HOW to lose $1,729,631.00
Several clients (before hiring me) lost a combined total of $1,729,631 because (for whatever their reason) they failed to file their real estate documents publicly with the county recorder. Their property rights, as evidenced by various deeds, trusts, assignments, land contracts, mortgages, and liens—simply went unnoticed. Most of the properties were lost to the taxing authorities or through foreclosure because the clients were never notified of a property auction. Other properties were sold or mortgaged to third parties who had no idea that my clients also had prior property claims. Whatever the cause, $1.7 million is an alarming figure when the solution against such loss is so easy.
Multiple transfers. Nationwide, state property laws encourage, but do not require anyone with property interests to record them in their county recording office. Recording real estate transfer documents protects against situations where the same property interest is transferred multiple times (i.e., the seller grants a mortgage for the same property to two different lenders). State laws all but determine which party’s interest prevails based upon when a deed, mortgage or other documented interest is filed with the recording office. The laws predominantly favor those who properly record their property interests over those who don’t.
Notice to the world. Recording real estate documents into a property’s “chain of title” provides “notice to the world” (known as “constructive notice”) of one’s property interest. By not appearing in the title chain, interested parties will not receive legal notices concerning the property, such as tax notices or lien filings. More importantly, in almost all instances, good-faith purchasers, lenders and other lien holders who are unaware of prior outstanding but unrecorded property interests have superior claims when challenged by property owners who failed to record their property interest.
Who and what should be filed. The list is not exhaustive, but generally, all real estate deeds need to be filed. Where land contracts are concerned, it is important that the buyer have a Memorandum of Land Contract recorded. Too often is the case where a seller has sold a property out from underneath a land contract buyer, all because no evidence of the sale was ever recorded with the county. Most title or closing agents will file real estate transfer documents as part of their business for a small fee. Lastly, mechanic liens, judgment liens or claim of liens against a property need to be recorded on time to be effective. If you are unsure about filing requirements, contact a real estate attorney.
Conclusion: Show Up! Remember, in order to protect your property interests against title claims or loss, it’s important that your real estate documents show up in the public records 100% of the time.
About the Author: Since 1990, attorney David Soble has represented lenders, loan servicers, consumers and business owners in real estate, finance and compliance matters. For over 25 years, he has been involved in thousands of real estate transactions and has successfully negotiated and saved millions for his business and consumer clients.
Disclaimer: You should not rely or act upon the contents of this article without seeking advice from your own, qualified attorney.