December 2009 Vol. 2, No. 12

Underwriters' Bulletin

Claims Corner


Recording Problems: "Legal Description Attached" ...or Is It?

ATG has had a sharp increase in the number of closing claims processed involving documents recorded with an incorrect legal description or with no legal description at all. The increase is related to the increase in foreclosure transactions. An incorrect legal description or missing legal description may never arise if the mortgagor makes the mortgage payments. However, when a lender is reviewing a file because the mortgagor is delinquent, this type of error is being caught more frequently.

When the legal description is incorrect or missing, the document must be corrected and re-recorded. This typically involves obtaining a certified copy and then paying for the re-recording. The good news is that these are relatively inexpensive claims that can typically be resolved for approximately $100. The bad news is the volume with which these claims come in: ATG typically receives at least one of these claims every week. Please be sure to compare your legal description to the legal description on the commitment. When the legal description does not appear on the face of the document, make sure there is a legal description attached. We see a lot of mortgages with the words,"legal description attached," and there is none.

Missing or incorrect legal descriptions on mortgages can also be critical in bankruptcy situations. Trustees in bankruptcy routinely attempt to avoid mortgages when they have not been recorded properly.

Also, remember to charge the exact amount needed to record a document. Any amount that is not used to record documents must be refunded to the parties. It is crucial that parties to a transaction are not overcharged for recording fees.

If you have any questions about legal description discrepancies or other related issues, contact the ATG Underwriting Department,, 217.403.0020, or 312.752.1990.

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[Last update: 12-14-09]