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Recent Change to Recording Statute Causing Headaches

Instruments must be acknowledged AND proven under revised statute.

The change of one word in the Indiana statute on recording is causing headaches for some individuals trying to record instruments.  Senate Enrolled Act No. 340 amended Indiana Code 32-21-2-3 so that as of July 1, 2020, any document to be recorded in Indiana must have both a notarized signature of the grantor of the document AND a notarized signature of a witness.  Prior to the statutory change, an instrument needed to be either acknowledged by the grantor (notarized signature) OR proved before a list of specified persons.

The changing of the word “and” to “or” may seem minuscule.  In fact, most agree that the legislature did not intend to make this change and that its drafting error will be corrected in the next legislative session.  In support of this premise, the Indiana Recorders Association sent out a directive to all County Recorders shortly after the effective date of the change instructing its members to accept for recording any instrument that contains the notarized signature or proof, just as the prior version of the statute required.  One problem that has arisen, though, is that not all Recorders are following the directive.

Other problems involve the clear language of the revised statute despite what may or may not have been the legislature’s intent.  While the Indiana Code does provide some protection for instruments recorded without adhering to the new requirements, title companies are requiring instruments to contain both the acknowledgement and proof before issuing title insurance.  In addition, creditors may argue that an instrument should be set aside even if the Recorder recorded it if it does not comply with the statute as the date of the recording.  Finally, the statute does not include any language exempting instruments created prior to July 1, 2020 from the new requirements.  For example, a deed created before the new requirements may nonetheless require both acknowledgement and proof even though such requirements did not exists as of the signing of the document.

Given the potential adverse consequences to not following the plain language of the statute and the half-hazard application of the new language, individuals should consider consulting legal counsel before recording any instrument that transfers title to real estate.

If the Stinson Law Firm can help your family with a transfer of property and a review of Medicaid and other potential legal issues that could occur as a result of such transfer, please do not hesitate to contact us at 317-622-8181 or www.stinsonelderlaw.com.