Laws known as recording acts are in effect in most states. Recording acts establish procedures for individuals to file copies of real property documents, such as deeds, liens, and mortgages. Recording acts also establish priority of real property ownership interests between individuals with competing claims.
How are Real Property Records Filed?
Real property records that affect title, or ownership, of property, are filed with a recording office. An individual who files a real property record must file that record in the county where the property is located. In such cases, the individual must file the document where the property is located, not where the person resides.
What is the Role of the Recorder’s Office?
When an individual brings a document to a recorder’s office for filing, the recorder’s office collects a recording fee for the filing. When the individual submits the fee, and any duplicate copies required to be filed, the recorder assigns a number to the document. The recorder also records the time and date of filing by “date-stamping” the document, which is applying a stamp containing the date and time. Then, the recorder enters the date-stamped document into the public record.
What is the Purpose of Recording a Real Estate Document?
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 to be aware of and have notice of the filing, since the person can easily look up the filing in the public records.
How Does Recording of Real Estate Documents Settle Ownership Disputes?
Recording laws provide rules for who “wins” when multiple people claim ownership to the property, or who claim a lien on the property. That is, the laws provide for priority of ownership of mortgages and deeds, and priority of ownership of liens on the property.
Under state recording laws, the date a document is recorded can be highly significant. Some state recording laws provide that, when two individuals each claim a lien, mortgage, or deed with respect to on a piece of real property, the person who records the lien, mortgage, or deed first, has priority over the other person.
This means the person who records first, has their lien, mortgage, or deed, legally recognized first. Other kinds of recording laws look at whether a person has constructive notice of a recording. Still other states look at both recording and constructive notice to determine who has priority of ownership.
What are the Three Types of Recording Acts?
There are three types of recording acts. These include notice statutes, race-notice statutes, and race statutes. Different states use different acts. Some states are “notice” states, while others are “race-notice” states, and others are “race” states.
“Race” recording acts are easy to describe. In a race state, if two people have a legitimate claim of ownership of property, the person who records the deed first, has a superior ownership claim over the other person.
Other states use ‘“notice” acts. Notice acts settle priority of ownership between a person who fails to record an ownership interest, and a person who, unaware of the other person’s interest, 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 when this situation may arise is when a person gives property to one person (A). A does not record the deed. Subsequently, the person gives the property to a different person (B). B pays a fair price for the property. B has no notice of A’s property interest, either constructive or actual knowledge, since A never recorded the deed. The “notice act” rule provides that B’s ownership interest will be recognized over A,’s, since at the time B purchased, B did not know of A’s interest.
Yet other states use “race-notice” acts. Race-notice acts are a combination of race acts and notice acts. Here is an example of a race-notice act at work: A person conveys property to A. A does not record their interest. Subsequently, the person conveys the same property to B, who pays a fair value. At the time B is deeded the property, B has no actual or constructive knowledge, since A did not record. Subsequent to B being deeded the property, A records A’s interest. B then records B’s interest. In a race-notice state, the “winner” must both take title without notice of the previous person’s deed, AND record first. A has priority of ownership; because B took title without notice, but recorded second.
Do I Need the Help of a Lawyer with Issues Involving Recording of Real Estate Documents?
If you intend to purchase or have purchased in interest in property, and seek to understand your recording rights and obligations, you should contact a property attorney. An experienced property lawyer near you can protect your interests by advising you on how to record your interest, and by explaining your state’s recording laws.