Disclaimer: This article provides general information about Nevada real estate practice and is not legal advice. For advice tailored to your situation, consult a licensed Nevada attorney.
Detailed Answer — How Nevada handles escrow/trust funds when a deed isn’t yet recorded
In Nevada real estate closings, funds that belong to a buyer, seller, lender or other party are commonly held by an escrow agent, title company, or attorney in a trust (escrow) account until closing conditions are met. One frequent closing condition is that the deed be recorded in the county recorder’s office. Whether the escrowed funds can be released before the deed is recorded depends on the written escrow instructions, the parties’ contracts, the practices and policies of the title or escrow company, and Nevada law about recording and notice.
Key principles that govern what happens in Nevada:
- Escrow agents and trust duties: An escrow agent must follow the escrow instructions it agreed to. If the instructions say funds are to be disbursed only after the deed is recorded, the escrow agent generally must wait. If instructions permit release on other proof (for example, a recorded receipt number or a certified title report showing recording), the agent may release funds accordingly.
- Recording creates constructive notice: Recording a deed in the county recorder’s office gives constructive notice to the public that ownership changed. Until the deed is recorded, a later purchaser or lender may not have notice of the conveyance and competing claims can arise. For Nevada statutes governing recording and the county recorder, see NRS Chapter 247 and the rules on conveyances in NRS Chapter 111: https://www.leg.state.nv.us/NRS/NRS-247.html and https://www.leg.state.nv.us/NRS/NRS-111.html
- Title insurance and lender requirements: Lenders and title insurers commonly require that the deed be recorded (or require proof of recorded status) before they authorize payoff of existing liens or disbursement of sale proceeds. Title insurance policies and commitments will typically condition coverage on a recorded deed.
Practical situations and typical outcomes
- Funds released only after recording: common and conservative approach. Many escrow companies will not disburse sale proceeds or lender payoffs until they have confirmation that the deed and related documents have been recorded (usually a recording stamp and instrument number, or a recorded copy). This protects buyer, lender and escrow agent from competing claims.
- Funds released before recording if parties agree and escrow holds protections. In some transactions, escrow instructions permit the escrow company to disburse funds before the deed is recorded if the escrow agent obtains other protections — for example, a written indemnity from the seller, a copy of the deed executed and acknowledged, a recorded notice of the buyer’s interest, or a title company’s escrow holdback or commitment to cure issues. These are negotiated protections; they do not eliminate all risk.
- If funds already released but deed not recorded: If proceeds were disbursed and the deed was never recorded, the buyer could lack constructive notice of ownership. That can create serious risks: a subsequent purchaser or creditor might claim priority. The buyer should contact the title company and its attorney immediately. A title insurance claim, quiet title action, or contractual remedies against the escrow agent or seller may be possible depending on the facts and the escrow instructions.
Why recording matters under Nevada law
Recording protects purchasers and lenders by placing the world on notice of the transaction. Unrecorded deeds may not defeat later conveyances to parties who record first or take without notice. Because of that policy, escrow agents, lenders, and title insurers often condition disbursement on recording or on equivalent protections.
When a deed isn’t recorded: immediate practical steps
- Do not assume disbursement equals safe transfer. Confirm recording before assuming title is clear.
- Ask the escrow or title company to provide the recorder’s instrument number and a scanned copy of the recorded deed or the county recorder’s stamp as proof.
- Request a title insurance policy or interim commitment showing the chain of title and any exceptions.
- If funds were already disbursed and the deed not recorded, notify the title company, lender and an attorney right away. Document all communications and preserve closing paperwork and escrow instructions.
Relevant Nevada statutes and resources
Useful statute chapters (for recording and conveyances):
- Nevada Revised Statutes, Chapter 247 — County Recorder: https://www.leg.state.nv.us/NRS/NRS-247.html
- Nevada Revised Statutes, Chapter 111 — Conveyances: https://www.leg.state.nv.us/NRS/NRS-111.html
These chapters explain the recording system and the effect of recorded instruments. They help explain why many parties insist on recording before releasing funds.
When to get a lawyer involved
Talk to a licensed Nevada real estate attorney if:
- Funds were released but the deed was never recorded.
- There is a dispute between buyer and seller or a title issue appears.
- You need to pursue or defend a claim about priority, quiet title, breach of escrow instructions, or title insurance coverage.
Helpful Hints
- Always get a copy of the recorded deed or the county recorder’s stamp and instrument number before accepting that title passed.
- Insist that escrow provide a title insurance policy or final title report showing recordation and clearing of liens before disbursement.
- Read and keep a copy of the signed escrow instructions; those instructions control the escrow agent’s duties.
- If escrow must release early, insist on written indemnities or escrow holdbacks to reduce your risk.
- Check the county recorder’s online database (by county) to confirm recording. If you cannot find the document, ask the escrow agent for the recording receipt.
- If a seller claims money was disbursed because they delivered an executed deed but the deed is not recorded, do not delay in contacting the title company and an attorney — remedies are time-sensitive.
- When in doubt, delay final disbursement until you have recorded evidence or a written agreement that allocates the risk.
Final note: the interplay between escrow instructions, title insurance requirements, lender demands, and Nevada recording law means the safest practice is to condition disbursement on recorded proof. If your situation involves funds already disbursed or unusual escrow instructions, speak to a Nevada real estate lawyer promptly.