Real estate and property law covers a wide variety of topics, including:
- Using; and
- Leasing residential or commercial property.
Some of the most common real estate and property law disputes involve:
- Establishing property title and boundary lines;
- Landlord and tenant disputes; and
- Zoning or land use issues.
Real estate and property law also addresses the financial aspects of real property, such as:
Most localities have a planning or zoning committee tasked with regulating land use. When such a committee passes a zoning ordinance, all properties within that locality must adhere to them unless one of the following exceptions applies:
- Variance: If the variance is granted, the property will be excused from conforming with the zoning ordinance. The zoning committee will have discretion over whether or not to grant the request for a variance; and
- Non-Conforming Use: When a new zoning ordinance prohibits using property in a specific way, owners that have already been using their property in that manner will most likely be able to do so despite the new ordinance. This is similar to the concept of being “grandfathered in.”
What Is Recording Real Estate Documents?
Most states have laws in place which are known as recording acts. This will be further discussed later on, but in short, recording acts establish procedures for people to file copies of real property documents. These documents include deeds, liens, and mortgages. Recording acts also establish priority of real property ownership interests between people with competing claims.
Real property records that affect title or ownership of property are filed with a recording office. The record must be filed in the county where the property is located, and not where the person resides.
The recorder’s office collects a recording fee for the filing and any duplicate copies required to be filed, after which the recorder assigns a number to the document. The recorder also records the time and date of filing by “date-stamping” the document and enters the date-stamped document into the public record.
What Is The Purpose Of Recording Real Estate Documents?
The act of recording a document gives what is called “constructive notice” to the public that the document has been filed. Constructive notice means that when the document is filed, the public is deemed aware of and has notice of the filing since a person can easily look up the filing in the public records.
Some states have real estate “notice” statutes for recording property ownership, which will be further discussed below. Simply put, these notice statutes invalidate a buyer’s property ownership if they receive notice that another owner has purchased the property from the same seller before their purchase. However, if the buyer does not have notice of the prior conveyance, they are considered the owner because they are deemed to be a bona fide purchaser.
Courts qualify notice as one of three types:
- Actual Notice: The buyer has acquired actual knowledge, either by word of mouth or by seeing the possession of property that a previous transfer of ownership has occurred;
- Constructive Notice: The buyer has constructive knowledge when the prior conveyance has been recorded since the buyer can easily look up this information with the county recorder; and
- Inquiry Notice: The buyer is aware of some fact that would put any other reasonable person on notice and would prompt them to investigate the matter further.
Even if a document is defective on its face or is defectively recorded, it would still constitute constructive or inquiry notice. This is because the buyers are charged with the concept of good faith to make a reasonable investigation when their suspicions are aroused.
In states that have recording acts that do not require notice, a buyer that purchases the property can still be considered the true owner despite knowing about another buyer. This is because a race statute in a recording act grants ownership to the first person that records their conveyance, regardless of who first bought the property. This is further discussed below.
How Does Recording Real Estate Documents Settle Ownership Disputes?
Recording laws provide rules for who “wins” when multiple people claim ownership of the property or claim a lien on the property. This means that the laws provide for priority of ownership of mortgages and deeds and the priority of ownership of liens on the property.
According to state recording laws, the date a document is recorded can be considerably significant. This is because some state recording laws provide that when two individuals each claim a lien, mortgage, or deed concerning a piece of real property, the person who records the lien, mortgage, or deed first has priority over the other person.
Other recording laws consider whether a person has constructive notice of a recording. In contrast, other states still consider recording and constructive notice to determine who has priority of ownership.
There are three types of recording acts, and different states use different acts. Some states are “notice” states, while others are “race-notice” states, and others are “race” states.
In a race state, if two people have a legitimate property ownership claim, the person who records the deed first has a superior ownership claim over the other person. It could be said that they “won the race” to record the deed before the other person.
Notice acts settle the priority of ownership between a person who fails to record an ownership interest, and a person who is unaware of the other person’s interest and purchases the property. In notice states, the rule is that the second person’s claim of ownership is superior to the first person’s claim.
An example of this would be when a person gives property to person A, who does not record the deed. Subsequently, the person gives the property to person B, who pays a fair price for the property. Person B has no notice of person A’s property interest, whether constructive or actual knowledge, because person A never recorded the deed. The notice act rule states that person B’s ownership interest will be recognized over person A’s, since at the time that person B purchased, they did not know of person A’s interest.
Race-notice acts are a combination of race acts and notice acts. An example of this would be if a person conveys property to person A, and person A does not record their interest. Subsequently, the person conveys the same property to person B, who pays a fair value. When person B is deeded the property, they have no actual or constructive knowledge because person A did not record. After person B is deeded the property, person A records their interest, and person B then records their interest. In a race-notice state, the “winner” must both take the title without notice of the previous person’s deed, AND record first. Person A has priority of ownership because person B took the title without notice but recorded it second.
Do I Need A Lawyer For Help With Recording Real Estate Documents?
Contact a property attorney if you are purchasing or have purchased the property and want to understand your recording rights and obligations. Your property lawyer will be familiar with your state’s specific laws and guide you regarding your legal rights and options under those laws. Additionally, your lawyer will also be able to represent you in court, as needed, throughout the process.