By Missouri statute, the recording a document relating to real estate in the office of the county recorder of deeds gives notice to all of the contents of the recorded document (called an “instrument”):
Every such instrument in writing, certified and recorded in the manner herein prescribed, shall, from time of filing the same with the recorder for record, impart notice to all persons of the contents thereof and all subsequent purchasers and mortgagees shall be deemed, in law and equity, to purchase with notice.
Is lack of recording notice that something did not occur, even though it should have been recorded?
According to the Missouri Court of Appeals, in the case Warren County Concrete v. Peoples Bank & Trust and Warren County Title Company, purchaser of real estate had no duty to check to see whether a release of a deed of trust had been recorded, even though the purchaser had provided the money to pay off the deed of trust to a title company that closed the transaction.
The purchaser claimed to have no idea that the bank had not released the deed of trust until four years later, when the purchaser received a notice that the bank was foreclosing on the property. A year later — more than five years after the purchaser closed its purchase of the property — the purchaser filed a lawsuit against the bank and the title company, alleging that they were obligated to record the release.
The bank and title company claimed that the five-year statute of limitations period had run for negligence and breach of contract, and the purchaser was out of luck. The trial court agreed.
The purchaser appealed, claiming that the statute of limitations only began to run when the purchaser became aware that he had been wronged, which would have been the date the notice of foreclosure was delivered to the purchaser.
In the appeal, the bank and the title company argued that the purchaser should have checked the recorder’s office after the closing to make sure that the release had been recorded. The appeals court reversed the trial court’s judgment, stating that the burden of searching the public records after the closing was “a duty we are unwilling to place on the purchaser.”
The Court of Appeals was probably influenced by the injustice that would result when a purchaser hires a title company to close a transaction and provides money to pay off an existing loan, but the title company fails to follow up to make sure that the lender receives the payoff and records a proper release.
The Court of Appeals’ opinion isn’t specific about the reason for the mix-up, but it looks like the bank recorded a release after receiving the payoff, but that the release described a different piece of real estate than the piece that purchaser bought.