Perfection as to real property

     Perfection of a consensual lien on real property is less complicated and less prone to error than perfection of a lien on personal property or fixtures through the filing of a financing statement.  One simply records the document that conveys an interest in real property (e.g. mortgage or deed of trust) in the appropriate office of the county in which the real property is located.  Unlike personal property, which is either intangible or moveable, there are no difficulties in determining where to record on real property because the real property is tangible and does not move. 

     Moreover, one generally does not encounter problems in the real property context akin those created by incorrectly stated or misspelled debtor's names in financing statements or debtor's names that change after a financing statement is filed.  Lenders against real estate almost always purchase title insurance.  Title companies use tract indexes, under which mortgages or deeds of trust encumbering a parcel of real property are reflected by tract (identified by a parcel number of legal description) rather than by the name of a party.  A title company will therefore usually discover, and report on a prelminary title report to a prospective lender, the liens of all deeds of trust and mortgages encumbering a parcel even if a name is incorrectly stated or spelled on the deed of trust or mortgage or even if a deed of trust or mortgage with no errors has been incorrectly indexed by the recorder's office in its grantor-grantee index.   Moreover, an oversight of an existing mortgage or deed of trust is precisely the risk against which the title company insures and the reason a lender should purchase title insurance rather than rely on its own search of the grantor-grantee index in the recorder's office.  

     Financing statements filed to perfect security interests in personal property, absent termination or renewal, lapse at the expiration of five years.   In contrast, in most states, absent reconveyance, a recorded deed of trust or mortgage will cloud the title to the real property for a substantial number of years.   See, e.g.,  Cal. Civ. Code 882.020.   In the typical transaction, the creditor will reconvey its interest to the debtor upon payment of the obligation secured and the debtor will record the reconveyance to clear the lien from the public record.  Statutory sanctions attend a creditor's wrongful refusal to reconvey upon payment by the debtor.