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Bank of New York v. Patel

2006 WL 337074 (N.J. Super. Ch. Div. 2006) (Unpublished)

DEEDS; CHAIN OF TITLE—Where a mistake interrupts the chain of title and there is no reason not to enforce an equitable mortgage that is affected thereby, a court may order that the chain of title be corrected.

On the same day, a borrower executed a first purchase money mortgage in favor of a lender; a property owner executed a deed to the borrower; and, the borrower executed a quitclaim to himself and another person as joint tenants with the right of survivorship. The borrower recorded the second deed to himself and the other party before he recorded the deed granting him title to the property from the original owners. Clearly, this was a mistake and the mistake disrupted the chain of title. According to the Court, “[i]t could not have been the intent of the parties to create a disrupted chain of title. Therefore, the chain of title must be corrected to reflect the intention of the parties.” The mortgagee was seeking to enforce an equitable mortgage against the property owners. “An equitable mortgage is created when ‘a deed or contract, lacking the characteristics of a common law mortgage, is used for the purpose of pledging real property, or some interest therein, as security for a debt or obligation, and with the intention that it shall have effect as a mortgage, equity will give effect to the intention of the parties.’” According to the Court, “[c]learly it would not be equitable to have [the property owner] receive the benefits of the property without having to pay back the indebtedness.” The parties intended the mortgage to be a first purchase money mortgage. There was no reason not to correct the chain of title or to enforce an equitable mortgage. Accordingly, the Court granted the mortgagee’s motion “to correct the chain of title and enforce and equitable mortgage between” itself and the borrower.

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