When you purchase a home using a mortgage, the lender places a lien on the home until you satisfy the debt. The lien is recorded to let everyone know the financial institution has a legal interest in the home. Because liens attach to the property and not the borrower, you cannot sell the home unless the lien is released. In most cases, the lien release is a smooth process completed by the lender or title company. However, there are times when the process gets complicated and requires some work on your end.
Check With Your Lender
After making your final mortgage payment, the lender issues and records the lien release. If a deed of trust was used to secure your property, the trustee is responsible for releasing the lease upon receipt of the final payment. Depending on where you live, you should receive a discharge of mortgage or a deed of reconveyance. Regardless of the name, the document proves you now own the home. The length of time the lender has to record the deed will vary among states, but generally, lenders must record the release within 30 days. If you have not received any documentation, contact the lender or trustee.
Locate the Successor Company
It is not uncommon for mortgage companies or trustees to go out of business. When this happens, a successor company usually takes over the accounts. If your mortgage is taken over by another company, you should receive notice at least 15 days before the change takes place, according to the Federal Trade Commission. If you have not received a notice, you can check the county recorder's office to see whether a successor company is named on the deed. You can also check with the settlement lawyer. According to the Washington Post, in some cases, the lender will mail the lien release to the original settlement lawyer, who is responsible for recording the document.
Request a Release Through FDIC
If you are unable to locate the servicer, you can submit a written request of lien release to the Federal Deposit Insurance Corporation. You will need to submit a copy of the mortgage or deed of trust and a recent title report. You must also provide proof the loan was paid in full, such as a copy of a "paid" note, settlement statement or copies of your returned payment checks. E-mail, fax or mail a written request for the lien release. At the time of publication, the FDIC charges a $50 processing fee for lien releases. The process takes about 20 days.
Get Release Through Title Company
When you refinance a loan, the title company closing the deal is responsible for ensuring the lien is released. Only the lender can physically release the lien, but the title company will handle communicating with the lender to ensure it is released. The release of lien is then recorded by the title company in the real property records at the county recorder's office. The fee is generally included in your settlement costs or as a separate lien release fee paid at closing. Your new mortgage company places a mortgage lien on the home and records it.
The title company is also responsible for ensuring a lien is released when a home is sold. The sale proceeds are automatically used to pay off the loan. Once the loan is paid off, the lien is released. If the buyer is financing the home, his lender immediately records a new mortgage lien on the home.
- Federal Deposit Insurance Corporation: Lien Release on Real Estate
- Consumer Financial Protection Bureau: After I Have Paid Off My Mortgage, How Do I Check if My Lien Was Released?
- Chicago Tribune: What Documents to Look for When Mortgage is Paid Off
- Washington Post: Borrowers Must Make Sure That Prior, Paid-Off Mortgages Get Released 'of Record'
- Federal Trade Commission: If Your Mortgage Lender or Servicer Is Closing or in Bankruptcy
- IRS. "What's the Difference Between a Levy and a Lien?" Accessed July 13, 2020.
- IRS. "Understanding a Federal Tax Lien." Accessed July 13, 2020.
- IRS. "Topic No. 201 The Collection Process." Accessed July 14, 2020.
- IRS. "Additional Information on Payment Plans." Accessed July 14, 2020.
- IRS. "Instructions for Requesting a Certificate of Release of Federal Tax Lien." Accessed July 13, 2020.
Jeannine Mancini, a Florida native, has been writing business and personal finance articles since 2003. Her articles have been published in the Florida Today and Orlando Sentinel. She earned a Bachelor of Science in Interdisciplinary Studies from the University of Central Florida.