Texas Recording Statutes
By: R. Scott Alagood
Recordation is not necessary to give a document its intended legal effect between the grantor and grantee. A valid real estate document must contain the following: identification of the parties; execution by the party against whom enforcement is sought; identification of the land; words of conveyance; and delivery to an accepted by the grantee.
So why record? First, recordation of a real estate document creates a presumption that the document was executed for the consideration stated and that the document has been delivered to the grantee with the grantor’s intent to convey the property. Second, and more importantly, recordation acts as notice to all of the existence of the document from the time and date it was recorded regardless of a party’s actual knowledge. The “notice” provided by recordation establishes the priority of a recording party’s interest in the same property over a subsequent holder of a competing interest. Failure to record will allow a subsequent “bona fide” or “innocent” purchaser to obtain a superior claim to the same property.
A “bona fide” purchaser is one who has acquired an interest in property in good faith, for valuable consideration, and without actual or constructive notice of any adverse interest. A bona fide purchaser takes its interest free of any other interest of which it had no actual or constructive knowledge. By recording the document, the grantee protects itself against a bona fide purchaser. By recording the document, the grantee protects itself against a bona fide purchaser. Recordation is “constructive notice” to all of the existence of that document and its contents, and creates an irrefutable presumption that a subsequent competing interest holder had knowledge of the adverse interest. By recording the document, a competing interest holder may never become a bona fide purchaser.
For example, on January 1, 2014, Grantor sells Greenacre to Grantee 1 for $10,000.00. Grantee 1 fails to record his deed. On February 1, 2014, Grantor sells Greenacre to Grantee 2 for $10,000.00. Grantee 2 is a bona fide purchaser. As between Grantor and Grantee 1, Grantee owns title to Greenacre. However, as to Grantee 2, Grantee1 loses his interest in Greenacre because Grantee 2 is a bona fide purchaser. Had Grantee 1 simply recorded his deed prior to February 1, 2014, Grantee 2 would have been on “constructive notice” of Grantee 1’s prior recorded deed. It wouldn’t matter how much Grantee 2 paid, or if Grantee 2 purchased in good faith, or if Grantee 2 lacked actual knowledge of Grantor’s prior transaction. Grantee 1’s recorded title to Greenacre will prevail over that of Grantee 2.
The purpose of the recording statutes is to protect innocent grantees and lenders from prior unrecorded instruments of which they have no knowledge. The recordation process is extremely simple, and the county clerks are very knowledgeable and helpful in the recordation process.
Before a document may be recorded, it must be signed and acknowledged before a notary public (or other public official authorized to certify an acknowledgment), acknowledged in the presence of witnesses or sworn to by way of a curate, otherwise proved according to law. Additionally, where an instrument transfers an interest to or from an individual, the document must contain the following notice at the top of its first page:
NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.
However, the failure to include this notice may not be the sole reason that a clerk refuses to file the instrument.
The Texas recording statutes provide protection for parties acquiring interests in real estate. The process if easy and the clerks are helpful. Make sure to protect your real estate by recording your documents as soon as possible after the conclusion of a transaction.