lillisphotography/Getty Images
Key takeaways
- A deed of reconveyance, also known as a satisfaction of mortgage, is a document that proves you’ve paid off your mortgage.
- The deed of reconveyance releases the lien the mortgage lender placed on your property.
- You’ll need this document to prove a clear title when you sell your home.
What is a deed of reconveyance?
A deed of reconveyance is a document that proves you’ve paid off the mortgage on your home. It represents the transfer of the title to your property from your mortgage lender to you.
Over the time you repaid your mortgage, you legally owned the property, but the lender held the mortgage lien — or claim — to it. If you failed to repay your mortgage, the lender could repossess your home. Once you’ve paid back the loan, the lender needs to remove the lien. To do that, it’ll issue the deed of reconveyance.
What is a satisfaction of mortgage?
A satisfaction of mortgage is another name for a deed of reconveyance. It confirms that a borrower has fully repaid their mortgage and that the mortgage lender no longer holds a lien on the home.
What is a full reconveyance?
A deed of reconveyance is also called a full reconveyance form in California.
What’s the difference between a deed of release and reconveyance?
A deed of release legally removes any further obligation to a binding agreement. Mortgage lenders can use it to indicate that you no longer owe mortgage payments, but it can be used in other situations, too, such as between an employer and an employee. The reconveyance deed applies specifically to mortgages.
How a deed of reconveyance works
Getting a reconveyance deed created and finalized requires multiple steps:
- Borrower makes the final mortgage payment. First, you’ll finish paying off your mortgage. Then you may need to request the deed of reconveyance from your lender. To be safe, contact the company and ask about their policies.
- Lender creates the deed of reconveyance. Once the lender — or, more commonly, a title company acting as a trustee of the lender — verifies that your loan is paid off, it will create the deed of reconveyance, sign it and have it notarized. Typically, the document must be provided to you within 30 to 60 days of your final payment, says Megan Hernandez, senior director of public relations and marketing at the American Land Title Association.
- Borrower receives and reviews the reconveyance deed. Once you receive the document, carefully review it for any errors.
- Borrower submits the deed. If the lender sends you the document directly, you must submit it to the recording office in the county where the property is located. The deed must be legally recorded to avoid problems when you sell the home.
If you’re selling your home but haven’t paid off your mortgage yet, a deed of reconveyance still impacts the final stage of the closing process: The money from the buyer pays off the rest of the loan, and that triggers issuance of the deed. In this case, the title company typically handles recording it.
“During the lead-up to closing, the title company will reach out to your lender and ask for a payoff statement reflecting everything owed up to the day of closing,” Hernandez says. “At closing, the title company will send the payoff to your lender and proof of that payment to your buyer’s lender.”
What’s the difference between conveyance and reconveyance?
Conveyance is the act of transferring property ownership from one person or entity to a new person or entity. A reconveyance deed is a document that transfers the title of a property from the bank or mortgage company to the borrower once they’ve fully paid off the debt.
What information is included in a deed of reconveyance?
The deed of reconveyance typically includes:
- Name and address of the homeowner/mortgage borrower
- Name of the lender/trustee
- Legal description of the property and parcel number based on the original deed
- Proof that the borrower has fulfilled their obligation to the lender and that the property that had been secured by the home loan now belongs to the borrower
- Signatures of the parties involved and a notary stamp
Why do you need a reconveyance deed?
When you sell your home, the reconveyance deed is evidence that the property has a clear title, meaning it’s free from any outstanding mortgages or other liens or claims. Buyers are often reluctant to buy a home without a clear title due to the additional complications it could involve.
A deed of reconveyance is still necessary, even if you aren’t planning to sell. It’s proof that you’ve paid off your mortgage, which prevents a lender from making a claim to the property.
Note that if you have a reconveyance deed, you still have financial obligations as a homeowner, most notably your property taxes.
What does it cost to get a deed of reconveyance?
Getting a deed of reconveyance may involve paying fees charged by:
- Your local government. Most cities and towns charge a fee to record documents.
- You lender. Some lenders charge a fee for generating a deed of reconveyance.
- A notary. If you must sign the deed, you’ll need to have it notarized.
How long does it take to receive a deed of reconveyance?
It can take up to two months to receive a deed of reconveyance after you’ve fully repaid the loan, but the exact amount of time varies by state and by lender. Often, state laws outline how long lenders have to provide a deed of reconveyance.
What happens if a deed of reconveyance isn’t recorded?
If the reconveyance hasn’t been recorded, don’t panic. You can still have a deed recorded, even if your mortgage has been paid off for some time.
“The act of paying off all the money owed is what actually extinguishes the mortgage,” Hernandez says. “The recording of the satisfaction is just evidence of the payoff. If a consumer has documentation showing they paid off their mortgage, they don’t need to worry that some lender will come after them.”
If you paid off your mortgage but never received a deed of reconveyance, contact your lender. Lenders can face statutory penalties, or even litigation, if the deed process isn’t handled according to state guidelines — so yours has incentive to help you.
FAQ
Read the full article here
