What Is A Deed Of Reconveyance?

lillisphotography/Getty Images

What is a deed of reconveyance?

A deed of reconveyance is a document that proves you’ve paid off the mortgage on your home. It represents the transfer of the property title from your mortgage lender to you.

Let’s put that in more practical terms: Over the life of your mortgage loan, while you legally own your home, the lender holds a mortgage lien — or claim — to it. This means that if you fail to repay your mortgage, the lender can repossess your home. Once you’ve paid back the loan, though, the lender will remove the lien. To do that, it issues a deed of reconveyance. When you sell your home, this deed is important evidence that the property has a clear title.

You might hear a deed of reconveyance referred to by a few other names:

• Satisfaction of mortgage: A satisfaction of mortgage confirms that a borrower has fully repaid their mortgage, and that the mortgage lender no longer holds a lien on the home. This is simply another name for a deed of reconveyance.
• Full reconveyance: In California, a deed of reconveyance is also called a full reconveyance form.
• Deed of release: A deed of release legally removes any further obligation to a binding agreement. Mortgage lenders can use it to indicate that you no longer owe mortgage payments, but it can be used in other situations, too, such as between an employer and an employee. The reconveyance deed applies specifically to mortgages.

What information is included in a deed of reconveyance?

The reconveyance deed typically includes:

• Name and address of the homeowner/mortgage borrower
• Name of the lender/trustee
• Legal description of the property and parcel number based on the original deed
• Proof that the borrower has fulfilled their obligation to the lender and that the property that had been secured by the home loan now belongs to the borrower
• Signatures of the parties involved and a notary stamp

How a deed of reconveyance works

When a loan is paid off, there are multiple steps to the process of getting a reconveyance deed created and finalized:

1. Borrower makes the final mortgage payment: First, you’ll finish paying off your mortgage. At that point, you may or may not need to request the deed of reconveyance from your lender. To be safe, contact the company and ask.
2. Lender creates the deed: Once the lender — or, more commonly, a title company acting on its behalf — verifies that your loan is paid off, it will create the deed of reconveyance, sign it and have it notarized. Typically, the document must be provided to you within 30 to 60 days of your final payment, says Megan Hernandez of the American Land Title Association.
3. Borrower receives and reviews the deed: Once you receive the document, carefully review it for any errors.
4. Borrower submits the deed: If the lender sends you the document directly, you must submit it to the recording office in the county where the property is located. The deed must be legally recorded to avoid problems when you sell the home.

The deed of reconveyance serves as proof that you’ve paid off your mortgage, which prevents a lender from making a claim to the property. But note that even with a reconveyance deed, you do still have financial obligations as a homeowner — most notably your property taxes. If you fail to pay them, your local government could potentially initiate foreclosure proceedings on your home.

How it works for home sellers who still owe a balance

What if you’re selling your home but haven’t paid off your mortgage yet? The process of getting a deed of reconveyance works slightly differently for home sellers who still owe money on their home loan.

During the closing process, a portion of the money you get from the buyer will be used to pay off the balance of the existing mortgage loan. For sellers, that is what triggers issuance of the reconveyance deed. In this case, the title company typically handles recording it.

“During the lead-up to closing, the title company will reach out to your lender and ask for a payoff statement reflecting everything owed up to the day of closing,” Hernandez says. “At closing, the title company will send the payoff to your lender and proof of that payment to your buyer’s lender.”

What does it cost to get a deed of reconveyance?

Getting a deed of reconveyance may involve paying fees charged by:

• Your local government: Most cities and towns charge a fee to record documents.
• You lender: Some lenders charge a fee for generating a deed of reconveyance.
• A notary: If you must sign the deed, you’ll need to have it notarized.

How long does it take to receive a deed of reconveyance?

It can take up to two months to receive a deed of reconveyance after you’ve fully repaid the loan, but the exact amount of time varies by state and by lender. Often, state laws outline how long lenders have to provide a deed of reconveyance.

What happens if a deed of reconveyance isn’t recorded?

If the reconveyance hasn’t been recorded, don’t panic. You can still have a deed recorded, even if your mortgage has been paid off for some time.

“The act of paying off all the money owed is what actually extinguishes the mortgage,” Hernandez says. “The recording is just evidence of the payoff. If a consumer has documentation showing they paid off their mortgage, they don’t need to worry that some lender will come after them.”

If you paid off your mortgage but never received a deed of reconveyance, contact your lender. Lenders can face statutory penalties, or even litigation, if the deed process isn’t handled according to state guidelines — so yours will have incentive to help you.

FAQs

• Is a deed of reconveyance proof of ownership?
  

  Caret Down Icon
  

  Yes. A deed of reconveyance is proof that the property is fully paid for and ownership has been transferred to the borrower. The lender no longer has a claim to the property.

• Can I request a deed of reconveyance if I paid off my mortgage early?
  

  Caret Down Icon
  

  Yes — once a mortgage is paid off, a lender is required to provide a deed of reconveyance. This applies even if you pay off the loan early.

• Can I request a deed of reconveyance if I refinance my mortgage?
  

  Caret Down Icon
  

  Yes. When you refinance your home, the existing mortgage is paid off by a new mortgage. As part of this process, you’ll get a deed of reconveyance, which serves as proof that the initial mortgage has been repaid.

• What’s the difference between conveyance and reconveyance?
  

  Caret Down Icon
  

  Conveyance is the act of transferring property ownership from one person or entity to a new person or entity. A reconveyance deed is a document that transfers the title of a property from the bank or mortgage company to the borrower once they’ve fully paid off the debt.