In 2006, the Kentucky legislature passed a statute titled “exception for instruments lodged for record prior to July 12, 2006” to cure defects in mortgages with defective acknowledgments.(1) Prior to that statute, bankruptcy trustees were filing many actions to avoid mortgages whose acknowledgment clauses contained minor technical and clerical errors. After passage of the statute, courts were applying the statute only to save mortgages filed prior to July 12, 2006. This may seem reasonable, given the title of the statute.

The 6th Circuit Bankruptcy Appellate Panel has now issued a decision finding that this statute must also be applied prospectively – to mortgages filed on or after July 12, 2006. The court noted that the title of the statute is not part of the statute and is ignored in determining what the statute means. Looking at the statute, the court agreed with the amicus brief filed by the Kentucky Bankers Association and held that the statute applies to both a mortgage which “is” or “has been, prior to the effective date of this Act, lodged for record. . . .”(2) In this case the “is” makes all the difference.  The court ruled the curative statute must also be applied to save mortgages with defective acknowledgments filed on or after July 12, 2006 from attacks by bankruptcy trustees.
(1) Ky Rev. Stat Ann. section 382.270
(2) In re Pelfrey, 2009 Bankr. Lexis 3623 (6th Cir BAP November 9, 2009)