Reconveyance is a legal process through which a lender transfers the title or ownership of real property back to the borrower once the underlying debt or mortgage has been fully paid off or satisfied. In mortgage transactions, the lender typically holds a lien on the property as security for the loan. Once the borrower has repaid the loan in full, the lender executes a document called a reconveyance deed, which formally releases the lien on the property and transfers ownership back to the borrower. Reconveyance ensures that the borrower has clear and unencumbered title to the property, free from any claims or liens by the lender. The reconveyance deed is then recorded with the appropriate government authority to update the property’s title records and reflect the change in ownership status. This process finalises the borrower’s legal ownership of the property and removes any encumbrances related to the mortgage.
The conveyance of a property back to a former owner.
n. in those states which use deeds of trust as a mortgage on real property to secure payment of a loan or other debt, the transfer of title by the trustee (which has been holding title to the real property) back to the borrower (on the written request of the borrower) when the secured debt is fully paid. Under the deed of trust the borrower transfers title in the real property to the trustee (often a title or escrow company) which holds it for the benefit of the lender (called “beneficiary”). The lender must surrender the promissory note to the trustee who cancels it and then reconveys title to the borrower and records the reconveyance.
Reconveyance is the transfer of title to real property from a trustee back to the borrower (trustor) once the terms of a deed of trust or mortgage have been satisfied, typically upon the repayment of a loan.
Reconveyance occurs when the borrower fulfils their obligations under the loan agreement, such as paying off the mortgage or deed of trust in full, thereby releasing the lender’s lien on the property.
The purpose of reconveyance is to transfer legal title of the property from the trustee (who held it as security for the loan) back to the borrower, thereby removing the lien and restoring full ownership rights to the borrower.
In most cases, the lender or their designated trustee initiates the reconveyance process once the loan has been paid off or otherwise satisfied. The borrower may also request reconveyance upon fulfilling their obligations under the loan agreement.
Once reconveyance is completed, the trustee issues a document called a reconveyance deed or deed of reconveyance, which acknowledges that the debt has been paid in full and releases the lender’s interest in the property. This document is typically recorded with the county or municipal land records office where the property is located.
Recording the reconveyance deed is essential to clear the title of any liens or encumbrances associated with the paid-off loan. Failure to record the reconveyance could result in clouded title or difficulties in proving ownership of the property.
Yes, reconveyance is essentially a release of lien, where the lender or trustee acknowledges that the debt secured by the property has been satisfied and releases their interest in the property.
Some states may impose recording fees or other administrative costs associated with reconveyance. These fees are typically paid by the borrower or included in the loan payoff amount.
In rare cases, reconveyance may be challenged if there are discrepancies or irregularities in the process or documentation. Borrowers or other parties with an interest in the property may seek legal recourse to address any issues with the reconveyance.
Reconveyance is significant for property owners as it marks the final step in the process of clearing the title of any liens or encumbrances associated with a paid-off loan, thereby ensuring full ownership rights and control over the property.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 29th March 2024.
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