Deed of trust should be released once loan is paid
Ilyce Glink and Samuel Tamkin
Q: I recently paid off my mortgage and received a Certificate of Satisfaction from my lender that was recorded with the county recorder's office. This certificate stated that the lien had been released. Is this the same thing as a recorded Deed of Trust?
Other than this certificate, do I need some other document proving that I own my house so I can legally sell it? The certificate mentions the loan was secured by a Deed of Trust, but I don't think I ever saw such a document labeled "Deed of Trust."
A: When you take out a loan, your lender requires you to put up the home as collateral. When you pledge the home as collateral, you sign a mortgage or deed of trust for the benefit of the lender. In some parts of the country, mortgages are more prevalent than deeds of trust. But for purposes of buying your home and pledging it as an asset against the loan, both will encumber your home.
A mortgage is a lien on a home that gives the lender the right to foreclose on the home to satisfy any delinquent debt owed by the homeowner to the lender. A deed of trust does basically the same thing, but this document conditionally transfers ownership of the home to the lender to secure the debt. The homeowner is still the owner of the home, but the lender has the right to the title in case the borrower fails to pay the debt as required.
Once you pay off the debt, the lender owes you a document that tells anyone looking at the title to your home that the mortgage or deed of trust has been released. Usually a lender will send that document to the office that handles recordings or filings, and once recorded or filed, anybody looking at the title to the home will see that the lien and interest of that lender in the home has been released.
The bottom line is that you should be all set with your lender.
Send questions to Real-estate Matters, 361 Park Ave., Suite 200, Glencoe, IL 60022, or contact author Ilyce Glink and lawyer Samuel Tamkin at www.thinkglink.com.