
Unrecorded Deed
An unrecorded deed refers to the situation where the title to a property, usually real estate, is not registered with the appropriate public records department. This record serves to notify the public of the sale of property, which in turn provides assurance of current ownership to any entity involved in transactions affected by the property, such as the issuance of a mortgage or a home equity loan, where the property serves as collateral. Most mortgage companies require prospective home buyers to conduct a title search and secure title insurance on the property to be purchased. An unrecorded deed refers to the situation where the title to a property, usually real estate, is not registered with the appropriate public records department. An unrecorded deed refers to the situation where the title to a property, usually real estate, is not registered with the appropriate public records department.

What Is an Unrecorded Deed?
An unrecorded deed refers to the situation where the title to a property, usually real estate, is not registered with the appropriate public records department.




Understanding an Unrecorded Deed
An unrecorded deed is a deed for real property that neither the buyer nor the seller has delivered to an appropriate government agency. Unrecorded deeds can present many issues for sellers (or grantors) and buyers (or grantees) such as proof of ownership and tax implications.
A deed transfers specific rights of ownership to a piece of real property between two parties. Most jurisdictions require that sellers file an original deed with a government agency that maintains such records in a given municipality. In the United States, this often takes place at the county level. This record serves to notify the public of the sale of property, which in turn provides assurance of current ownership to any entity involved in transactions affected by the property, such as the issuance of a mortgage or a home equity loan, where the property serves as collateral.
Failure to record a deed effectively makes it impossible for the public to know about the transfer of a property. That means the legal owner of the property appears to be someone other than the buyer, a situation that can have serious ramifications. A buyer, for example, could encounter great difficulty in selling, insuring, or obtaining loans for a property if financial institutions and insurance companies cannot establish clear title. Worse, an unrecorded deed creates potential for a seller to engage in a subsequent sale of the same property to yet another buyer.
Most mortgage companies require prospective home buyers to conduct a title search and secure title insurance on the property to be purchased. The title search examines existing public records to ensure a clean transfer of title, a process that could be disrupted by outstanding liens or past-due property taxes.
Self-financed purchasers would do well to consider doing a title search and securing title insurance for any property they want to buy.
Title insurance offers a further backstop by protecting the insurance holder from any losses due to deficiencies in the title not turned up by the title search. Buyers should note that lenders often require a separate title insurance policy that protects only the lender's interest in the property. Therefore, buyers may want to purchase a policy covering their interests as well.
Suppose, for example, that a homeowner self-funded the purchase of a home with an unrecorded deed and the seller neglected to close out an existing second mortgage. If the seller were to default on the loan, the bank would file a lien against the collateral, which would still appear to belong to the seller because of the unrecorded deed.
Related terms:
Certificate of Title
A certificate of title is a state or municipal-issued document that identifies the owner or owners of personal or real property. read more
Collateral , Types, & Examples
Collateral is an asset that a lender accepts as security for extending a loan. If the borrower defaults, then the lender may seize the collateral. read more
Deed
A deed is a signed legal document that transfers the title of an asset to a new holder, granting them the privilege of ownership. read more
Home Equity Loan
A home equity loan is a consumer loan secured by a second mortgage, allowing homeowners to borrow against their equity in the home. read more
Mortgage
A mortgage is a loan typically used to buy a home or other piece of real estate for which that property then serves as collateral. read more
What Is Property?
Property is anything tangible or intangible over which a person or business has a legal title. Discover more about the term here. read more
Register of Deeds
Register of deeds refers to the depository for maintaining records on real estate deeds, birth certificates, and other documents. read more
Special Warranty Deed
A special warranty deed only warrants against problems in the property title that occurred during ownership of the property. read more