What is the purpose of “recording” a document?

When you acquire tangible assets, you receive a written document known as “the official document” which transfers the ownership of the assets from the buyer to you as the purchaser. The official document grants you legal rights in exchange usually for a specified sum of money. The transfer of interest in tangible assets is not finalized until the official document is handed over to you. It is important to promptly register the official document with the appropriate local government office in the area where the assets are situated. By registering the official document, you provide notification to all future potential buyers of those assets that you now possess an ownership stake in that specific set of assets. The registration process also maintains a record of the chronological sequence of ownership changes involving various buyers and sellers. Before you acquire tangible assets, a search is conducted at the local government office responsible for registering such documents to verify that the seller (as well as all previous sellers) holds legal title to the assets in question. This task is typically performed by title insurance to identify any defects that may have occurred in prior sales and transfers. If any defects are detected, they can be identified and excluded from the insurance coverage.