With the high quantity of recordings today, it is not unusual for an instrument recorded in the public record to contain an error. Many times, the error is contained in: (i) a legal description attached to a recorded document; or (ii) an incorrect reference to an execution date within the recorded document. It is very important that there are no errors within a recorded document because constructive notice may be affected by these errors, which in turn may affect the priority of a lien on specific collateral that secures a loan. It is, therefore, incumbent upon lenders to correct any errors in a recorded instrument as soon as practicable.
The method of correcting errors in recorded instruments will depend largely on state-specific laws. Examples of ways to correct errors in a recorded instrument include the following: (1) execute and record a corrective document; (2) correct and re-record the original document; or (3) record an affidavit explaining the original error (limited situations).
1. Recording a Corrective Document: Recording a corrective document is the recommended way to correct errors in a recorded instrument. This method requires the execution of a corrective document (properly titled) that complies with the requirements of the instrument that it seeks to correct, including execution by the original parties to that instrument. The new corrective instrument must also: (i) identify the document that it seeks to correct (by referencing the official records book and page or instrument number in the county of recording); (ii) state the specific changes being made; and (iii) clearly explain the reason for the correction.
2. Re-Execution and Re-Recording of an Original Document: Another way to correct a recorded instrument is to obtain the original recorded document, directly correct the face of the document itself, re-execute it, and re-record it The re-execution of the document must be completed with the same formalities as if it were the original document being executed, including re-execution by the original parties to the instrument in the presence of the correct number of attesting witnesses and notarization prior to re-recording.
In limited situations - for example, failure to attach a referenced exhibit containing a legal description to a recorded document - an instrument may be re-recorded without being re-executed by the original parties. In this situation, the original document may be re-recorded with the referenced exhibit attached along with an affidavit from the party responsible for the original recording of the document.
3. Recording an Affidavit: Sometimes, under applicable state law, the formalities described above are not required, and correction may be made by recording an affidavit by an appropriate party explaining the error. Specific instances where an affidavit may be appropriate include: (i) addressing the omission of a reference in a legal description; or (ii) addressing a clerical or non-material error in the original, recorded document, such as the omission of an initial used in a party's name.
Priority: Keep in mind that lien priority may be lost if a lien or other matter attaches to property during the time period between the original recording and the subsequent recording of a corrective document or re-recording of the original document. A prudent lender or closing agent will obtain a title search prior to the recording of a corrective document or re-recording of the original document since the search will identify any title or lien priority discrepancies that may require further action. Lenders should also consult the applicable title insurer regarding the appropriate corrective instrument and related endorsement to the title policy.
