Legal Question in Real Estate Law in California

You are not obligated to record it, but if you don't you lose the protections of title priority. That means if they die, it could be sold out from under you. If a judgement is entered against them it will take priority over your rights, etc. I cannot think of any legitimate, above-board reason the seller would want to keep this a secret, and there are other ways to protect yourself if you want the transaction not to be linked to you.

Why would you do something as dumb as to use a land sale contract in California. That makes no sense under the applicable laws.

First, if your seller dies or moves away, how are you ever going to get title? A quiet title law suit is likely.

Second, if you are simply trying to keep from having a property tax reassessment, this does not work. A land sale contract is a transfer for property tax purposes.

Third, a promissory note secured by deed of trust is a tried and true method of transfer of title, and you can each get a title policy protecting your rights.

Finally, an unrecorded agreement for land sale means he could sell it to you, then mortgage the proeprty, sucking out all the equity. Or he could sell it to someone else. Why would you be willing to take this type of risk, when there is really little to gain by doing so?

There are good reasons no one uses land sale contracts any more. If you are foolish enough to use one, for heaven sakes record it. At least you have some notation on the record which may help when he files for bankruptcy and they find out he still owns the house because it is titled in his name.

If the contract is not recorded, the seller can transfer title to a subsequent "bona fide purchaser" for value, who will have priority over your "hidden" agreement. Recording the contract puts the world on notice of your deal, and prevents any third parties from claiming that they are bona fide purchasers.

Recording is permitted, and in fact encouraged; real estate brokers are required by law to record such transactions or, at least, to advise the parties to do so. However, in a private deal, recording is not mandatory.