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What happens if I don’t record a deed with the county clerk?

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Let’s say I buy a house cash, no loan, and no title insurance. I execute a deed but I don’t record it with the county clerk. I live in that house for ten years, then right before I want to sell it, I record the deed. What’s the downside of doing this?

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Posted (edited)

In theory, the seller to you could resell the house to a third party.  If they had no knowledge that the property had been sold to you, and record their deed before you do, they would become a bona fide purchaser without notice and you would have no recourse against them.  Your only recourse would be against the double-seller, presumably for the return of the purchase price.

Also, a creditor of the seller may place a lien on the property and record notice of same before you and if the lien is otherwise valid, their rights would be superior to yours.

https://statutes.capitol.texas.gov/Docs/PR/htm/PR.13.htm

Edited by TwiceHorn

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39 minutes ago, TwiceHorn said:

In theory, the seller to you could resell the house to a third party.  If they had no knowledge that the property had been sold to you, and record their deed before you do, they would become a bona fide purchaser without notice and you would have no recourse against them.  Your only recourse would be against the double-seller, presumably for the return of the purchase price.

Also, a creditor of the seller may place a lien on the property and record notice of same before you and if the lien is otherwise valid, their rights would be superior to yours.

https://statutes.capitol.texas.gov/Docs/PR/htm/PR.13.htm

Thanks. It seems like the first situation (seller sells it again) would be extremely improbable. The second one, still pretty improbable but not as much.

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Posted (edited)

Who is it you are hypothetically trying to hide the purchase and the asset from?

Edited by Jerry Callo

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16 minutes ago, Jerry Callo said:

Who is it you are hypothetically trying to hide the purchase and the asset from?

An insane person who expressed interest in killing me. I’m not trying to hide the asset. I’m trying to hide myself. I suppose the easiest way to live somewhere and it not be public record would be to rent, and I may have to do that.

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Well, you could form an LLC and purchase in the name of the entity.  The property is located at 226 Elm Street?  226 Elm Street LLC is a perfect name!   You will have to disclose the agent for service (lawyers will do this for a small fee) but the operating agreement (ownership) of the LLC can remain private. 

But not recording the deed is really risky.  A fucking disgruntled handyman could file a  mechanic's lien and foreclose on the house (here in CA anyway).

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1 hour ago, XYZ said:

Thanks. It seems like the first situation (seller sells it again) would be extremely improbable. The second one, still pretty improbable but not as much.

So, I have an investor that has paid cash for condos for  both of his kids, and the deed is in the kid's name.  His kids are dipshits.  As soon as the deal closes, he records mortgages (trust deeds in CA) against the properties for the full value.   In theory, if his kid got drunk and ran somebody over, the asset is protected. 

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7 minutes ago, Gil Bang said:

Well, you could form an LLC and purchase in the name of the entity.  The property is located at 226 Elm Street?  226 Elm Street LLC is a perfect name!   You will have to disclose the agent for service (lawyers will do this for a small fee) but the operating agreement (ownership) of the LLC can remain private. 

But not recording the deed is really risky.  A fucking disgruntled handyman could file a  mechanic's lien and foreclose on the house (here in CA anyway).

Thanks. So if I were to form an LLC, a couple of disadvantages would be that I cannot get the homestead tax exemption, and also when I sell it, assuming I made a profit, I would owe federal capital gains taxes, right?

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Posted (edited)

the homestead thing I have no idea; we don't do that here.

the tax thing, well, depends on how long you own it.  IIRC, if you bought it intending to fix it up and sell it at a profit, the profits are treated as ordinary income.  But I'm no CPA.  

It's an interesting question.  What if you bought in in a trust?   Hollywood types are able to hide their ownership that way. 

Edited by Gil Bang

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19 minutes ago, Gil Bang said:

What if you bought in in a trust?   Hollywood types are able to hide their ownership that way. 

I looked into that. Unfortunately at least here in Texas, the deed would have to be recorded with the grantee being “XYZ as trustee of the ABC Trust”. It has to be a person or legal entity (trust doesn’t count as a legal entity). What I found out is that what celebrities do is create a trust with their manager or lawyer as the trustee, so let’s say Britney Spears buys a house, the grantee will be “Joe Blow as trustee of the ABC Trust”, so Britney’s name doesn’t show up anywhere, except that she’s the grantor of the trust and gets to live there, but that is not public information. But a regular loser like me doesn’t have managers or lawyers that I can ask to be trustee of a trust.

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going back to your OP,  consider this:

You form LLC.   You purchase home for X dollars in the name of the LLC.  Later, you sell the home to yourself for X.  Walla, no cap gains.

 

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1 hour ago, XYZ said:

Thanks. So if I were to form an LLC, a couple of disadvantages would be that I cannot get the homestead tax exemption, and also when I sell it, assuming I made a profit, I would owe federal capital gains taxes, right?

i don't know how you'd homestead it without recording the deed anyway. 

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plus with no homestead when you go BK you cannot keep that homestead asset as Texas allows

buy a house and a gun stop running from the problem and confront it head on and shoot it

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Posted (edited)

You absolutely could convey it to a trust with some entity or other person as trustee, as long as you trust that person not to do something fuct up with it.

You would even get the homestead exemption if it is a qualifying trust.

 

(3) "Qualifying trust" means a trust:

(A) in which the agreement, will, or court order creating the trust, an instrument transferring property to the trust, or any other agreement that is binding on the trustee provides that the trustor of the trust or a beneficiary of the trust has the right to use and occupy as the trustor's or beneficiary's principal residence residential property rent free and without charge except for taxes and other costs and expenses specified in the instrument or court order:

(i) for life;

(ii) for the lesser of life or a term of years; or

(iii) until the date the trust is revoked or terminated by an instrument or court order that describes the property with sufficient certainty to identify it and is recorded in the real property records of the county in which the property is located;

But the trust instrument does have to be recorded, so you as beneficiary would show up.  But not in the CAD records, which typically show the name of the trust and of the trustee.

Edited by TwiceHorn

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I think the county appraisal district and the county clerk will withhold/redact your information from searches upon request. Just ask the question. Solves most of your issues it would seem.

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2 hours ago, Bill Clay said:

I think the county appraisal district and the county clerk will withhold/redact your information from searches upon request. Just ask the question. Solves most of your issues it would seem.

Appraisal district, yes. County clerk, no as far as I know.

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2 hours ago, Lobwedgephil said:

Damn, she must be really crazy. 

She is. Maybe some day I’ll tell the story.

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going back to your OP,  consider this:
You form LLC.   You purchase home for X dollars in the name of the LLC.  Later, you sell the home to yourself for X.  Walla, no cap gains.
 
He’s trying to hide the house from his baby mama.
plus with no homestead when you go BK you cannot keep that homestead asset as Texas allows
buy a house and a gun stop running from the problem and confront it head on and shoot it
Huh?
Damn, she must be really crazy. 

I feel we are missing some crazy backstory here.

Sex musta been dy-no-mite!

All of these.

She will eventually find you, have more sex with you, drug you and skin you alive in order to make a jacket, mask and lamp shade.

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19 hours ago, XYZ said:

Thanks. So if I were to form an LLC, a couple of disadvantages would be that I cannot get the homestead tax exemption, and also when I sell it, assuming I made a profit, I would owe federal capital gains taxes, right?

Homestead exemption doesn't apply to businesses so you can't get apply for it if the house is owned by an LLC

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Also if the LLC owns real estate in Texas won’t it have to file a Texas Franchise tax return which will include a public information report showing the officers and majority shareholders?

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5 hours ago, Jkwellborn said:

He’s trying to hide the house from his baby mama.
Huh?



All of these.

She will eventually find you, have more sex with you, drug you and skin you alive in order to make a jacket, mask and lamp shade.

https://www.nolo.com/legal-encyclopedia/texas-bankruptcy-homestead-exemption.html

The Texas homestead exemption allows you to protect the entire value of your home in bankruptcy.

If you file for bankruptcy in Texas, you can exempt the entire value of your home -- this is called the homestead exemption. However, there are some acreage limits to the Texas homestead exemption. Read on to find out more about the homestead exemption in Texas.

 

 

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You can set up a simple revocable trust to own the home, and that will still allow the homestead exemption to be claimed. 

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https://www.nolo.com/legal-encyclopedia/texas-bankruptcy-homestead-exemption.html

The Texas homestead exemption allows you to protect the entire value of your home in bankruptcy.

If you file for bankruptcy in Texas, you can exempt the entire value of your home -- this is called the homestead exemption. However, there are some acreage limits to the Texas homestead exemption. Read on to find out more about the homestead exemption in Texas.
 
 

There may be some further limits to the Texas homestead exemption if a bankruptcy case is filed within 1215 days of the acquisition of the homestead. The 2005 changes to the Bankruptcy Code placed some limitations on the exemptions for relatively newly acquired homesteads.

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Posted (edited)
10 hours ago, hornian said:

You can set up a simple revocable trust to own the home, and that will still allow the homestead exemption to be claimed. 

But if I buy a home with a living trust, the grantee on the deed will still be “XYZ as trustee of the Surly Asshole Living Trust”, so my name would still be trivially searchable, unless I find someone else to be trustee, and I’m looking into that.

Edited by XYZ

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30 minutes ago, XYZ said:

But if I buy a home with a living trust, the grantee on the deed will still be “XYZ as trustee of the Surly Asshole Living Trust”, so my name would still be trivially searchable, unless I find someone else to be trustee, and I’m looking into that.

And the Trust instrument itself must be recorded, so you're SOL.

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1 hour ago, TwiceHorn said:

And the Trust instrument itself must be recorded, so you're SOL.

I think you’re wrong about having to record the trust instrument. From some lawyer’s web page:

Quote

In Texas a trust is a not a legal entity. Rather, it is a legal relationship in which a Trustee holds legal title for the benefit of another person called the beneficiary. Unlike a corporation, which is required to file certificate of formation with the Secretary of State, there is no such requirement for a Trust. Rather, the trust remains a private document. Those dealing with the Trustee can verify the Trustee’s authority to act on behalf of the trust by requesting documentation in the form of an affidavit of trust or certification of trust.

 

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that's how it works here too.   

 

"ABC Revocable Trust" wants to sell real property.  The Trustee signs the purchase contract, and escrow and title demand the trust cert before they will close the deal.  The trust documents are private.   

Same with LLCs.  Something called the LLC-1 is public record...that only includes the agent for service.  The operating agreement is provided to escrow/title when the transfer of real property occurs. 

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On 6/13/2020 at 3:31 PM, XYZ said:

An insane person who expressed interest in killing me. I’m not trying to hide the asset. I’m trying to hide myself. I suppose the easiest way to live somewhere and it not be public record would be to rent, and I may have to do that.

Sorry to hear that. Do you still have the VW van? Wonderful opportunity to go see America/replace multiple #3 cylinders.

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2 hours ago, RDCanecutter said:

Sorry to hear that. Do you still have the VW van? Wonderful opportunity to go see America/replace multiple #3 cylinders.

I do still have it. Love that bus.

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2 hours ago, XYZ said:

I think you’re wrong about having to record the trust instrument. From some lawyer’s web page:

 

Normally, that is correct.

In order to invoke the homestead exemption, the trust must be of record in the county deed records.

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6 hours ago, TwiceHorn said:

Enfeoffment of seisin.

is that when they slapped a kid with the stick out at the property so the kid would remember that day 50 years later when there was a question as to who had title?

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But if I buy a home with a living trust, the grantee on the deed will still be “XYZ as trustee of the Surly Asshole Living Trust”, so my name would still be trivially searchable, unless I find someone else to be trustee, and I’m looking into that.

That must have been some stellar pussy.

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5 hours ago, elfenix said:

is that when they slapped a kid with the stick out at the property so the kid would remember that day 50 years later when there was a question as to who had title?

Yessir!

 

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Major flashback to first year property law class in 1986. Livery of seisin: Snapping of twigs, throwing of clods and boxing of ears.

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I looked into that. Unfortunately at least here in Texas, the deed would have to be recorded with the grantee being “XYZ as trustee of the ABC Trust”. It has to be a person or legal entity (trust doesn’t count as a legal entity). What I found out is that what celebrities do is create a trust with their manager or lawyer as the trustee, so let’s say Britney Spears buys a house, the grantee will be “Joe Blow as trustee of the ABC Trust”, so Britney’s name doesn’t show up anywhere, except that she’s the grantor of the trust and gets to live there, but that is not public information. But a regular loser like me doesn’t have managers or lawyers that I can ask to be trustee of a trust.
I'll do it if you tell us whose wife you banged and post her nudes.

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