Defective Legal Description Will Not Necessarily Invalidate Mortgage

Lesson.  As long as the legal description within the mortgage sufficiently describes real estate owned by the mortgagor, the mortgage itself will be valid, even if the legal description is flawed in other respects. 

Case cite.  Samuels v. Garlick, 49 N.E.3d 1116 (Ind. Ct. App. 2016).

Legal issue.  Whether a mortgage is invalid if the legal description of the mortgaged property has defects.    

Vital facts.  Samuels involved a lien priority dispute between two mortgagees.  There was no question that Mortgage 1 was recorded three years before Mortgage 2.  The complicating factor surrounded the legal description contained in Mortgage 1.  The opinion details the history of the subject real estate and the problems surrounding how the deeds and the two competing mortgages described the real estate.  The legals involved both “metes and bounds” descriptions and descriptions by lot after the owners subdivided the property.  In sum, Mortgage 1 (a) described some property that the mortgagors no longer owned, (b) did not describe some of property at issue and (c) described only certain portions of two of the lots at issue.  In short, the mortgage “both over- and under-described the mortgaged property.”  The second mortgagee contented that, with these defects, it was “impossible to determine which property was intended to be mortgaged.”  

Procedural history.  The trial court granted summary judgment for the first mortgagee, and concluded that Mortgage 1 was valid and senior to Mortgage 2 but “only as to that part [of the real estate] covered by the legal description in its mortgage.” 

Key rules. 

• Generally, in Indiana, to charge subsequent parties with notice, a “mortgage must … contain an accurate legal description of the property.” 
• “In order for a mortgage to be effective, it must contain a description of the land intended to be covered sufficiently to identify it.”  The test for determining the sufficiency of the description “is whether the tract intended to be mortgaged can be located with certainty by referring to the description.”
• Indiana case law stands for the proposition that “the fact that the described premises encompasses more real estate than is owned by the mortgagors is relevant only to the issue of whether there is a valid and enforceable lien on the non-owned premises; it does not impair the validity of the lien on the mortgaged premises.” 

Holding.  The Indiana Court of Appeals affirmed the summary judgment.  Mortgage 1 was a prior and superior lien as to that part of the real estate covered by its legal description.  The fact that the description may have been flawed did not render the entire mortgage invalid.    

Policy/rationale.  The Court concluded that it was not impossible to determine which property was intended to be mortgaged by Mortgage 1.  That mortgage, which was in the mortgagors’ chain of title, “put prospective purchasers or mortgagees on notice of an existing mortgage on property commonly known as 8611 West 96th Street, Zionsville – the same address shown on Lot 1 of Copper Ridge Secondary Plat, which [was] also in [the mortgagors’] chain of title.”  Mortgage 1’s metes and bounds description was a “facially valid legal description” with the “same geographic starting point as [the subdivision plat] and encompasse[d] the western 155 feet of said plat.”  The fact that the premises described in Mortgage 1 encompassed more or less real estate than was owned by the mortgagors did not impair the validity of the lien on the described premises that the mortgagors owned. 

Related posts. 

• Defective Notary Does Not Mean Defective Mortgage
• Reformation: How A Mortgage With An Erroneous Legal Description Can Be Foreclosed
• To Be Enforceable, An Indiana Mortgage Must Adequately Describe The Debt It Purports To Secure

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I frequently represent judgment creditors and lenders, as well as their mortgage loan servicers, entangled in lien priority and title claim disputes.  If you need assistance with a similar matter, please call me at 317-639-6151 or email me at [email protected].  Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.