When you (finally) ditch your mortgage, your lender issues you a deed of reconveyance, confirming that they relinquish you from your debt. Reconveyance is the process of removing the lender’s lien on the title of the property once the borrower (the homeowner) has paid the loan in full.
Whether you’re paying off your mortgage with home sale proceeds or other available funds, reconveyance is an essential step to cut ties with your lender. If you fail to complete reconveyance and recording, your mortgage remains as a lien on your property, impeding the title transfer to your buyer.
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To walk us through the ins and out of the reconveyance process, we spoke with Kenneth Bryant, a West Virginia real estate agent with more than 24 years of industry experience. He advises sellers to start the reconveyance process early in a transaction to avoid unwelcome surprises and prevent delays.
What is reconveyance, and why do you need one?
When you first bought your home, you signed a promissory note laying out your loan terms. Depending on your state law, you also signed either a mortgage or deed of trust, an agreement to use your home as collateral for the loan.
That agreement — the mortgage or deed of trust — is a legal record of the lien on your property. Your county or other local municipality’s recorder’s office retains a recorded copy of the document. If you were to stop making payments or otherwise default on the loan, that lien would give your lender the right to foreclose, and you could lose your home.
When you satisfy the terms of your promissory note and pay off your loan, your lender no longer has claims to your property. Reconveyance is the process of removing the lender’s lien from the property’s title once the borrower has paid the loan in full.
The specific reconveyance document your lender uses to process the reconveyance hinges on whether your loan is secured by a mortgage or deed of trust. Common reconveyance forms include:
- Mortgage release
- Release of mortgage
- Satisfaction of mortgage
- Mortgage satisfaction
- Deed of reconveyance
- Release of trust deed
While these documents go by different names, they all serve the same purpose: to confirm the loan payoff and remove the lender’s lien on the property title.
Confirm recording to avoid title issues down the line
If the reconveyance isn’t recorded, the lien from your home loan remains on the title in your county or local municipality’s records. This inaccurate record could cause issues later when you go to sell, warns Bryant. You won’t be able to transfer the title to the new owner until you record the reconveyance.
If the lender mails you an unrecorded reconveyance and you lose it, don’t panic. Bryant says it’s correctable, but you’ll have extra legwork. “You [have] to go back and get another original … that can take a week, 10 days … to get it from the lending institution,” he says. If you’re in the middle of selling your home, the delay could affect your closing time or put a sales transaction in jeopardy.
If you aren’t sure whether the reconveyance was recorded, check with your local public records office. Many offer online search queries to look up recorded documents, or you can visit the records office in person.
Unrecorded reconveyance and many other types of delays can jeopardize your selling timeline. And if you were banking on the funds from your home sale to fund the purchase of your new home, you might be in trouble — especially if you’ve already found one for which you want to put a strong offer.
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Reconveyance fees vary: Here’s how costs add up
Reconveyance fees vary depending on your property records office, your lender, and your settlement agent.
If you’re selling your home and the settlement agent handles the title transfer, your settlement agent charges a reconveyance fee to your closing statement. The fee covers the cost to record the document, and the local recorder’s office dictates the amount. For example, Bryant’s local office in West Virginia charges $14 to record a reconveyance. In San Francisco, you’ll pay $75, plus $14 to $17 in recording fees.
Keep in mind that your settlement agent may charge a higher reconveyance fee to cover document preparation and post-closing tracking. For example, Equity Title of Washington charges $180 for a reconveyance and a tracking fee of $40 per lien.
Your lender may also charge a reconveyance fee or recording fee, which would show up on your loan payoff statement.
Step one: Talk to an expert!
Selling your house soon? Connect with a top agent near you to get an expert opinion on how much your house will sell for, what to fix before listing, and the latest local housing market trends.
Just paying off your loan balance won’t clear the lien — you need the reconveyance, too
Paying off your loan balance is just the first step to getting rid of your mortgage. You won’t have a clear title without a reconveyance. With a reconveyance done right, you’ll avoid headaches at the eleventh hour when you’re selling or preparing to sell your home.
FAQs about reconveyance
What happens if a deed of reconveyance is not recorded?
If a lender fails to record a deed of reconveyance, the borrower’s title may not reflect that the loan is paid off, which can lead to legal disputes or difficulty selling the property.
Do reconveyance procedures vary by state?
Yes, states have different laws and timelines for filing a deed of reconveyance. Some may have strict deadlines and penalties for delays, so be sure you work with an agent who knows the local market and laws inside out.
What role do title companies play in reconveyance?
Title companies often assist in ensuring the deed of reconveyance is prepared and recorded properly, especially if the lender delays or fails to act.
How is a deed of reconveyance different from a deed of release?
A deed of release confirms that a specific obligation, like a lien, has been satisfied, while a deed of reconveyance officially transfers the title back to the borrower.
What should I do if my lender doesn’t file the deed of reconveyance?
You can contact the lender directly, hire a title company, or consult an attorney to ensure the deed is filed and your title is cleared.
Are there penalties for lenders who don’t file the deed of reconveyance on time?
In some states, lenders can face statutory penalties for failing to file within the required timeframe. These can be additional — and unnecessary — expenses on top of your closing costs. Coordinate closely with your lawyer and agent to avoid these penalties.
Can I sell my home without a recorded deed of reconveyance?
It may be challenging, as an unrecorded deed could raise questions about clear title ownership during the sale process. Your lawyer and agent can help guide you through this process.
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