DEED OF TRUST MISTAKENLY RECORDED WITHOUT LEGAL DESCRIPTION STILL VALID

By Kent Berk on July 27th, 2010 in BLOG, FORECLOSURE, REAL ESTATE LAW

The Arizona Court of Appeals recently decided a case where a deed of trust was mistakenly initially recorded without a legal description. In 3502 Lending, LLC v. CTC Real Estate Service, the borrower executed a deed of trust with the legal description attached as an exhibit, but the deed of trust was initially recorded without the exhibit. As between the parties to the deed of trust, the Court held that the deed was valid since it included the legal description when it was signed.

The Court next considered whether the deed of trust was superior to a later recorded deed of trust, even though the first deed of trust was recorded without the legal description. The Court held that it was, notwithstanding the initial defect in the first deed of trust, since the party holding the second deed of trust had received actual notice that there was a prior/superior deed of trust against the property.

This case reinforces the law that the recording system is for the benefit and protection of non-parties to the transaction and parties who do not have actual notice of a prior recording.