Bulletin: NY000133

Dear Associates:

We have received a letter from Joy Bobrow, the New York City Register, together with a copy of the Final Rules ("the Rules") adopted by her Office relating to the implementation of the new Torrens legislation (Chapter 277 of the laws of 1996). The new legislation was discussed in the earlier Bulletin No. NY000121. They become effective in all recording offices in the City of New York on January 1, 1997. If you would like a copy of the letter and Final Rules, please contact our New York City office.

It is suggested that you distribute the Rules to all parties in your office who deal with recordings or with the Torrens Registration System. They contain a very detailed description of the procedure for recording documents which heretofore would have been registered in the Torrens system. The following is a brief summary of the highlights of the Rules:

Effective January 1, 1997, only adverse instruments, (i.e., those that adversely affect, but do not convey title to registered land and whose validity does not depend upon the consent of the owner) may be registered in the Torrens system. Examples of adverse instruments are mechanic's lines, judgments and notices of pendency. A more complete list is set forth at the end of the Final Rules.

On and after January 1, 1997, voluntary instruments (those which convey title and which depend on the owner's consent for their validity, such as deeds and mortgages) will not be registered. The Owner's Duplicate Certificate of Title will not be required when recording a voluntary instrument. Registration copies of mortgages will not be required when filing a voluntary mortgage or instrument.

Each voluntary instrument submitted for recording must contain the following language:

"Being and intended to be (part of) the same premises as registered under Certificate of Title # ____________. "

The name of the party of the first part in the voluntary instrument must be the owner of the property as shown on the Certificate of Title. If it is not, the instrument will not be accepted for recording, except where the instrument tendered for recording shows that the grantor or mortgagor is the

Heir(s) at law, or

Surviving spouse, or

Executor or administrator of the estate of the deceased owner, or

A referee, guardian, Committee, etc., and a certified copy of the death certificate, letters testamentary or of administration or other proof of designation is attached as an exhibit to the voluntary instrument.

A Referee's deed tendered for recording on or after January, 1997 in connection with a mortgage foreclosure action which commenced prior to that date, will be considered a voluntary instrument and will not require a Court order directing the Clerk to record.

The Certificate of Title will be checked to see if there are any "active" instruments which had been previously delivered to the Registrar's Office but which have not yet been filed, and if there are, they will be annexed to the voluntary instrument that is being recorded.

The voluntary instrument, Certificate of Title and the active instruments, after being assigned Reel and Page numbers, will be indexed into the FAIRTAX computer system. The date of record will be the recording date in the City Register's Office and the remarks column will refer to the fact that the instrument was transferred from Torrens and will give the Reel and Page number assigned to the Certificate of Title. The FAIRTAX computer will refer to the Certificate of Title by use of the abbreviation, "CERT.", and the date of record will be the date recorded in the City Register's office.

Instruments recorded in the City Register's Office after the initial transfer of the property to the City Register which satisfy, release, cancel, assign or modify, a mortgage, encumbrance, covenant and restriction, easement or judgment that was memorialized on the Certificate of Title must contain a statement that "the property was transferred to the City Register under Reel _____ Page _______, (which reel and page refer to the number assigned to the Certificate of Title)."

Until a voluntary instrument affecting a particular Torrens parcel has been presented for filing, any "adverse" instrument affecting such parcel will continue to be filed in the Torrens system until either a voluntary instrument is submitted for filing or December 31, 1999 (by which time all Torrens parcels must be transferred to the Register's Office), whichever is earlier.

It should be anticipated that the new procedure will experience some problems in its implementation, but we assume that they will be corrected as the transition process continues. In the interim, if you have any questions, please do not hesitate to contact Company Counsel.