Deeds and mortgages are recorded for two main purposes: to protect an owner’s or lender’s interest in the property and to put others on notice of those interests.
A lender is interested in recording the mortgage because it’s the document that ties the collateral to the loan; usually, this is in the context of a bank lending money for the purchase of the home.
The lender’s interest is its financial investment in the property, but, if the borrower defaults on the loan, then the lender can step in and reclaim the property. Thus, the lender wants to make sure that no one else lays claim to the property if the borrower should default on any other loans.
Typically, if the mortgage is recorded before any other judgments, liens, or mortgages, and especially if it’s a purchase money mortgage (another topic altogether), then the mortgage is first in line to be paid out in the event of bankruptcy or foreclosure. A recorded mortgage also serves as notice to a potential buyer to ensure the mortgage is discharged before closing.
A homeowner taking title to the property either has paid up front for the property or will be making significant payments over a period of years. He needs to be assured that no one else is holding title to his investment.
Under rare circumstances, a person may deed the same parcel, or part of a parcel, to more than one person — by fraud or mistake, for example. Property that is not recorded as having been deeded will not be reflected in a title search to put a potential buyer on notice. Since legal title goes to the bona fide buyer who records first, a deed should be recorded immediately after closing.
Deeds and mortgages, among plenty of other documents, are recorded at the clerk’s office of the county in which the subject property is located. County clerks’ offices are usually home to the satellite offices of title search companies. If you have any questions about recording deeds or mortgages, the clerk’s office is a good place to start.