Mortgage company failed to record our deed, What should we do?

Question

I used a hard money loan to purchase a home, rehab, and sell a few years back under an LLC. I later decided to keep the home and refinanced out of the LLC into my personal name using conventional financing.

A few months ago I decided to do a refinance to take advantage of the current decrease in interest rates. When the current title company did a title search they found that the title was still held in the LLC and not in my personal name as it should be. I do not have owners title insurance, however, I did purchase lenders title insurance.

I have been advised to allow the lender to file a claim against the title insurance instead of personally paying the cost to have the deed recorded.

My questions:

1. Should the title company who failed to record our deed be responsible for the cost of recording the deed now?

2. Will the Lenders title insurance policy cover this error?

3. Is the title company at fault, is the lender at fault, or am I to be held responsible in this matter? (there is an email from the Lenders underwriter directing them to place the title in my name and not leave it in the LLC)

4. What would you recommend I do in this situation? How?

Thank you for all help!

Jason Wray · Answer

Title company records your deed not the lender. Contact the title company and request them to fix the problem and request book and page.

Peter Walther · Answer

In my opinion

1. If the recording fee wasn't collected at the time of the last closing you should expect to pay to have it recorded now since it was your responsibility originally.

2. Under a lender's title policy, as long as the mortgage is current and performing there is no loss recoverable even though there appears to be a defect in title. That said, have you spoken with the office that did the last closing and if so what did they say. In my experience most title agencies don't want to see a problem get worse so if they're told about the situation they'll most likely want to see it corrected.

3. There's enough responsibility for the problem to go around, including to you. You should have questioned why there wasn't a charge on the closing statement for recording the deed and payment of the transfer tax if any. You should have realized you didn't get the original recorded deed back and followed up with the closer. If a deed wasn't recorded the property tax bill should be still in the the LLC's name and you should have noticed.

4. Contact the prior closing agent and see what they'll do to fix the problem.

Joe Splitrock · Answer

Unfortunately in business, you often pay for other peoples mistakes if you don't catch them. All these years and you never got the deed. You never noticed on the tax notices that the LLC owned the property? Contact the title company from the refinance and explain that you believe they made a mistake. See if they can remedy at their expense. Maybe you pay some small fee.

Nobody really cares about this since the bills are getting paid. The only reason it is an issue now is because of the refinance.

Either way, I would remedy ASAP because there could be other problems that come up (insurance or tax related). Maybe not, but sometimes issues like this can result in bigger problems.

Ian Walsh · Answer

What does the prior title company say?

Brett Cohen · Answer

Should I insist the title company cover the cost of recording the deed? They didn't collect for it in the previous settlement. What would happen to them if a claim was filed against the title insurance?

Mortgage company failed to record our deed, What should we do?

Mortgage company failed to record our deed, What should we do?

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