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Caroline Bielas and Michael Hickox
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Dirty Deeds - Part 2
By: Caroline Bielas, 1/15/2014

Legal Services plans provide discounted or free legal services to their members. In our practice, we see many clients who have availed themselves of free or low-cost estate planning services through legal services plans. A recurring issue that we have seen in legal services planning and in older estate plans done by attorneys who do not specialize in estate plans is the "record it later” deeds. The attorney drafts the deed either transferring the home into the client’s trust or to children upon the client’s death, but tells the client not to have the deed recorded until "later”. Usually this means that the client’s heirs will record the deed after the client dies.

First, it is important to understand that a deed takes legal effect when it is signed and delivered by the grantor (the person transferring ownership of the property). "Delivery” in this instance does not mean delivery to the recorder’s office. It means that the grantor delivered the deed to the grantee (the person who is getting an interest in the property). So in the case of a client who is transferring ownership of their home into their trust, the deed is effective when it is signed and delivered to the Trustee. Who is generally the trustee of the client’s revocable trust? The client! The same is true for the client who has a deed that grants them a life estate in their home and then passes it to their children at death – the client is the grantor and grantee so the deed is effective when signed. This is a generalized overview, but it is important to understand that a deed doesn’t need to be recorded to be effective.

Why record deeds then? Because a recorded deed is presumed "delivered”, but more importantly because the recorded deed then becomes part of the chain of title of the property. Unrecorded deeds cause problems! A lost unrecorded deed causes even more problems. For example, a client has a deed drafted and signs it that transfers her home to her children at her death. She doesn’t record the deed, the deed is lost over time and the client dies – the home then goes to probate at her death because there is no record of a deed being done.

Or the client wishes to execute a new deed removing her son as an owner on her home after her death, leaving it all to her two daughters. The client has the deed prepared and signs it but never records it. The unrecorded deed cannot be found at the time of her death, the son ends up an owner even though that wasn’t what his mother intended.

Recording a deed at the time it is executed solves a lot of these problems and keeps the chain of title clean for sales in the future.

Next time – not so good reasons that people don’t record their deeds.

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