17.16 Recording Acts

17.16.1

In General

Chapters 11 and 12 of the Texas Property Code regulate the recording of instruments, particularly those affecting title to real estate, determining what instruments must, or may be recorded, and the priority of rights resulting from their recordation. The objectives of recording acts are as follows:

  • To establish a statutory rule of priority among conveyances by according priority of right to a purchaser who first records his/her conveyance.
  • To protect subsequent purchasers against secret and unknown conveyances and agreements by reason of which they would otherwise be prejudiced.
  • To preserve an accessible history of each title according to reliable information as to ownership and encumbrances.
Texas Follows Notice Recording SystemAt the present time, there are four types of recording statutes in the United States. They are the following: Race Recording Statutes The first grantee from a common source of title to record has priority regardless of whether the first grantee has notice of a prior conveyance. Texas follows this standard. Period of Grace Statutes First grantee prevails if first grantee records within specified time after first grantee's conveyance regardless of notice. Race Notice Statutes First grantee prevails unless subsequent bona fide purchaser takes without notice and records before recordation by first grantee of prior grantee's deed. Notice Statutes Subsequent bona fide purchaser for value who takes title prior to recordation of prior deed without notice of prior deed has priority even if prior grantee records first.

17.16.2

Technical Defects in Instruments Conveying Real Property

In 2007, legislation was passed relating to technical defects in instruments conveying real property. This bill lowers the amount of time from four years to two years that a technical defect in an instrument of conveyance may cause a right of action. It also clarifies what constitutes a defective acknowledgment. This will help us clear up some liabilities and problems with technically defective instruments in title examinations. Effective September 1, 2007.

The following is the list of technical defects corrected by the passage of time:

1) lack of the signature of a proper corporate officer, partner, or company officer, manager, or member (missing signature of entity officials);

(2) lack of a corporate seal;

(3) failure of the record to show the corporate seal used;

(4) failure of the record to show authority of the board of directors or stockholders of a corporation, partners of a partnership, or officers, managers, or members of a company (example: lack of recorded corporate or other resolutions);

 

(5) execution and delivery of the instrument by a corporation, partnership, or other company that had been dissolved, whose charter had expired, or whose franchise had been canceled, withdrawn, or forfeited (example: deed from entity no longer authorized);

(6) acknowledgment of the instrument in an individual, rather than a representative or official, capacity (example: use acknowledgement form for individual not entity);

7) execution of the instrument by a trustee without record of the authority of the trustee or proof of the facts recited in the instrument (example: dry trust);

(8) failure of the record or instrument to show an acknowledgment or jurat that complies with applicable law (Example: wrong or improper acknowledgement form used); or

(9) wording of the stated consideration that may or might create an implied lien in favor of the grantor.


Changes/actions required: If your search and examination of the title discovers a technical defect set out above in a document that has been recorded longer than 2 years (from the date of recording), you need not require a correction document be executed or recorded.

 

17.16.3

Correction of Documents