"The petitioners, Merscorp, Inc. (hereinafter Merscorp), and its subsidiary,
Mortgage Electronic Registration Systems, Inc. (hereinafter MERS), operate a national
electronic registration system (hereinafter the MERS System) for residential mortgages
and related instruments (hereinafter MERS Instruments). In essence, lenders who
subscribe to the MERS System (hereinafter MERS Members) designate MERS as their
nominee or the 'mortgagee of record' for the purpose of recording MERS Instruments
in the county where the subject real property is located. The MERS Instruments
are registered in a central database, which tracks all future transfers of the
beneficial ownership interests and servicing rights among MERS Members...
On April 5, 2001, the Attorney-General issued Informal Opinion No. 2001-2 in
response to two questions posed by the Nassau County Clerk regarding the latter's
obligation to record and index MERS Instruments. Although the Attorney-General
concluded that the Nassau County Clerk had a statutory duty under Real Property
Law § 291 Real Prop. to record MERS Instruments if they were duly acknowledged
and accompanied by the proper fee, he advised the Nassau County Clerk to list
the MERS Instruments in the County's alphabetical indexes under the names of the
actual lenders. Based in part on the Attorney-General's Informal Opinion, the
Suffolk County Clerk announced that as of May 1, 2001, he would no longer accept
MERS Instruments which listed MERS as the mortgagee or nominee of record unless
MERS was, in fact, the actual mortgagee.
Simultaneously with commencing this hybrid proceeding and action, Merscorp
and MERS moved, inter alia, for a preliminary injunction to compel the Suffolk
County Clerk to record MERS Instruments and list MERS as the mortgagee in the
County's alphabetical mortgagee-mortgagor indexes for recorded conveyances. Although
the Supreme Court, Suffolk County (Bivona, J.), granted the request of Merscorp
and MERS for a temporary restraining order on May 2, 2001, the same court (Catterson,
J.), subsequently denied their request for a preliminary injunction on May 22,
2001...
Merscorp and MERS demonstrated a reasonable probability of success on the merits
of its claim for a writ of mandamus to compel the Suffolk County Clerk to record
MERS Instruments ... Contrary to the contention of the Suffolk County Clerk, he
has a statutory duty that is ministerial in nature to record a written conveyance
if it is duly acknowledged and accompanied by the proper fee (see Real
Property Law § 290 Real Prop. [3], § 291; County Law § 525 [1]). Accordingly,
the Clerk does not have the authority to refuse to record a conveyance which satisfies
the narrowly-drawn prerequisites set forth in the recording statute...
This court notes that the Suffolk County index is governed exclusively by Real
Property Law § 316-a Real Prop.. Real Property Law § 316-a Real Prop. (1)
provides that the Suffolk County Clerk shall record and index '[e]vert instrument
affecting real estate or chattels real, situated in the county of Suffolk * *
* which shall have been recorded in the office of the [C]lerk of said county *
* * pursuant to t he provisions of this act' (emphasis supplied). Pursuant to
Real Property Law § 316-a Real Prop. (2), the Suffolk County Clerk must maintain
the indexes so they 'contain the date of recording of each instrument, the names
of the parties to each instrument and the liber and page of the record thereof
and shall be substantially the forms of the schedules hereto annexed' (emphasis
supplied; see also Real Property Law § 316-a Real Prop. [5]).
Therefore, in light of Real Property Law § 316-a Real Prop., Merscorp
and MERS also demonstrated a reasonable probability of success on the merits of
their claim to compel the Suffolk County Clerk to perform his ministerial duty
to index MERS Instruments as the language of Real Property Law § 316-a Real Prop.
is mandatory and not permissive...
Moreover, to the extent that the Suffolk County Clerk has recorded approximately
16,000 MERS Instruments before May 1, 2001, MERS established irreparable harm
to its business operation, the mortgage lending industry, and the general public,
in the absence of a preliminary injunction compelling the Suffolk County Clerk
to record and index MERS Instruments..., particularly since Real Property Law
§ 316-a Real Prop. (8), (9), and (10) sets forth a mechanism for correcting any
mistakes in the indexes.
Under these circumstances, a preliminary injunction should be granted to maintain
the status quo while the legal issues are determined in a deliberate and judicious
manner..."
