Properly Recording Your Real Estate Transactions Is Critical

Real Estate Investing Tips

Because buyers of real estate are ‘charged with notice,’ it is important that they actually receive such notice. Deeds and the like need to be recorded in the right place for the public to see. Mistakes are sometimes made in a county recorder’s office. It is your responsibility to make sure everything is recorded in the right place so notice can be accurately provided to future buyers.

In a recent Minnesota case, the legal description on a mortgage document had the number ‘13’ mistaken for the letter ‘B.’ (You can just imagine the harried assistant reading their boss’s too close together ‘13’ as a ‘B’!) When the document was recorded it didn’t track with the chain of title for the specific parcel and so no notice was imparted. As such, a bankruptcy trustee was able to avoid the mortgage.

Imagine yourself in this case. You have sold one of your properties, taking 10% down and a 90% note. You prepare the mortgage and deed of trust documents but because of a typo, the documents aren’t recorded in the right place. Later, a prospective buyer does not have notice of your first deed of trust. It isn’t on the public record. They buy the property as bona fide (or good faith) purchasers. They can get the property free from your first deed of trust, which is now void. Yikes!

The lesson is to make sure that your recordings are done property. Mistakes do happen. Double check the public records to make sure your deeds and liens are recorded in the right place and in a way that gives notice to all later parties.

About the Author

Garrett Sutton, Corporate Attorney & AuthorGarrett Sutton, Esq., author of Start Your own Corporation, Run Your Own Corporation, Loopholes of Real Estate, The ABC’s of Getting Out of Debt, Writing Winning Business Plans and Buying and Selling a Business in the Rich Dad Advisors series, is an attorney with over twenty-five years experience in assisting individuals and businesses to determine their appropriate corporate structure, limit their liability, protect their assets and advance their financial, personal and credit success goals.

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