What Is a Deed of Reconveyance?
A deed of reconveyance is a significant document that transfers the property title from a mortgage lender to the borrower upon full loan repayment.
**Key Points:**
– A deed of reconveyance signifies the complete payment of a mortgage.
– It validates the transfer of property ownership from the lender to the borrower.
– Non-registration of a deed of reconveyance can hinder the sale of the property.
How a Deed of Reconveyance Works
Upon full repayment of a mortgage, borrowers receive a notarized deed of reconveyance created by the lender. This document contains a legal property description and is recorded in the relevant county.
A title search confirms the mortgage lien payment, eliminating foreclosure risk for the borrower.
The deed of trust between a home buyer and a lender outlines loan repayment terms and grants the lender legal title to the property until the loan is fulfilled.
During property sale, a recorded deed of reconveyance becomes integral to the closing process, often managed by a title insurance company.
Refinancing entails a new deed of reconveyance, signifying the satisfaction of the prior mortgage.
Second mortgages create a security interest for lenders, independent of the first mortgage’s deed of reconveyance.
States vary in deed of reconveyance processes, some preferring trust deeds over mortgages.
What’s Included in a Deed of Reconveyance?
Elements typically found in a deed of reconveyance are:
- Homeowner/borrower details.
- Lender/trustee information.
- Property description from the original deed.
- Documentation confirming loan fulfillment and property ownership transfer.
- Signature lines for all parties and notary verification.
Example of Deed of Reconveyance
In a mortgage scenario, once a borrower pays off a $400,000 loan, the lender issues a deed of reconveyance, finalizing the debt clearance.
The deed confirms full mortgage repayment, transferring property title to the borrower.
Frequently Asked Questions
What Is the Difference Between Security Interest and Deed of Reconveyance?
A security interest allows lenders to foreclose on a property in case of loan default. A deed of reconveyance relinquishes this interest, preventing foreclosure post repayment.
What if the Deed of Conveyance Is Not Filed or Filed Improperly?
Failure to file a deed of reconveyance correctly can result in property title issues, affecting a home sale.
Can a Homeowner Face Foreclosure With a Deed of Conveyance?
Property tax debt post-reconveyance can lead to foreclosure, particularly in nonjudicial foreclosure states.
What Is the Difference Between Conveyance and Reconveyance?
Conveyance transfers property ownership, while a deed of reconveyance shifts title from the lender to the borrower upon loan completion.
The Bottom Line
A deed of reconveyance signifies the transfer of property title to the borrower after full mortgage repayment, clearing the lender’s interest. It is vital for both parties to complete, sign, and file this document correctly.