DOT recorded in wrong county!

14 Replies

New here to BP and note investing, and getting baptized by fire. What a pickle I am in. I need advice!


I am the lender on a $50K note that began in early 2017. The note listed a property in its text, but it was not secured. I know that was not wise, but I did correct course: about three months ago, the amount was secured by a deed of trust, but the title company recorded the DOT in the WRONG COUNTY. I just found this out yesterday. I suppose I am not secured after all.

In the meantime, things have gone sour with my borrower; he hasn’t paid me in four months. He is ducking me and being intentionally obtuse. I suspect bad faith on his part if I don’t take action.

As far as he knows, the deed is recorded and he is on the hook to eventually pay me. But if I want to foreclose, I assume the deed of trust must be recorded in the correct county. However, the request to sign a new DOT would alert him that I don't have any leverage. I expect with that knowledge that he would then disappear entirely.

If it matters, the deed was supposed to be a second lien and this is in Missouri. If I could foreclose, yes, there is enough room for me to made whole, even as second lien.  

Is there anyway that I can either get this recorded in the correct county without alerting the borrower? Or is there an E & O insurance the title company has to cover me for their mistake? It’s not my fault the title company recorded the deed in the wrong county.

I haven’t started firing salvos at the borrower or the title company yet. I am coming here first for wisdom. Thanks!

I am no expert but my thinking is that the title company may be responsible to cover any/all cost related to their negligence, but I would strongly consider talking to an attorney and some friends and/or some other noteholders to see their take on your situation... the last thing you want to do is say something wrong and/or do things that are unnecessary/ not your responsibility 

@Tom Gimer  

Finally, some good news. Tom, is this a universally accepted practice in all states or counties to re-record a document without a hassle?

If there is a lien put on the property between the erroneous recording and this re-recording and my lien is now third or further down, would I then take this up with the title company? 

@Larry Bowers Definitely take this up with the title company. You should be able to hit their E&O Insurance for this.

Rerecording in the correct county shouldn't require any additional signatures. The document speaks for itself.

As far as priority is concerned, this is a matter of state law. Not all states are pure race recording states. For example, 

https://scholar.google.com/scholar_case?case=64588... - "A mortgage recorded in the wrong county has no more effect than an unrecorded mortgage.[5] Such a mortgage is good as between the parties irrespective of recording[6] and only need be recorded as required by Colo.Rev.Stat. § 20-1-1 (1953) to be effective against creditors and third persons having liens enforceable by execution, attachment, or contract acquired during the time when the mortgaged property remained in possession of the mortgagor.[7] Colorado has further held that a purchase money mortgage has preference over other claims or liens through the mortgagor even though prior in time.[8]"

I am not a lawyer and this is not legal advice.


@Tom Gimer In most race recording jurisdictions, a certified copy is the equivalent of the original for the purposes of legal proceedings and rerecording. In jurisdictions that haven't formally adopted a race recording statute, this may be more of a gray area (see Connecticut).

@Hal Thompson

What about Missouri? Is that one of the "race recording states"? 

And IAMNAL but:

For this quote you put about Colorado, am I interpreting it correctly that the intent to record the DOT counts for something...that the lien position would be the same as if were recorded in the correct county?

As long as the creditor brings the error up prior to the sale, the DOT will fall into the seniority positon place if it were recorded correctly?

Or am I way off? 

Originally posted by @Larry Bowers :

New here to BP and note investing, and getting baptized by fire. What a pickle I am in. I need advice!


I am the lender on a $50K note that began in early 2017. The note listed a property in its text, but it was not secured. I know that was not wise, but I did correct course: about three months ago, the amount was secured by a deed of trust, but the title company recorded the DOT in the WRONG COUNTY. I just found this out yesterday. I suppose I am not secured after all.

In the meantime, things have gone sour with my borrower; he hasn’t paid me in four months. He is ducking me and being intentionally obtuse. I suspect bad faith on his part if I don’t take action.

As far as he knows, the deed is recorded and he is on the hook to eventually pay me. But if I want to foreclose, I assume the deed of trust must be recorded in the correct county. However, the request to sign a new DOT would alert him that I don't have any leverage. I expect with that knowledge that he would then disappear entirely.

If it matters, the deed was supposed to be a second lien and this is in Missouri. If I could foreclose, yes, there is enough room for me to made whole, even as second lien.  

Is there anyway that I can either get this recorded in the correct county without alerting the borrower? Or is there an E & O insurance the title company has to cover me for their mistake? It’s not my fault the title company recorded the deed in the wrong county.

I haven’t started firing salvos at the borrower or the title company yet. I am coming here first for wisdom. Thanks!

 Just out of curiosity were there any signs that may of shown that the borrower would default on his payments?

How did this guy convince you to lend to him?

Originally posted by @Larry Bowers :

@Tom Gimer  

Finally, some good news. Tom, is this a universally accepted practice in all states or counties to re-record a document without a hassle?

If there is a lien put on the property between the erroneous recording and this re-recording and my lien is now third or further down, would I then take this up with the title company? 

You should be able to do this without hassle... I would call the clerk in the correct county to see if they will require you to pay recording fees and taxes again. If so, yes I would look to whoever messed this up for the funds.

Regarding lien priority... that is a local issue you will need to research but also keeping in mind if you entrusted someone to do this and priority is now an issue, there could be some liability there. Good luck.

@Elvis Vasquez

I was newbie that was schmoozed by the borrower. I was eager to enter the fray and didn't underwrite these so well. He did make the payments for the first 8 months. Then he went dark. 

@Tom Gimer

Title company recorded it yesterday afternoon, hooray. Title company is also doing a updated title report for free. If another lien is found, that is higher than mine because of the delay, that would be their E & O insurance? Seems like a textbook case to me. 

@Larry Bowers

Freyermuth runs the DIRT real estate listserve. https://www.refinblog.com/tag/freyermuth/

I have found he generally knows what he's talking about.

Good primer on pure notice, pure race, and race-notice jurisdictions: http://www.law.missouri.edu/freyermuth/ret/fall201...

Missouri appears to be a pure notice jurisdiction. Therefore, failure to search is irrelevant, because:

Pure notice (Missouri): estoppel should protect reliance; BFP’s reliance occurs at time of transfer – If prior claimant hasn’t recorded, prior claimant should be estopped from claiming title vs. BFP (without regard to whether BFP has recorded)

This means that a subsequent bona fide purchaser for vale (BFP) is entitled to rely on their lack of notice (as evidenced by the lack of recording). As Freyermuth states:

What if B was lazy/imprudent and failed to search the title records at the time B purchased Blueacre? – B’s failure to search is irrelevant – Buyer has no legal duty to search the title records before buying land – Buyer deemed to have constructive notice of what search would’ve shown • If B had searched, B would not have found A’s deed (which was unrecorded)"

This is in contrast to pure race jurisdictions, where the only relevant question is who records first, and race-notice, where question is both who recorded first and whether that person had notice.

So to answer your question, in a pure notice jurisdiction, intent is irrelevant. The question is whether the BFP had notice of the other interest. Can it be shown that the subsequent purchaser for value (BFP) had notice of the previous claim?

The Colorado reference was merely pointing out that some jurisdictions favor certain types of liens (in that case, a "purchase money" mortgage, where the bank has provided the purchase money) over other types of liens against property, regardless of when each was recorded. In Colorado, the lack of recording may not be fatal to asserting priority over another lien that is recorded first.

@Hal Thompson


Thanks, Hal.
So in third grader lingo, in MO, a pure-notice state, if my DOT as a lienholder is recorded in the wrong county but I put the title company on notice that an error was made, I have covered myself against a third party grantee taking title to the property and wiping out my lien, because I was "first-in-time"?

@Larry Bowers No. Putting the title company on notice does nothing. You want to tell the title company about the mistake, so that their E&O insurance will pay to re-record in the proper county (and in the event that someone has beat you to recording a lien that is now prior to yours, they might be on the hook for that problem as well).

Assuming no additional liens have been recorded against the property, I would just re-record the DOT in the proper county. Again, consult a lawyer and this is not legal advice, but GENERALLY SPEAKING, the document itself is still good. Recording it is just notice to the world that it exists. So just rerecord it in the correct county...there is nothing magical about having recorded it in the other county that makes it so you can't re-record it somewhere else. (This assumes, of course, that there is nothing wrong with the property description or signatures on the DOT itself).