## Facts

- Charles T. Bowling owned residential real property in Oxford, Ohio.
- Bowling executed a promissory note and a mortgage securing the note in favor of the lender later succeeded by Mortgage Electronic Registration System (MERS).
- The mortgage was recorded and contained a facially regular notarial certificate stating Bowling acknowledged execution in the notary’s presence.
- Cathy J. Bowling did not sign the note or mortgage.
- The Bowlings filed a Chapter 7 petition.
- The Chapter 7 trustee filed an adversary proceeding to avoid the mortgage, alleging it was defectively executed under Ohio mortgage formalities because Bowling neither signed nor acknowledged in the notary’s presence.
- The trustee supported the claim with Bowling’s affidavit stating the notary was not present at the signing.
- MERS moved for summary judgment; the trustee filed a cross-motion for summary judgment.

## Issues

1. Whether the mortgage was defectively executed under Ohio Rev. Code § 5301.01 because the mortgagor did not sign or acknowledge before the notary, despite a facially proper acknowledgment clause.
2. Whether, as of the bankruptcy petition date, the trustee could avoid the mortgage under 11 U.S.C. § 544(a) as a hypothetical bona fide purchaser or judicial lien creditor.
3. Whether Ohio Rev. Code § 5301.234’s recorded-mortgage presumption of proper execution barred avoidance, including whether it could be applied to impair the trustee’s § 544(a) rights.

## Decision

- The court denied MERS’s motion for summary judgment and granted the trustee’s cross-motion.
- The court found the mortgage was defectively executed because the notary was not present and no valid acknowledgment occurred.
- The court held the trustee could avoid the mortgage under § 544(a) because, under Ohio law, a defectively executed mortgage is ineffective against a bona fide purchaser or lien creditor.
- The court held Ohio Rev. Code § 5301.234 did not save the mortgage against the trustee’s avoidance action in this bankruptcy case.

## Legal Principles

- Under Ohio Rev. Code § 5301.01, a mortgage must be properly acknowledged before an authorized officer; if the mortgagor neither signs nor acknowledges in the officer’s presence, the mortgage is defectively executed.
- A facially regular notarial certificate does not conclusively establish a valid acknowledgment where uncontroverted evidence shows the notary was not present.
- Under 11 U.S.C. § 544(a), a Chapter 7 trustee may avoid a mortgage that state law would render ineffective against a hypothetical bona fide purchaser or judicial lien creditor as of the petition date.
- State curative or presumption statutes cannot be applied in a way that retroactively defeats the trustee’s avoidance rights that attach at case commencement under federal bankruptcy law.

## Conclusion

The bankruptcy court held that a recorded Ohio mortgage lacking an actual acknowledgment was defectively executed and avoidable by the Chapter 7 trustee under § 544(a), and that Ohio’s statutory presumption of proper execution for recorded mortgages could not be used to defeat the trustee’s petition-date avoidance rights.


In re Bowling, 314 B.R. 127 (Bankr. S.D. Ohio 2004)