A mortgage lien is recorded on real property to secure a debt from a borrower. The borrower promises to pay a specified amount stipulated in the mortgage, and if he fails to pay, the holder of the mortgage may initiate a foreclosure proceeding to take the property that is secured by the mortgage. In legal terms, a mortgage “runs with the property,” which means that even if there is a change in ownership of the property, unless the mortgage is paid, it will remain as a lien against the property. Each state has different rules that pertain to how long a mortgage remains valid on a piece of property.
What are the Characteristics of a Mortgage Lien?
A mortgage is a voluntary debt recorded on a property by a lender or creditor to secure an unpaid debt or loan that has been agreed to by a borrower. When a borrower signs a mortgage, he agrees to pay a certain sum of money within a specified time period. In the mortgage agreement, he acknowledges that if he fails to make payments as agreed upon, the mortgage holder can foreclose on the lien, and potentially take the property as satisfaction of the debt. Some mortgages are short term and some have a payment period of thirty years. A mortgage lien stays valid on a property as long as the unpaid debt remains in force.
State-by-State Rules on Lien Expirations
Each state has different rules that apply to a mortgage that has sat dormant on a property without any legal activity, or notification by its holder that a secured interest still exists. For example, in Ohio the statute of limitations is 21 years. This means that if a mortgage were recorded on a property, and then left alone, unless there was some action to contest it, or have it removed, it would automatically expire after 21 years. Oftentimes, this applies in situations where a mortgage was paid off as part of a sale or refinance, but a reconveyance wasn't recorded, which would have removed the lien from the title.
How Do You Check the Status of a Mortgage Lien on Your Property?
You can check the status of all recorded liens by asking a title company to prepare a property profile report, which shows any encumbrances or liens that exist on a property. For a lien to be valid, it must be recorded with the county recorder, and title companies keep track of this information. The information in the report should include the original creditor’s name and the loan amount and terms of the loan such as a 30-year mortgage. It will also show the recording date, which is important in case a statute of limitations action is necessary to remove the lien. Most title companies will prepare a property profile for free.
Legal Help for Discharge of Lien
In order to remove a dormant mortgage lien, you might need the services of a real estate attorney. In some cases, if the lien was obviously paid off in the past, as evidenced by newer mortgages being placed on the property, a title company may indemnify a future mortgage holder or owner of the property against any loss incurred as a result of the old lien. Indemnification means the title company acknowledges that the old lien exists, but that it is invalid, or has already been paid off, and the company will issue a new title policy based on that information.
- Pulgini and Norton LLP: Mortgage Discharge Documents
- Ohio Laws and Rules: 5301.30 Expiration of Mortgage Lien
- PropLogix: How To Get A Mortgage Lien Released
- Internal Revenue Service. "Understanding a Federal Tax Lien." Accessed Sep. 18, 2020.
- Experian. "Tax Liens Are No Longer a Part of Credit Reports." Accessed Sept. 18, 2020.
- Experian. "What Affects Your Credit Scores?" Accessed Sep. 18, 2020.
- Federal Trade Commission. "Fair Credit Reporting Act 15 U.S.C § 1681," Page 22. Accessed Sep. 18, 2020.
I graduated with a degree in Finance from Cal Poly Pomona and have held an active Brokers License for over 30 years. I also owned an accounting and tax practice for ten years. I'm an expert in all matter relating to mortgages, accounting, small businesses and taxation, and investing.