The Deed of Reconveyance's importance is tied to the deed of trust. Another name for this document is a trust deed. It is used as an agreement between a trustor and beneficiary that the party in possession should place the property title in question in a trust.
This trust is held by a neutral third-party called the trustee. Deeds of trust are not as typical anymore but still used in about 20 states. The Deed of Reconveyance is a document issued by the trustee confirming the borrower paid their debt in full to the beneficiary and now holds the title to the property.
The Deed of Reconveyance is a vital document to the property owner, showing no liens against the property. The Deed of Reconveyance should indicate the borrowed amount and when the borrower paid the loan in full. It should also contain all relevant information on the property, such as the legal description and parcel number.
Most importantly, the Deed of Reconveyance should contain the trustee's signature, which officially releases the borrower's property title.
Depending on your state, a Deed of Reconveyance may also be known as:
Any person or entity with a mortgage loan from a bank, title company or any other financial institution needs a Deed of Reconveyance once the loan is paid off. This document ensures the property is officially released from the deed of trust. Having this document makes selling and buying a property less problematic.
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A Deed of Reconveyance is a straightforward document showing a clear transfer of the property title from a trustee to a trustor. As a trustee, you might benefit from having a template of this document expediting the process without compromising accuracy.
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When the trustee signs the Deed of Reconveyance, they should do so in front of a notary public. The document should have enough space allocated for the notary's stamp and signature. If you live in Georgia, Michigan, Ohio, South Carolina, Arkansas, or Vermont, you will also need a witness signature.
After the Deed of Reconveyance is signed and notarized, you must file it at the local land records office. Depending on the state and county, it can be the County Clerk's Office, Register of Deeds, Land Registry Office, or County Recorder's Office.
In terms of what they represent, there is no difference between the two. They are both official documents issued by the mortgager or trustee affirming that the borrower has paid the debt in full and that they are now the only owner of the land or property of concern. However, the difference is that the Deed of Reconveyance is only used when the deed of trust was used, which includes a third-party and is used in some states in lieu of the Mortgage Agreement. Other states may offer both.
If you are looking to sell a property and you cannot find a Deed of Reconveyance with the records office, which can create a significant issue. The deed of trust continues to be a burden against the property, and that creates further complications. It is the trustee's job to issue the Deed of Reconveyance to the trustor and most states have time limitations for that. But it is the borrower's job to file the Deed of Reconveyance with the county clerk's office. When the debt has been paid in full, it's essential for all parties to perform due diligence and follow through with the paperwork to avoid complications in the future.
It is not uncommon today for loan refinancing to be the cause for a reconveyance. What happens is that the purchaser of the property chooses to refinance an existing loan and, in the process, pays it in full. This automatically initiates the reconveyance process and the Deed of Reconveyance now belongs to the new beneficiary. This could lead to potential complications once the loan is finally paid in full.
If there are no issues regarding the Deed of Reconveyance discharge by the trustee and the borrower can file it after, there is no need to hire an attorney. But if any clerical errors ensue and any other related issues, perhaps contacting a real estate attorney licensed to practice law in the state can be beneficial.
All US states recognize interstate notarization so it should not matter. But to be absolutely sure, you may want to contact the County Clerk’s Office.
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