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Filing a Satisfaction of Mortgage Can Be Key to a Clear Title
Following the acquisition or financing of a property, most parties to the transaction are happy to circulate the “Congratulations!” missives as soon as the closing has occurred – but the champagne corks shouldn’t be popped quite yet. There is one crucial post-closing item that too often gets overlooked – recording the satisfaction or discharge of mortgage (called a Full Reconveyance in California).

While it may be the lender’s burden to prepare and arrange for the recording of the Full Reconveyance, it is the property owner who ends up feeling the pain if that fails to happen, particularly when he or she can’t obtain clear title when seeking to refinance or sell the property. To avoid these issues, it is good practice to ensure that a full reconveyance is recorded – and, luckily, state legislatures have provided incentives for lenders to do just that.

Most states have statutes requiring lenders to record a full reconveyance, satisfaction of mortgage, lien release, or similar filing within a specific timeframe following payoff of the loan. In California, Civil Code Section 2941 says, in part, that:

(a) Within 30 days after any mortgage has been satisfied, the mortgagee or the assignee of the mortgagee shall execute a certificate of the discharge thereof, as provided in Section 2939, and shall record or cause to be recorded in the office of the county recorder in which the mortgage is recorded. The mortgagee shall then deliver, upon the written request of the mortgagor or the mortgagor s heirs, successors, or assignees, as the case may be, the original note and mortgage to the person making the request.

(b) (1) Within 30 calendar days after the obligation secured by any deed of trust has been satisfied, the beneficiary or the assignee of the beneficiary shall execute and deliver to the trustee the original note, deed of trust, request for a full reconveyance, and other documents as may be necessary to reconvey, or cause to be reconveyed, the deed of trust.

(A) The trustee shall execute the full reconveyance and shall record or cause it to be recorded in the office of the county recorder in which the deed of trust is recorded within 21 calendar days after receipt by the trustee of the original note, deed of trust, request for a full reconveyance, the fee that may be charged pursuant to subdivision (e), recorder s fees, and other documents as may be necessary to reconvey, or cause to be reconveyed, the deed of trust.


In the event the property owner finds his or her title burdened – either with a deed of trust that was held by a lender that is no longer in business (because it was either acquired by another banking institution or it failed), or with a deed of trust from long ago – both federal and state laws provide some relief.  In the case of a lender that is no longer in business, the FDIC may also provide some help. For example, the FDIC can provide the owner with the contact information for the acquiring institution in order to obtain the full reconveyance from them. There may be other options as well, so it’s best to contact your title sales representative or REALTOR® for more information.

Adapted from an article by Diana Crocket on www.jdsupra.com.

This material is not intended to be relied upon as a statement of the law, and is not to be construed as legal, tax or investment advice.  You are encouraged to consult your legal, tax or investment professional for specific advice.  The material is meant for general illustration and/or informational purposes only.  Although the information has been gathered from sources believed to be reliable, no representation is made as to its accuracy. 


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