Certified Residential Appraiser Practice Exam

Why is it important to record a deed?

1. It protects the property from theft

2. It establishes property boundaries legally

3. It gives public notice of a transaction and sets priority of claims

4. It provides a record for future inheritance purposes

The correct answer is: It gives public notice of a transaction and sets priority of claims

Recording a deed serves several vital functions in real estate transactions, but the primary significance lies in providing public notice of a transaction and establishing the priority of claims. When a deed is recorded in the appropriate government office, it becomes part of the public record, which means anyone can access it to verify who has title to a property. This recording process puts third parties on notice regarding the ownership and any claims or interests that others may have in the property. This public notice aspect is essential because it helps prevent disputes over ownership and ensures that potential buyers or lenders can ascertain the status of the property before engaging in transactions. Additionally, the order in which deeds are recorded can establish priority in claims, particularly in cases where multiple parties may assert a right to the same property. Thus, when a deed is recorded, it helps protect against future claims that may arise from unrecorded interests in the property. While factors like protecting against theft, establishing property boundaries, and maintaining records for inheritance are all relevant to property ownership, they do not encapsulate the primary function of recording a deed as effectively as the role it plays in public notification and establishing the chronology of claims.