55 (2008), provides that registration “shall be made in the following manner: The mortgage deed or other instrument to be registered shall be presented to the registrar, and the registrar shall enter upon the certificate of title a memorial of the instrument registered, the exact time of filing, and its file number.” The majority holds that respondents’ mortgages were not “of record” at the time that appellants contributed their first items of material or labor to the land, based on its conclusion that the mortgages were not registered under Minn.Stat. § 508.55, until they were memorialized on the certificate of title. I disagree that respondents’ mortgages were not “of record” under Minn.Stat. § 514.05, subd. 1, when appellants contributed their first items of material or labor to Lot 4.
I would conclude that interests in registered land are “of record” under Minn. Stat. § 514.05, subd. 1, at the time they are filed, even before they are memorialized on the certificate of title. Mortgagees or other interest-holders have no control over the timing of entry of memorials of their interests on the certificate of title. In this case, an extraordinary delay occurred between the time the mortgages were filed with the registrar and the time their memorials were entered on the certificate of title. But even under ordinary circumstances, the registrar does not simultaneously file-stamp a mortgage, assign a document number to it, and enter a memorial of the mortgage on a certificate of title. In the ordinary course of business in the office of the registrar, a time gap necessarily occurs between the date of filing and entry of a memorial on a certificate of title. The length of this gap varies from week to week and among counties. Registrars have no control over the number of documents presented to them for registration and also must contend with normal work-production issues. And no party in this case has suggested that respondents somehow controlled the timing of the entry of the memorials of their mortgages on the certificate of title to Lot 4.
*907The majority’s holding presents an unworkable rule under which construction lenders must wait for proof that their mortgages have been memorialized on certificates of title — which may take days or weeks — before disbursing any mortgage funds for fear of risking the loss of priority to mechanics’ lienholders who commence work after the mortgages have been filed with the registrar but before they are memorialized. To wait to disburse mortgage funds until a mortgage is memorialized on a certificate of title has not been the practice of construction lenders, who disburse funds as soon as they can verify that no visible work was done on the building site before the mortgage was filed. See 6A Stephen J. Kirsch, Minnesota Practice § 48.3.9 (3d ed. 1990) (describing steps construction lenders should take pri- or to disbursing funds).
Additionally, if mortgages or other interests in registered land are deemed not to be “of record” under Minn.Stat. § 514.05, subd. 1, until memorialized on a certificate of title, the resolution of priority disputes ■will depend on the availability of information regarding the exact date and time that instruments are memorialized on a certificate. But the registrar makes no record of the date and time of memorialization on a certificate of title. Instead, the registrar makes a record of the date and time that an instrument is filed. As in this case, certificates of title contain a column with the heading:
“Date of Registration Month Day, Year Time.”
For each mortgage deed or other instrument to be registered, after presentation to the registrar for filing, “the registrar shall enter upon the certificate of title a memorial of the instrument registered, the exact time of filing, and its file number. The registrar shall also note upon the registered instrument the time of filing and a reference to the volume and page where it is registered.” Minn.Stat. § 508.55. The statute does not require the registrar to note upon the certificate or elsewhere the date or time of memorialization, and the registrar does not do so. The “Date of Registration,” set forth under the above-referenced column heading, reflects the month, day, year and time that the instrument is filed with the registrar.
I would conclude therefore that the priority of competing interests in registered land is determined by the date of filing with the registrar, not the date on which an instrument is memorialized on a certificate of title. This position is supported by case law. See In re Ocwen Fin. Servs., Inc., 649 N.W.2d 854, 857 (Minn.App.2002) (holding that the registration numbers are conclusive evidence of the order in which the mortgages were filed, and granting priority to the interest with the lower registration number).
I would hold that respondents’ mortgages were of record at the time that appellants furnished their first item of labor or materials to Lot 4, and I would affirm the district court.