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

[Brett Cohen]

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!

[Peter Walther]

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.