Affidavit of Memorandum in Real Estate: Protect Your Investment

Imagine this: you’ve signed a purchase contract on a property, you’re excited about the deal, and then the seller suddenly starts shopping around for higher offers. It happens more often than you’d think, and it can feel like the rug is being pulled out from under you. That’s where an affidavit of memorandum—also called a notice of interest—comes in. This simple filing can “cloud the title” so that the seller can’t easily walk away or sell to someone else while your contract is active.

For wholesalers and investors, this tool can be a game-changer. It gives you leverage and helps protect your equitable interest, but it also comes with rules and risks you need to understand. Use it the right way, and it can safeguard your deal; misuse it, and you could face legal pushback.

In this guide, we’ll break down everything you need to know, step by step. Here’s what you can expect to learn:

• Affidavit of Memorandum vs. Notice of Interest
• Why Investors Use This Tool
• Legal Framework & Recent Laws
• How to Prepare & File
• Risks, Ethics & Drawbacks
• Alternatives
• Releasing/Removing a Memorandum
• FAQs
• Final Thoughts on Affidavit of Memorandum

Affidavit of Memorandum vs. Notice of Interest

An affidavit of memorandum is a sworn statement that investors record in public property records to show they have a binding purchase and sale contract on a property. By doing this, it “clouds the title,” which means the seller can’t easily transfer ownership to someone else until your contractual rights are resolved. The purpose is simple: protect your equitable interest so your deal doesn’t get pushed aside if another buyer comes along with more money.

In practice, many investors don’t actually file something labeled “affidavit of memorandum.” Instead, they often record a notice of interest or a memorandum of contract—short, one-page documents that announce to the public that you have a legitimate claim tied to a purchase agreement. These documents may also be referred to as a memorandum of agreement or even resemble a lis pendens in some contexts. While the terminology varies, the function is the same: it’s a recorded document designed to give notice and preserve your position in the deal.

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Why Investors Use This Tool

Real estate investing can be unpredictable, and even after you’ve signed a purchase agreement, there’s always the chance a seller gets cold feet or is tempted by a higher offer. That’s a nightmare scenario for investors (especially wholesalers) because your time, money, and energy are already tied up in the deal. This is exactly where an affidavit of memorandum (or notice of interest) steps in. By recording it, you essentially plant a flag in the property records that says, “I have a legal interest here.” That single move can stop sellers from backing out, keep competitors from swooping in, and give you the leverage to see your contract through to closing.

Here are the most common reasons investors use this powerful tool:

• Protecting your deal: Once you’ve signed a purchase agreement, the affidavit or memorandum keeps the seller from backing out and taking a higher offer. It shows you have a legitimate claim on the property and makes it harder for them to sidestep the contract.
• Creating leverage: By clouding the title, you gain negotiating power. In some cases, if another buyer wants the property, they may need to “buy you out” of your position before moving forward.
• Safeguarding assignments: Wholesalers often use this tool to protect assignment contracts. It ensures their right to assign the deal for a fee is respected, rather than cut out at the last minute.
• Stopping “up-bidding” games: Sellers sometimes try to renegotiate if they find a buyer offering more money. Recording notice of your interest locks in your position and reduces those risks.
• Enforcing performance: If push comes to shove, this filing helps you pursue specific performance—essentially forcing the seller to honor their side of the agreement.

Remember, this strategy isn’t about being aggressive—it’s about protecting yourself. Just make sure you have a valid, signed contract and a real deposit before filing; otherwise, you could end up doing more harm than good.

Legal Framework & Recent Laws

Before you run out and record an affidavit of memorandum or notice of interest, it’s important to understand the legal landscape that surrounds these filings. Every state has its own rules, and some are much stricter than others. Generally speaking, you must have a legitimate claim tied to a signed purchase contract, and the affidavit must clearly identify the parties involved, the property in question, and the nature of your interest. This document is then recorded with the county recorder, so it shows up in the property’s public records.

Some states add extra layers of protection. For example, Colorado requires not only that you file the notice, but also that you serve it on all parties involved. Failing to follow these procedures—or worse, filing without a valid contract—can expose you to legal consequences like paying damages, covering the other side’s attorney fees, or having the filing forcibly removed. In extreme cases, improper filings can even lead to accusations of slander of title.

In 2025, Texas passed HB 4063, a law specifically aimed at curbing abuse of memoranda filings. Under this new law, anyone who records such a notice must also mail a copy to the property owner. If challenged, the filer has just 45 days to respond and prove their claim. Fail to do so, and the memorandum automatically loses its power. This change was designed to stop investors from using filings as leverage without a legitimate contract behind them.

It’s also worth noting that many standard real estate contracts include language forbidding either party from recording a memorandum or notice of interest unless both sides explicitly agree. Ignoring these provisions not only puts your deal at risk, but it could also land you in hot water legally. Bottom line: know your state’s rules and never file unless your paperwork is airtight.

How to Prepare & File

Filing an affidavit of memorandum (or notice of interest) isn’t complicated, but it does require precision. Think of it like building a paper trail that proves your deal is real and enforceable. Missing a step—or filing when you don’t have a valid contract—can land you in hot water. Follow this process carefully, and you’ll be able to record your claim in a way that stands up legally and protects your equitable interest.

1. Check your contract and state law: Make sure your purchase agreement allows you to file a memorandum, and confirm what your state requires before recording.
2. Draft the affidavit or memorandum: Clearly list the buyer and seller names, the property description, the date of the contract, and contact information.
3. Notarize the affidavit: Have it signed in front of a licensed notary to make it legally binding.
4. File with the county recorder: Bring the document to the county recorder or clerk’s office and pay the required filing fee.
5. Serve notice to the seller: Mail a certified copy of the filing to the seller. In states like Texas, this step is mandatory under HB 4063.
6. Verify recording: Check that the affidavit appears in the public record and keep proof that you notified the seller.

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Risks, Ethics & Drawbacks

Like most tools in real estate investing, an affidavit of memorandum can be powerful when used correctly—but risky when misused. Filing one without a valid purchase contract is considered a wrongful filing in many states. That means you could be held responsible for damages, forced to pay the other party’s attorney fees, or even have the document thrown out by a judge. Some states take things even further, treating frivolous filings as criminal acts. In other words, this is not paperwork you should play fast and loose with.

Another major risk is a slander of title claim. This is a lawsuit that can be brought against someone who publishes false information about property ownership in the public record. If a court finds you filed without a legitimate claim, you could be on the hook for serious financial penalties. There’s also the issue of “greenmail,” where unethical investors record a memorandum and then demand payment from the seller to release the cloud on title. Recent laws like Texas’s HB 4063 were designed to curb this type of abuse by requiring proof of a legitimate claim within tight deadlines.

Alternatives

While an affidavit of memorandum can be a strong safeguard, it’s not the only way to protect yourself in a real estate deal. In fact, many investors prefer less aggressive options that achieve the same result without creating tension or legal exposure. These strategies are often easier to enforce, less intimidating to sellers, and still give you leverage if someone tries to walk away from a signed agreement.

• Performance clauses: Add clear language in your contract that spells out penalties or damages if the seller backs out, giving you legal recourse without needing to cloud the title.
• Higher earnest money deposits: Putting more skin in the game in the form of an earnest money deposit shows commitment and makes sellers think twice about trying to renegotiate.
• Option contracts or right of first refusal: These agreements give you the right—but not the obligation—to purchase the property within a set period, providing flexibility while still protecting your interest.
• Document your communications: Keep written records of emails, texts, and signed addenda to strengthen your position if you need to enforce specific performance later.
• Record the actual contract: In some states, you can record the purchase agreement itself, which serves as public notice of your claim without drafting a separate affidavit.

Each of these methods has its own pros and cons, but they can be effective ways to secure your deal while avoiding the risks tied to recording a notice of interest.

Releasing/Removing a Memorandum

Once a memorandum or notice of interest is recorded, it acts like a lien on the property. That means the title is “clouded,” and no buyer or lender will move forward with closing until it’s cleared. If your deal falls through or the dispute gets resolved, you’ll need to take steps to release or remove the filing so the property can transfer with a clean title.

There are a few common ways to remove a recorded memorandum:

• Settlement or Release of Lien: The fastest option is to negotiate with the filer and have them sign a formal release, which is then recorded with the county.
• Court order: If the claim is invalid or the filer refuses to cooperate, you can file a motion in court to have the notice removed. This is often part of a quiet title action.
• Expiration of claim: If the underlying purchase agreement has been dismissed or is no longer enforceable, the notice automatically loses its power to cloud the title.

Clearing the memorandum quickly is crucial—whether you’re moving forward with a new buyer, refinancing, or simply resolving a dispute.

FAQs

Affidavits of memorandum can be confusing, especially if you’re new to real estate investing. To make things easier, here are some of the most frequently asked questions about how they work, when they’re valid, and what recent law changes mean for investors. Each answer is short, simple, and designed to give you the clarity you need.

Is an affidavit of memorandum legal everywhere?

Laws vary by state. Most allow memoranda or notices of interest if you have a legitimate contract, but some—like Texas—now have stricter rules in place.

Does the seller need to sign it?

No. These filings are typically unilateral, though your contract should explicitly permit you to record one.

How long does it cloud the title?

It remains on record until it’s formally released, expires by law, or is removed by a court order.

What if the seller ignores it?

The property can’t be transferred with a clear title. Title companies will usually require a release before closing can proceed.

What’s new in 2025?

Final Thoughts on Affidavit of Memorandum

An affidavit of memorandum—or notice of interest—can be one of the most powerful tools you have to protect your deals in real estate investing. It locks in your position and gives you leverage, but it should always be used carefully, ethically, and in line with state laws. Before recording one, talk with an attorney to make sure your contract and deposit are solid and that you’re not crossing any legal lines.

If you’re serious about growing in real estate, it pays to learn strategies that balance opportunity with ethics. Our training programs are designed to help you master skills like wholesaling, deal structuring, and protecting your investments the right way. Ready to take the next step? Explore how Real Estate Skills can guide you on your journey to becoming a confident, well-prepared investor.

*Disclosure: Real Estate Skills is not a law firm, and the information contained here does not constitute legal advice. You should consult with an attorney before making any legal conclusions. The information presented here is educational in nature. All investments involve risks, and the past performance of an investment, industry, sector, and/or market does not guarantee future returns or results. Investors are responsible for any investment decision they make. Such decisions should be based on an evaluation of their financial situation, investment objectives, risk tolerance, and liquidity needs.