Unrecorded Deed

Unrecorded Deed: Overview, Risks, and How to Protect Yourself

Key takeaways
* An unrecorded deed is a deed that transfers ownership of real property but has not been filed with the local public records office.
* Failure to record can make the transfer invisible to third parties, creating problems for resale, financing, insurance, and tax records.
* Recording statutes (race, notice, race-notice) determine priority among competing claims and vary by state.
* Buyers should obtain a title search and title insurance and record the deed promptly; sellers should ensure liens are cleared before transferring title.

What is an unrecorded deed?
An unrecorded deed is a legal instrument that passes interest in real property from a grantor (seller) to a grantee (buyer) but has not been submitted to the government office that keeps land records (usually a county recorder or register of deeds). Recording is not always required to make the deed legally effective between the parties, but it provides public notice of the transfer and establishes priority against later claims.

Why recording matters
* Public notice: Recording gives constructive notice to the world that ownership has changed. Without it, third parties may reasonably rely on older recorded records.
* Priority: In many jurisdictions, the first party to record may have superior rights over later purchasers or lienholders, depending on local recording laws.
* Practical consequences: An unrecorded deed can make it hard to:
– Sell the property (buyers and lenders require clear title)
– Obtain a mortgage or home equity loan
– Obtain title insurance
– Resolve tax or billing issues
* Risk of double sale: A seller could fraudulently or mistakenly sell the same property to another buyer who records their deed first.

Common examples
* Self-financed purchase with no recording: A buyer pays cash to a seller, but the seller or buyer fails to record the deed. If the seller later defaults on an old mortgage, a lender could place a lien on the property, and the recorded records will still show the seller as owner, creating a lien against the property in the seller’s name that can disrupt the buyer’s ownership claims.
* Sequential sales: A seller transfers the property to Buyer A but does not record. Seller then transfers the property to Buyer B, who records. If recording statutes favor the first recorder, Buyer B may appear to have priority even though Buyer A received the earlier deed.

How recording statutes affect priority
States follow different rules to resolve competing claims:
* Race: The first person to record wins, regardless of notice.
* Notice: A subsequent purchaser who buys without notice of an earlier unrecorded interest wins even if they don’t record first.
* Race-notice: A subsequent purchaser wins only if they both took without notice of the earlier interest and recorded first.
Knowing your state’s rule is important when evaluating risk from an unrecorded deed.

How to protect buyers and sellers
For buyers (grantees)
* Insist on a title search before closing to reveal liens, judgments, and prior claims.
* Obtain owner’s title insurance as well as any lender-required policy.
* Record the deed immediately after closing. Closing agents or attorneys typically handle this.
* Use escrow or a closing agent to ensure documents are properly prepared and recorded.

For sellers (grantors)
* Pay off or obtain releases for mortgages and liens before transferring title.
* Provide clear, recorded evidence of any lien releases or payoff statements.
* Cooperate with the buyer and closing agent to ensure the deed is recorded promptly.

What to do if you discover an unrecorded deed
* If the deed was delivered but never recorded: File the original deed with the recorder’s office as soon as possible; provide affidavits or supporting documents if required.
* If a recording error occurred (e.g., wrong legal description): Execute and record a corrective deed or affidavits as instructed by a title professional.
* If the deed was forged, never delivered, or a dispute exists: Consult a real estate attorney. Remedies may include quiet title actions, reformation, or litigation.
* If you have title insurance: Notify the insurer—coverage may apply for losses caused by unrecorded defects or competing claims.

Recording process (typical steps)
1. Prepare the deed in the required form (often done by an attorney or title company).
2. Sign and, where required, notarize the deed.
3. Submit the original deed to the county recorder or register of deeds with any required transfer tax forms or fees.
4. Confirm recording and obtain a stamped recorded copy for your records.

Conclusion
Recording a deed is a simple but crucial step that protects property ownership and prevents disputes. Buyers should insist on title searches and title insurance and make sure deeds are recorded immediately. Sellers must clear liens and cooperate in recording. If an unrecorded deed or competing claim appears, consult a title professional or attorney to resolve the issue promptly.