Q: Is is absolutely necessary to have a deed in order to sell a house? I paid off my mortgage some time ago and have official evidence to that effect from the county government, but I am unable to find a deed. What should I do?
A: In today's marketplace, I hope that the missing deed will be the only problem you will have as you attempt to sell your house.
A deed, once it has been recorded among the land records in your locality, becomes, for all practical purposes, a meaningless paper. The recordation of the deed is important; the paper itself is not critical to a subsequent sale.
This is not to say that I am recommending that you destroy your deed after settlement. On the contrary, you should keep all of your settlement papers in a safe place, for future reference.
The procedure works as follows: When you go to the lawyer's office (or the title company) for settlement, the seller signs the deed conveying the property to you (the buyer). The settlement attorney is responsible for recording the deed among the land records in the jurisdiction where the house is located. For example, in Montgomery County, the deeds will be recorded at the county seat in Rockville.
After the deed has been recorded by the government agency--usually the recorder of deeds--the deed will be returned to the name and address that appears on the reverse side of the deed. At settlement, it is a good idea to make sure that your name and mailing address are placed on the deed, so that it can come back to you. Chances are the attorney or title company that conducted your settlement put that office's address on the deed, and you may find the original recorded deed in the office files.
If you don't have the deed, the title attorney handling the sale of your house will be able to obtain the proper legal description from the land records, and will be able to prepare a new deed. You have no reason to be concerned.
The question is always raised as to what documents a buyer should keep after settlement.
Perhaps the most important document is the settlement sheet. This will determine the costs of your house (called the basis) for future tax purposes. You may also have certain deductions for next year's tax return, and they may only be found on the settlement sheet itself.
For example, in Maryland when you buy a house in the fall, you have to reimburse your sellers for a pro-rata share of the real estate taxes that they have already paid for a full year. This is the only evidence of these payments, and many people forget to list that tax adjustment on their income tax returns.
The deed of trust and promissory note that you sign with your lender are also important papers. You should insist that the settlement attorney give you a complete set of these documents. Although most attorneys and title companies will keep a set of these settlement documents in their files, it is better for you to have a complete set in the event questions or problems arise in the future.
Thus, before you leave the settlement table, insist on obtaining a copy of every document you have signed.