Daily Development for Tuesday, November 4, 2003 by: Patrick A. Randolph, Jr. Elmer F. Pierson Professor of Law UMKC School of Law Of Counsel: Blackwell Sanders Peper Martin Kansas City, Missouri dirt@umkc.edu The following is extracted from material published in the First American Title Insurance Company internal publication LandSakes. The principle author is Burt Rush. We've reported on this case before in DIRT, but I believe that this posting is a far more complete analysis of the issue. DEEDS; VALIDITY; ACKNOWLEDGMENT: A certificate of acknowledgment (i.e., notary's jurat) which fails to state that the notary has identified the signing party may nevertheless be sufficient under Tennessee law. In re Akins, 87 S.W.3d 488 (Tenn. 2002). Ronald L. Akins, Sr., borrowed $175,000 from Community Trust & Banking Company, giving a deed of trust against property in Bradley County which was promptly recorded. The certificate of acknowledgment recited in part: "I, Tammy Bentley, a Notary Public of the county and state first above written, do hereby certify that Ronald L. Akins, unmarried, personally appeared before me this day and acknowledged the execution of the foregoing instrument." Later, Akins filed Chapter 7 bankruptcy and a trustee was appointed. The trustee filed an adversary proceeding seeking to invalidate the deed of trust, under section 544 of the Bankruptcy Code, arguing that the interest was not perfected under state law. The trustee claimed the deed of trust was not perfected, and thus was avoidable, because the certificate of acknowledgment "did not adequately demonstrate the notary's knowledge of the identity of the person appearing before her." In other words, the jurat did not contain a recital such as "with whom I am personally acquainted (or proved to me on the basis of satisfactory evidence)" or "to me known to be the person(s) described in and who executed the foregoing instrument." The trustee argued such recital was required by Tennessee Code Annotated section 66-22-107(a)-(b). On certification of the question from the bankruptcy Tennessee Supreme Court.held the certificate valid, finding that it satisfied a "substantial compliance" test for jurats embodied in Tennessee Code Annotated section 66-26-113, and also that it passed an "intent test" set forth in Tennessee Code Annotated section 66-22-114(b). The Court began its analysis by acknowledging older Tennessee cases that had interpreted "substantial compliance" language of section 66-22-113 to make "statutorily prescribed 'magic words'...practically indispensable" to a certificate of acknowledgment. Under these cases, almost any missing recital could be fatal. But, said the Court, beginning in 1983 the legislature relaxed the requirements, first by amending Tennessee Annotated Code sections 66-22-106 and 66-22-107(a) to permit identification of signing parties by various forms of "satisfactory evidence" (such as a government issued passport or driver's license); then by adding a subsection (d) to section 66-22-106, saying "(a)n officer who has taken an acknowledgment pursuant to this section shall be presumed to have operated in accordance with the provisions of this chapter;" and later (in 1987) by enacting section 66-22-114(b) to provide that no specific form or wording shall be required for a certificate (the "intent test"). In light of these changes, the court gave the "substantial compliance" language of 66-22-113 a new slant. Mainly, Tennessee courts must now presume that a notary's actions are "regular" so long as essential requirements appear to have been satisfied. In this case, the Court said "it can reasonably be inferred that Mr. Akins was in some way known to the notary because she included the word 'unmarried' in the certificate." This identification, said the Court, "satisfies the substantial compliance test." Likewise, the court said that the certificate of acknowledgment, taken together with the signature of Mr. Akins over his typewritten name, are sufficient to show his intent to acknowledge his signature on the deed of trust. This evidence satisfies the "intent test" of section 66-22-114(b). Reporter's Comment 1: This is a great decision, because the Court's reasoning and interpretation of statutes can be applied to many other situations involving defective certificates of acknowledgment. This forcefully promotes certainty and reliability of land records in the Volunteer State. As the Court says, to rule otherwise would put form over substance. The same result should obtain in other states, although statutes elsewhere may be less helpful than they proved to be in Tennessee. In states with weak statutes, bringing about legislative changes would be a worthwhile project for land title and state bar associations. Reporter's Comment 2: In recent years we've seen a flurry of cases from Tennessee concerning defective jurats. In 2000, the Tennessee Supremes held that a deed of trust recorded without a notary's seal was void. Later, a federal court in Knoxville upheld validity of a jurat that failed to include names of the notary and signing parties, but instead contained check marks over spaces where the names should have appeared. Then, in 2002, the Supreme Court held that a jurat containing a false statement about appearance of a signing party, who in fact did not appear but whose signature was supplied under a power of attorney, was invalid. Readers are encouraged to respond to or criticize this posting. 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