Tuesday, July 03, 2012

"I paid my mortgage. Please return my deed."

Here's a question I received via email this morning.  It's a question that is asked quite frequently:

Hello - I recently paid off my mortgage and received a release and discharge. Can you please send me my deed?

Here's the response I sent:

Congratulations on paying off your mortgage.  It's a common misconception that the deed to the property is somehow held as security until the mortgage is paid.  That's not the case.  When you purchased the house, you should have received the original deed which conveyed the property from the seller to you.  Many people don't end up with the original deed for a variety of reasons - the lawyer may have never sent it or it may have been otherwise misplaced.  In any case, the registry would not have retained the original: we just make the official copy and then return the original to whomever recorded it.
That said, don't worry if you don't have the original.  I have attached an official copy from our records which should be just as good for almost all purposes (and if you need it for some court or other legal proceedings, you can always obtain a certified copy from us which is just as good as the original).

As for the mortgage, the way it works is when you sign the mortgage at the time you borrowed the money, you did convey an interest in the property to the lender.  That interest was the right to seize and sell the property if you defaulted on the terms of the note.  Since you have now paid off the loan, the interest that you conveyed to the bank is extinguished.  The way that is shown in our records is by the lender recording a discharge of mortgage which we have linked to the mortgage.  Taken together, the two documents show that the mortgage is no longer operative.

The assumptions presented in the above question are reflective of how most non-lawyers (and others not in the real estate business) understand the operation of a mortgage.  To the extent we can help educate folks on how the system actually works, I believe we do everyone a useful service.

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