As a homeowner who has worked diligently and paid off your mortgage, it may come as a shock when you sell your home and find out that your mortgage company never filed the appropriate documents with the county when your home was paid off.
I was recently involved in a transaction where this happened. In the early 90s, the homeowner paid off his mortgage and was ever so happy that he was debt free. In 2019 he sold his home, but when the title company conducted their title search the county recorder’s office had no record of a lien release on the property. What ensued was a mad scramble by the homeowner and title company to find records indicating that the loan was paid off.
As it turned out the mortgage company had long ago closed its doors and the note was assigned to another financial institution. The title company handling the escrow went to work to find any trail of paperwork that showed that the property had been paid off. However, after several weeks and little satisfaction the title company agreed to provide title insurance to the buyer without a recorded deed of release and reconveyance. The seller in turn had to sign an affidavit of indemnity indicating that the loan had indeed been paid off.
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It turned into a big mess and caused the title company and the seller much unneeded and unnecessary work and reminds us about the importance of making sure that everything is in order when we pay off a mortgage.
If your loan has been paid off or if you expect it to be paid off soon even you are refinancing your mortgage make sure that your lender has filed or will file a deed of release and reconveyance with the county recorder when it is paid. The release indicates that you no longer have this mortgage and the reconveyance shows that you have all right, title and interest in the property.
After it is filed and recorded, you should get a copy of the document and it is imperative that you safeguard it for as long as you own the property.