Recording, notice, chain of title, and title insurance

Recording and notice

Recording places an instrument in the public real property records where the land is located. A valid deed transfers an interest through execution, delivery, and acceptance; recording generally protects against competing claims rather than creating the transfer between the parties. Recording cannot validate a forgery or prove ownership.

Actual notice is direct knowledge. Constructive notice is knowledge the law attributes to a person, commonly from proper recording in the chain of title. Inquiry notice arises from facts that call for reasonable investigation, such as occupancy by someone other than the seller. Recording statutes vary; do not assume the first document recorded necessarily wins.

Following the chain

The chain of title is the sequence of ownership transfers to the current owner. A title search follows those links and checks mortgages, easements, judgments, and releases. Missing links or unresolved adverse claims can create a cloud on title. An abstract summarizes relevant recorded documents; an attorney's title opinion evaluates their legal effect. Neither is insurance. Marketable title is reasonably free from doubt and litigation risk, not necessarily free of permitted restrictions.

Allocating title risk

Title insurance protects against covered title losses, usually arising from events before the policy date. Searches can miss hidden defects such as forgery or an undisclosed heir. An owner's policy protects the insured owner's interest. A lender's policy protects the lender's security interest and does not replace owner coverage. A one-time title premium differs from annually renewed insurance against future physical damage.

A commitment conditionally promises a policy. Requirements must be satisfied for issuance, such as obtaining a lien release. Exceptions identify particular uninsured matters; exclusions are broader policy limits. Review these with the amount and conditions of coverage. Texas's resale contract, TREC No. 20-19, paragraph 6, provides for an owner's policy subject to exclusions and listed exceptions.

Tracing ownership, addressing defects, and obtaining coverage serve different purposes. A policy allocates covered financial risk; it does not erase easements or cure defective deeds.