importance of recording a deed

The Importance of Recording a Deed

When it comes to real estate transactions, recording a deed may seem like a mundane task amidst the excitement of buying or selling property. However, this seemingly routine process holds immense significance in safeguarding property rights and ensuring legal clarity. Understanding the importance of recording a deed is vital for buyers in navigating the complexities of property ownership. In this article, we delve into the crucial aspects of recording a deed and why it should never be overlooked.

Establishing Ownership and Legal Clarity

Many people understand contracts as becoming enforceable as soon as they sign a contract with another party. In this instance, both parties are bound by the promises made in the contract and can take legal recourse in case the other party violates one of the provisions in the agreement. When it comes to buying property, the person selling/conveying the land (the grantor) and the person buying/obtaining the land (the grantee) must lawfully execute a deed by properly describing the land, naming the parties to be bound to the document, signing the deed, delivering the deed to the grantee, and the grantee must accept the deed to be enforceable.

Protection Against Fraud and Third-Party Claims

Although a properly executed deed is enforceable between the grantor and grantee, the work does not stop here. To properly pass title from grantor to grantee, the deed must be recorded in the respective county where the property is located to put all other third parties on notice of the deed’s existence. Recordation achieves multiple goals.

First, a recorded deed prevents the grantor from improperly trying to sell the land described in the deed to a third party even though the grantor already sold that same land to the grantee. For example, let’s think of Bob who sells his property located in Texas to Jared who currently lives in Massachusetts and is planning on moving to Texas in 6 months to live on his newly purchased property from Bob. Jared and Bob properly execute a deed to the property. Jared does not record the deed. Bob knows Jared does not record the deed and decides to also sell this same property to Anna without Jared’s knowledge. Anna performs her due diligence and looks into the land before purchasing the property. She does not know about the previous transaction between Bob and Jared, she visits the land and sees there is no one living on the land and checks her local property records where Jared’s deed does not show up. Accordingly, Anna has no notice of the prior deed between Bob and Jared and would be considered a bona fide purchaser if she decides to purchase the land from Bob and record her own deed. Anna’s deed would be superior to Jared’s deed even though Jared entered into his deed first. In this scenario, Jared would have been saved if he recorded his deed in the first place.

Second, recording a properly executed deed allows the grantee to sell the property to third parties with proof that the grantee had title to the property sufficient to convey to a third party in the first place. This layer of security protects the grantee against all other parties who purport to have superior title over the property in an effort to thwart the grantee’s otherwise valid effort to sell the land.

Notice to Potential Buyers

Recording deeds saves the buyer a lot of time, money, and stress that accompanies the effect of failing to record a deed. Accordingly, this vital step should be completed as soon as practicable after the deed has been accepted by the buyer to achieve security in title after purchasing property. It is not merely a procedural formality but a fundamental step in protecting property rights and ensuring legal clarity in real estate transactions. From establishing ownership to providing notice to interested parties, the importance of recording a deed cannot be overstated. Understanding the significance of this process is essential for navigating the complexities of property ownership and safeguarding your investment.

Written by Arieana Martinez, Attorney at KMD Law