Tag Archives: registration

Alabama Court Rejects “Split-the-Note” Theory

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The court in deciding Gray v. MERSCORP, Inc., 2013 U.S. Dist. (N.D. Ala., 2013) rejected the split the note theory put forward by Gray.

This matter arose out of a note and mortgage executed in March 2007 by plaintiffs Clayburn Kyle Gray and Carrie Ann Gray, defendant Quicken Loans, Inc., and defendant MERS.

Plaintiffs’ resulting suit primarily consisted of two allegations: (1) that the defendant Quicken wrongfully and deceptively caused the plaintiffs’ entire ten-acre property to be encompassed by the mortgage and (2) that the defendant OneWest, to whom the mortgage was subsequently assigned by defendant MERS, was incapable of foreclosing on the mortgaged property, due to “a separation of the note and mortgage in this cause.”

Defendants filed a motion to dismiss, this was subsequently granted. The court noted that Alabama courts, have roundly rejected the “split the note” theory, thus rendering it ineffective and inapplicable in the present case.

Tennessee Court Rejected MERS’ Argument that Sale of Property Should be Invalidated

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The court in deciding Mortgage Elec. Registration Sys. v. Ditto, 2014 Tenn. App. (Tenn. Ct. App., 2014) affirmed the judgment of the lower court.

This appeal involved the purchase of property at a tax sale. MERS filed suit against purchaser to invalidate his purchase of property because it had not received notice of the sale even though it was listed as a beneficiary or nominee on the deed of trust.

Purchaser claimed that MERS was not entitled to notice because MERS did not have an interest in the property. Purchaser also alleged that MERS failed to properly commence its lawsuit because it did not remit the proper funds pursuant to Tennessee Code Annotated section 67-5-2504(c).

The trial court refused to set aside the tax sale, holding that the applicable notice requirements were met and that the purchaser was the holder of legal title to the property. MERS appealed the lower court’s decision, however this court affirmed the decision of the lower court.

Since appellant was never given an independent interest in the property, and it did not suffer an injury by the sale of the property at issue, and the only injury suffered by appellant related to the future effect the case could have on its business model, which was not a distinct and palpable injury capable of being redressed by the court, the trial court’s grant of the purchaser’s motion for judgment on the pleadings was properly granted as appellant did not have standing to file suit to set aside the tax sale of the property for lack of notice under Tenn. Code Ann. § 67-5-2502(c) and the Due Process Clause of the Fourteenth Amendment.

The court found that the failure to tender the appropriate funds when filing the petition to set aside the sale under Tenn. Code Ann. § 67-5-2504(c) was not a prerequisite for relief.