Ordinarily recordable documents should be recorded promptly

Law Offices of Fred M. Duman & Associates 2807 Castro Valley Boulevard Castro Valley, California 94546 Tel: (510) 537-3388 Fax: (510) 889-1114

Dear Mr. Duman:

My next door neighbor, who is elderly and not wealthy, recently loaned money to her grandson and his wife. She was given a "deed-of-trust" as security for the loan, but she has never recorded it.

I have been trying to explain to my neighbor that she should record her "deed of trust" in order to protect her money in the event her grandson and his wife fail to make their loan payments.

She is not listening to me, but she reads your column. What can you tell her about this subject?

E.K., Alamo

Dear E.K.:

I can, and will, tell your neighbor that she ought to record the deed of trust, immediately. Generally speaking, recording documents creates protection for the recording party, because it gives notice of the document to the public at large. The recording establishes a "priority" for the recording party and the recorded document is enforceable against subsequent parties, who may claim an interest in the property. Also, the recording of an instrument provides proof of the existence and the content of the document.

When an instrument affecting real property is properly recorded, it is presumed to give constructive notice of that document to prospective buyers and mortgagees of that particular land.

Although the failure to record a document will not necessarily, invalidate an unrecorded transaction, as between the parties to that transaction, an unrecorded document will not affect the the rights of subsequent "bonafide purchasers or encumbrancers for value", who may thereafter acquire an interest in the property, without knowledge of the earlier transaction. A subsequent purchaser or encumbrancer is entitled to rely on the county record and may not be bound by a document that is unrecorded.

A "bonafide" purchaser or encumbrancer is someone, who buys the property or, who loans "valuable consideration" and is secured by the real property, in good faith, and without notice or knowledge of anyone else's prior interest in the land. In general, a bonafide purchaser or encumbrancer is not charged with having "constructive" knowledge of real property interests, which have not been recorded. However, a purchaser or encumbrancer, who has actual knowledge of the unrecorded prior transaction would not be protected as a "bona fide" purchaser/encumbrancer.

In order for recordation to have the desired legal effect, the instrument must be completed and recorded properly at the office of the county recorder in the county where the property is located, and must also bear the seal and acknowledgment of a notary public. There are also other procedural requirements affecting the form and content of recorded documents.

The rules and procedures governing the recordation of documents can prove complex and confusing to the layperson. Hence, our readers having questions regarding this subject should promptly consult their lawyer, for specific guidance.

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