This is a classic case that demonstrates why an owner's policy of
title insurance is so important. A county clerk made a typo in the
index that may cause an Ohio family to lose their home.
According to an article in the
Columbus Dispatch, Andy Mateja bought his home for $320,000 in 2001
and has made all of his mortgage payments on time. In August 2007, he
was served with foreclosure papers. The previous owner, Dr. Subbarayudu
Koppera, had a $150,000 second mortgage to Chase that was never paid.
The Chase mortgage went on record in 1998 but due to a typo by the
Muskingum County Recorder's office it was indexed as "Koppepa"
instead of "Koppera."
Muskingum County Recorder Karen Vincent, whose office made the
spelling mistake, testified that a correction was made in
2006. Vincent told the Dispatch that
to her knowledge, it was the first time an error has been made,
but she declined to comment further.
The first time? I seriously doubt that. Mistakes seem to be
all too common these days. I blame the computer systems that have been
adopted by counties. In the old book indexes, I doubt this lien would
have been missed. First, "Koppera" and "Koppepa" would have most likely
been indexed on the same page and the abstractor would have most likely
caught it, even it was spelled wrong. Second, the method of entry in
the books provided a forced error checking procedure. The entry was
made initially in the books before the volume and page had been
assigned. Then, when the volume and page was ready, a different county
employee would have had to find it in the index to enter the volume and
With the computer systems, that "double checking" is not being
done - at least not effectively. The first time the information is
entered, the volume and page is assigned. Someone else may "look at it"
to make sure it is right, but they aren't forced to "search" for it to
make sure it can be found.
Though Mateja paid for a title search, it is clear why it did not
disclose the existence of the Chase mortgage. Had he purchased an
owner's policy of title insurance, it would not matter why the lien was
missed - he would have had a valid claim and his clear title would have
been protected. Unfortunately, in many areas of Ohio, owner's
policies are not customary - perhaps they should be.
Dr. Koppera has since moved to New Albany, Ohio where he purchased a
$682,000 home in 2004. He even modified the Chase mortgage in 2004,
long after he sold the home encumbered by the lien. Apparently he had
been making payments on it for quite some time. Unfortunately, Koppera
and his wife have been slapped with several civil judgments for unpaid
debts and federal, state and county taxes. There probably isn't a good
chance that he is in a position to pay Chase at this point.
He believes the title company made a mistake. "They should've
known it and stopped right there so the lien was clear. Instead
of me taking the cash, I would've paid the lien," Koppera
said regarding the sale of the house. "They didn't do their job,
and they should pay for it."
Seriously? He failed to notify the title company that he also
owed on a mortgage to Chase and he thinks the title company should pay
for it now? Even after he continued to make payments, he never
contacted the title company to alert them to the fact that the mortgage
was missed. The lien was misindexed.... though it could have possibly
been found, had a search been done with first few letter of the name
(KOPP*), it is not the examiner's fault for failing to find a misindexed
document. "Koppera" and "Koppepa" are not idem sonans (alike sounding
So, Chase has a valid mortgage and a right to foreclose on the
collateral. It is not their fault that it was misindexed and missed on
the title search. The title company did not discover the lien during
the course of their title search, and I do not believe that it was due
to negligence on their part. Regardless, the new owner opted NOT to
purchase an owner's policy of title insurance. Clearly, Koppera owes
Chase the money and he should pay it, but unfortunately, it appears that
he is unable to do so. Clearly the county recorder's office was
negligent in their duty to properly index the mortgage. So, to what
extent may the Recorder be held liable?
In Ohio, the recorder is required to give a bond in the amount of
$10,000 conditioned for the faithful discharge of the duties of his
office. (ORC 317.02). If the county recorder does or omits any other
act, contrary to Sections 317.01 to 317.33 of the ORC, the recorder
shall be liable solely on the recorder's bond to any party harmed
by the improper conduct. (ORC 317.33). If that covers a negligent
misindexing, it would appear that the potential recovery would be
limited to the $10,000 bond.
However, this is from a 1970 Attorney General's opinion that deals
specifically with negligent errors and omissions.
County recorders and common pleas court clerks and their deputies
are liable, both personally and on their bonds, to the
persons who may have been injured through their
negligent errors and omissions, including those arising
from indexing and filing of papers within their respective
offices. The principle of sovereign immunity does not apply to
protect public officers and their deputies from personal liability
in the performance of ministerial duties: OAG No. 70-077 (1970).
Personally, I believe the $10,000 bond is woefully inadequate.
Typically abstractors and title agents carry limits of $500,000 to
$1,000,000 on their
E&O policies. County recorders and their deputies
can cause losses just as severe and often times, there mistakes render
it impossible for those searching the records to ever find a misindexed
This is certainly an unfortunate situation for Meteja and his
family. He does not deserve the consequences that have been befallen
him. Owner's policies should be the norm and hopefully this story will
enlighten people to the value of title insurance. Though there are many
people who tell homebuyers that they do not need title insurance, such
advice is reckless at the very least.
About the Author
Robert A. Franco has been in the title industry for nearly 15 years in the
state of Ohio. The owner of
a full service abstracting and title company, and the founder and
president of Source of Title, a
Web site devoted to providing media and marketing services to the title
industry, Franco has dedicated much of his professional career to
furthering the role and significance of title examiners in the title
insurance industry. You can read more from Robert's blog or write