Before burning the mortgage, be sure the release is recorded


Dear Mr. Azrael:

My mother-in-law and her husband jointly own a single-family house in Havre de Grace. They paid off the mortgage in 1992 but did not receive a release of deed of trust or mortgage on the property.

While reviewing her estate, my mother-in-law realized she did not have a release on the mortgage, so she contacted the Harford County clerk of the court. The court mailed her a fully executed copy of the release on the mortgage.

In reviewing the release, it is now apparent why they never received a copy to begin with: The mailing address was incorrect. It contains the proper name, street name, city and ZIP code, but an incorrect street number.

How can we ensure that the release is corrected and that the deed and paperwork on file with the state/county is properly referring to the property? In the event that she were to ever sell this property, she does not want to encounter problems.

Randy Barnhart Richmond, Va.

Dear Mr. Barnhart:

On that happy day when the mortgage is finally paid off, some folks say they'll celebrate by "burning the mortgage." My advice: Make sure a release is properly recorded before you set flame to the mortgage documents.

When a person borrows money on real property, the lender records a mortgage or deed of trust in the land records of the local courthouse. The recording gives legal notice that the lender holds a lien on real estate. If the lien is not paid, the lender can institute a foreclosure proceeding and sell the property, applying the proceeds to the debt.

When a mortgage or deed of trust is paid off, it is important for the borrower to obtain a release and record it in the local courthouse. The recorded release gives legal notice that the mortgage or deed of trust is no longer a lien onthe real property, and also typically acknowledges that the debt has been fully paid. Until a proper release is recorded, the mortgage or deed of trust is "open of record," and is still considered a lien. An unreleased mortgage or deed of trust may cloud the title to the property, causing delay and extra expense when the property is sold or refinanced.

Maryland law requires the holder of a mortgage or deed of trust to provide the borrower with a release within seven days of full and final payment. If the mortgage holder fails to provide a release within 30 days of a written demand, the borrower or a title insurer can bring legal action to obtain delivery of a release, and also can recover all costs and expenses in bringing the action.

When a mortgage or deed of trust is paid off in a sale or refinance of paid property, the title company handling the transaction usually assumes responsibility for obtaining and recording a release of the liens which are paid. Often the title company charges a fee for this service. But, when the borrower pays off the loan directly, it's the borrower's responsibility to record the release.

Despite the legal necessity of recording a release, it is quite common for mortgages or deeds of trust to remain unreleased long after they have been paid. This may cause serious title problems, particularly if the lender is no longer in existence, and it is impossible to locate a legally authorized person or entity to sign a release.

It appears that a release of the mortgage on your mother-in-law's house actually was recorded in the land records of the Circuit Court of Harford County, where the property is located. Even though the mailing address is incorrect, the release still may be valid.

You need to examine the release to see:

* That it properly describes the property.

* That it is either endorsed on the original mortgage or properly refers to the recording reference of the original mortgage.

* That it is signed by the mortgage holder, and acknowledged by a notary public, if contained in a separate release document.

If you are uncertain, an attorney or title company can quickly determine if the release is legally sufficient.Should it appear that the release is deficient, you will have to obtain a corrected release from the lender and record this confirmatory instrument in the land records.

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