MALPRACTICE WARNING FOR ATTORNEYS FILING IN JEFFERSON COUNTY PROBATE COURTS

The Problem 

Recent budgetary shortfalls in Jefferson County, Alabama, have created a potential for a malpractice trap for anyone attempting to timely file or record instruments. AIM insureds, both in and outside of Jefferson County, who file documents for recording in Jefferson County Probate Courts (Birmingham Division and Bessemer Division) need to understand the danger of mailing or dropping off and leaving documents for filing.

Whether you are filing deeds, mortgages, certificates of judgment, lis pendens, recordable leases, incorporations, L.L.C., or other documents, be aware that there may be as much as a six week delay ("gap") between receipt of a document by the court and its ultimate recording. Reportedly, this is the case in the Birmingham Division. Significant delays also exist, reportedly, in the Bessemer Division. While this gap primarily affects real estate closing attorneys, it can also affect other practitioners who need to record a client's document in Jefferson County.

In normal times, there is a gap of time between obtaining a title commitment and the ultimate recording of the deed, mortgage and other instruments from a closing. Typically, this gap was about a week. For example, a closing that occurred on March 10, probably had a title commitment current to March 3 (effective date). Assuming the deed, mortgage and other instruments were recorded on the day of closing, there was, thus, a gap of seven days for which there was no additional information about the state of title unless the closing attorney updated same or obtained an update prior to closing. There is now a potential gap of up to six weeks. This longer period of time increases the likelihood for intervening instruments to be recorded that could adversely affect the state of title of subject property and injure clients. Certificates of judgment, mortgages, Internal Revenue Service and State of Alabama Department of Revenue liens, as well as other encumbrances, might be filed against the subject property during the gap.

How To File Timely

Backlogs of instruments to be recorded are the source of delays (up to six weeks) currently experienced at the Jefferson County Probate Court. Even hand-delivering instruments will not avoid the problem, if the instruments are left to be recorded, scanned and returned by mail to the attorney. The only sure procedure is to stand in line and personally hand the document to the recording clerk, wait while it is being recorded, scanned, and then obtain the stamped original before you leave the probate court.

Attorneys who do not practice in Jefferson County might consider asking an attorney they know in Birmingham or Bessemer to go to these probate courts for them (or to send a member of their staff) to have instruments recorded, scanned and the original obtained before leaving, using this hands-on process. Keep in mind, whether you undertake to record a document yourself, or engage someone else, this procedure likely will be time-consuming. The point is that unless you use this procedure, you invite unnecessary risk.

Title Insurance And The Gap

Be aware that title insurers may take the position that they do not cover damages from encumbrances that affect title filed during the gap between the title commitment and recording of the closing documents. Obtaining an update on the status of title directly before closing can protect your client from loss and you from a malpractice suit. Remember to focus on the “effective date” of such update. Additionally, some title insurers may offer gap coverage for an additional fee. Consider advising your clients, or parties to the transaction affected, to purchase such gap insurance if same is available. It is also wise to document, in writing, such advice.

Other Counties

The above-discussed problem affects the two Probate Courts in Jefferson County. If you record in other counties' probate courts (in or out-of-state), check with the court to find out whether it has a recording backlog and for advice on how to best record documents timely.