How Unrecorded Documents Can Affect Your Title 

A title search may, every once in a while, result in the discovery of a reference to or citation of an unrecorded document, such as an agreement, restriction, easement and other articles of similar effect. Many property owners are unaware that such unrecorded documents can still greatly affect them. To avoid the shock of loss of title or rights of ownership, you should familiarize yourself with the different types of documents that can affect your title.

Notice

Because Florida is a race-notice state, encumbrance and/or lien priority is granted to the entity or individual that files the record first. The exception being that the recorder was given proper notice of a special case that claims preeminence or priority. If a document that conflicts with your title precedes said title, your rights could be in jeopardy. There are two types of notice that can be given:

• When an individual personally knows a matter affecting the rights or state of the property. A neighbor, for example, might know of easements placed on parcels of the property. This is called Actual Notice.
• Constructive Notice, on the other hand, occurs when an instrument is received and recorded with the county’s public records. In the event that the overseeing agent, underwriter and owner are put on notice, the offending issue must be resolved before any other actions can be taken.

The task of identifying matters of constructive notice falls to the examiner of the title in question. Any issues will be recorded in the title commitment (under Schedules B-1 or B-2). In addition, this examiner must be informed of unrecorded matters such as the seller owning a second mortgage, an unapproved construction of any kind, or easements or agreements made concerning water or mineral rights. Should agent, owner or underwriter remain ignorant of such unrecorded documents, the insured buyer or lender will take title or priority of lien, thus severely hampering the smooth conclusion of the closing process and even your claim to the title itself.

Exceptions

Exceptions that may possibly apply include the Marketable Record Title Act (MRTA) and Statutes of Limitations. The MRTA dictates that certain unrecorded documents will be extinguished if they are not re-imposed within 30 years of the root of title, which is the term used to refer to the first deed in the chain of title that is now older than 30 years. However, any easement, for example, that is still in effect will remain so. The experts at Marina Title can assist through the entire process.

Florida Statute 95.11(1)(b), furthermore, states that “a legal or equitable action on a contract, obligation or liability founded on a written instrument” will expire within five years. This includes, to name a couple, foreclosures and any action taken that breaches a property insurance contract. Some unrecorded documents may be rendered invalid by the passage of time, thanks to this Statute of Limitations. However, it is always best to ascertain that the examiner has clearly presented any unrecorded documents discovered, and underwriters must be informed by the seller, agent or borrower of any pertinent matters concerning the insurance, mortgage or placement of lien on the property in question.

The professionals at Marina Title offer their knowledge and expertise concerning deeds, titles and other matters pertaining to the intricacies of Florida real estate. Contact us by email at [email protected], or by phone at (305) 901-5628.