A home purchase is a public transaction.
- Recording means you are filing your mortgage/ deed with the county
- The document will then be stamped with a date and time, it is usually uploaded for the public
- When signing your final documents at closing you may have to pay recording fees
It can potentially lead to ownership disputes if you fail to properly record these documents. The financial and legal results can be devastating. Your lender will not give you the keys until the recording is complete. If your county recording office fails to record on time, it can hold up your move-in date.
Real Estate Recording 101
Attorney Andrew Maguire says, “recording is simply the process for making deeds and other real estate documents part of the public record for your local county.” There are over 100 different types of documents that can be recorded. They can include foreclosures, mortgages, deeds, easements, licenses, fees, and subdivision declarations. Depending on the nature and number of documents, these recording fees will all vary.
The title company or attorney that you use will deliver all of the documentation to the county recorder’s office. Once they have the documents, a county clerk, recorder of deeds, or another official will handle the recording.
Are Recording Fees Expensive?
According to Home Buying Institute, the national average for recording fees is $125. In Alaska, the fees can range from $0 to certain percentages of the home price, which can cost thousands. Some states also combine real estate transfer taxes with their recording fees, while other states separate them.
Why Recording Is Important
The documents will create a chain of titles when recorded. Your property will then be traceable to verify a history of ownership. This information will then be made available to the public. This is helpful to prevent fraud, like people online who try and sell a property they claim to own.
Legal documents that affect the title are very important and need to be recorded. It’s one way of letting the public know about claims of rights to real estate. A buyer might not be obligated to honor those claims without a recording. It also provides an official record of ownership, so if the owner loses their original deed, it’s not devastating.
Real estate recording has its pros and con. It gives the new owners legal protection for their newly acquired property. On the other hand, it allows your information to be made available to the public. Even a tax lien against you can be seen by anyone who can do a quick search.
Does a Recording Protect You From Anything?
There can be bad outcomes if there is a failure to record the deed to your new home. Not recording the deed can make it impossible for you to get title insurance or borrow from a lender. It can also bring up issues regarding the validity of property ownership, which can be the worst outcome.
Let’s say the seller conveyed the deed to both you and another buyer. Now there are two different buyers who have a claim to the property. If you didn’t record the deed, buyer two would have a better chance of being awarded the property in most cases.
Is there any good news? Since your lender will require you to have title insurance, this will protect you if a title has a defect, lien, or claim of ownership before and after you buy. If there is a title defect, it’s up to the title company to either fix the issue or pay you for damages. Even with title insurance, it’s still important for you to get a recording to avoid any hassle.
Rules for Recording
Every state has its own recording rules. Recording fees are also different for individual counties. Usually, recording fees are very small and not a huge burden in the home-buying process.
Some states will require the attorney who prepares a recording document to be named on the document. Other states require the documents to be notarized. Many states require that the real estate tax parcel number be listed on the deed.
The lender you used for your mortgage may be required to record a lien release when you pay off your mortgage. It’s possible this step can get glossed over, but it’s important if you ever want to borrow against or sell your property in the future.
When It’s All Said and Done
Keep in mind that just because you have a real estate recording it, doesn’t mean your ownership is established. The recorded deed is there to resolve any disputes between parties regarding the claims to your property. It’s a common misconception that you obtain ownership rights when the deed is made public. It is not correct, having the deed establishes ownership.
A chain of title is established when real estate documents are recorded. It can also notify others that there may be claims against your title. These claims can be a tax lien, lawsuit, or an easement issue.
If there is another property trying to claim rights to your property, a court can look up how each party fits into the chain of title. The court will look at the record of ownership from the validly recorded deeds.
If you ever have any title issues, you can go to court and file to “quiet” the title. This will resolve the problems and establish your rights as the owner- dismissing any other claims.
