Acacia on the Green Condo. Assn., Inc. v. Jefferson, 47 N.E.3d 207

Background

In 2005 Sal Culotta took two mortgages on a Lyndhurst property: a first mortgage to MERS and a second to TED Properties (TED); both were recorded June 27, 2005.
Culotta sold the property to Jevaun Jefferson in July 2007; Jefferson obtained two mortgages from First Horizon, recorded July 27, 2007; proceeds paid off the MERS mortgage but not TED’s lien.
Jefferson defaulted; Acacia condo association foreclosed and First Horizon asserted cross-claims challenging TED’s priority.
TED’s recorded mortgage referenced an attached “Exhibit A” for the legal description, but no Exhibit A was attached; First Horizon argued that omission rendered TED’s mortgage invalid as to subsequent lienholders.
A magistrate found TED’s lien valid and that First Horizon had notice; the trial court sustained First Horizon’s objections and awarded priority to First Horizon.
On appeal the Eighth District reversed, holding TED’s recorded mortgage gave notice to First Horizon (both constructive and actual via the title examiner) despite the missing exhibit, so TED’s earlier-recorded lien retained priority.

Issues

Issue	Plaintiff's Argument (TED)	Defendant's Argument (First Horizon)	Held
Does absence of a land description in a recorded mortgage invalidate it as to subsequent lienholders?	A mortgage need not contain a perfect legal description; omission does not nullify priority if subsequent parties had notice.	Lack of any description means the mortgage did not provide constructive notice and is invalid as to later lienholders.	The court held omission alone did not defeat notice here because the mortgage was discoverable in the chain of title; TED’s lien remained valid and prior.
Is a defective but recorded mortgage an equitable lien enforceable against third parties?	Even if defective, the mortgage creates equitable rights and notice issues control priority.	First Horizon asserted invalidity as to third parties due to the defect.	Court did not decide broader equitable-lien question (TED’s second assignment deemed moot) because notice resolved priority in TED’s favor.
Is a properly executed but descriptively-defective mortgage "unrecorded as a matter of law"?	No — courts distinguish execution defects (which can render recording ineffective) from description defects, which raise notice questions.	Argued the defect made the mortgage effectively unrecorded, so First Horizon took priority.	Court held execution defects (not present here) can nullify recording; mere absence of description does not automatically make instrument unrecorded as a matter of law.
Was First Horizon a bona fide purchaser without actual or constructive notice of TED’s lien?	Title examiner for First Horizon located TED’s mortgage by grantor search and twice informed First Horizon’s title agent; therefore First Horizon had actual and constructive notice.	First Horizon contended the TED mortgage was not in the chain of title and that any title-examiner knowledge was not imputed to it.	Court held First Horizon had both constructive (mortgage was discoverable by grantor-name search) and actual notice (title examiner told First Horizon’s agent), so it was not a bona fide purchaser.

Key Cases Cited

Delfino v. Paul Davies Chevrolet, Inc., 2 Ohio St.2d 282 (Ohio 1966) (defective mortgage may still bind the parties absent fraud)
Citizens Natl. Bank v. Denison, 165 Ohio St. 89 (Ohio 1956) (execution defects can affect validity of recorded instruments as to subsequent purchasers)
In re Nowak, 104 Ohio St.3d 466 (Ohio 2004) (recording effectiveness can be defeated by defects in execution)
Argent Mortgage Co. v. Drown (In re Bunn), 578 F.3d 487 (6th Cir. 2009) (notice inquiry for defective descriptions focuses on whether subsequent purchaser could discover the encumbrance)
Emrick v. Multicon Builders, Inc., 57 Ohio St.3d 107 (Ohio 1991) (instruments within the chain of title give constructive notice to subsequent purchasers)