|Matthew R. Lasek|
Indexing is a process that occurs at the time of recording, when all of the parties to a recorded document are listed so that the document can be found in a title search. Incorrectly indexed documents can be impossible to find as part of a normal title search. If the recorder's office makes an indexing mistake, the recorder is not liable and the document remains in force. In that situation, future third parties (such as a buyer, lender, and so on), who might have had no realistic chance of discovering the document, may still have their rights affected by it. If the indexing problem is the fault of the parties to the document, however, then subsequent, unsuspecting third parties may not be bound by it.
Consider the following scenario. A Company mortgages its land to a Lender. The Mortgage is recorded but improperly indexed. The Company then sells the Real Estate to a Family, who conducts a title search but, because of the indexing error, does not find the Mortgage.
If the county recorder made the indexing mistake, the Lender's rights are preserved, the land remains subject to the Mortgage (meaning that, if the Mortgage is not paid, the Lender can foreclose on it and eliminate the Family's interest in the property), and the recorder is not liable for any of it. If the Lender made the mistake, however, then there is a good chance that the Family will own the land without having to worry about the Mortgage. The sheer uncertainty and inconvenience of a situation like this one should motivate most parties to do what they can to get recorded documents properly indexed so that they are discoverable during a title search.
While all Allegheny County indexing rules (available at https://pa_allegheny.uslandrecords.com/palr/indexing_guidelines.jsp) should be noted, parties should be especially cognizant of several counterintuitive and potentially troublesome rules. First, Allegheny County's rules state that initials in corporate or company names are indexed with spaces between the initials. In an example given by Allegheny County, a document to which "ING Bank" is a party is indexed under "I N G Bank"; therefore, a search for "ING" or "ING Bank," without the spaces between the first three letters, will not return the document in question.
Second, Allegheny County's related indexing rule - that capital letters in a partially-capitalized name are assumed to represent initials - creates additional problems. This can be particularly problematic for entities which have capitalized letters that do not represent initials. For example, a document involving a company named "PANAM Airlines, Inc." ("PANAM" being a contraction of "Pan American") would be indexed as "P A N A M Airlines, Inc.," which is an unlikely search term; it would not be found by searching for "PANAM Airlines, Inc.," the actual name of the company.
No case in Pennsylvania has decided what happens when parties run afoul of the indexing rules discussed above. However, in order to avoid being the test case on this issue, parties can employ a simple, widely-used drafting technique: capitalizing the entire name of the parties the first time they appear in a recorded document. Under this approach, documents involving "PANAM AIRLINES, INC.," typed in all capitalized letters, could be located using the much more intuitive and true-to-life search of "PANAM Airlines, Inc."
Being aware of the indexing rules and the simple drafting technique discussed here could save individuals and companies who record and search for recorded documents in Allegheny County a considerable amount of time, expense, and grief.
For more information about recorded documents or other real estate matters, please feel free to contact Matthew Lasek or any of the attorneys in Meyer, Unkovic & Scott's award-winning Real Estate & Lending Group.