Understanding Recording Agreements in Commercial Leases

Long-term lease agreements related to land or buildings often have recording provisions within them. This is especially true in the commercial leasing context. The recording provision allows either party to record the lease agreement, or a notice of the lease agreement, with the county. The general purpose for allowing a lease to be recorded is to create a priority interest in the public records regarding the leased property.

County Land Records

Every county has appointed a land records officer, often called a county recorder, to maintain public records relating to the ownership and title to all real property located within that county. The county land records office files copies of all recorded documents that relate to any type of interest in real estate, and these recorded documents are available for public inspection and researching.

Recording

To record a lease agreement means to file a copy of the lease agreement with the local county land records office. The land records office will charge a small recording fee and will stamp the top of the lease agreement with a recording stamp that indicates the date, time, entry number of the recorded document. The county then maintains an index of all recorded documents so that the general public can search and review those documents.

Purpose

Many state statutes provide that recording is necessary to create long-term interest real estate. Certain interests in land may be invalid if they are not written in a document recorded with the county. Additionally, if the owner of property sells the property, and the lease agreement has not been recorded, then the future owner of the property will not be bound to the terms of the lease agreement. Recording puts all future property purchases on notice that the lease agreement exists, which causes all future property purchasers to be bound by the terms of the lease agreement if they purchase the leased property from the landlord.

Private Notice

Some landlords or tenants do not want all the terms of the lease agreement to be made public. The lease agreement may contain confidential information that the landlord or tenant wishes to keep private. Accordingly, it is common practice to record a notice of lease agreement that identifies the lease agreement in general, but does not actually record the lease agreement itself. Recording a notice protects the priority interest of the lease without disclosing the private terms of the lease.