Loan Paid In Full? Make Sure Your Lender Is Accountable!
Posted Jun 23, 2020
By Washington State Business & Real Estate Lawyer Babak Shamsi
Most property owners have a mortgage. In the course of property ownership, the owner may end up paying off this mortgage (“deed of trust”), whether by sale of the property to a third party, refinance of the loan, or outright payment with personal finances. Once the loan is paid in full, this should effectively end the owner’s relationship with the lender who held that deed of trust.
Sadly, this is not always the case. Even after receiving payment in full, some lenders fail to reconvey (release) their deeds of trust. This can often happen through something as simple as a paperwork mix-up. Troublingly, when this happens, borrowers often have no awareness that their prior lender’s deed of trust still encumbers title to the property. This can become a serious problem if the borrower seeks to sell or refinance the property in the future, as the owner often does not discover the issue until the title company involved with the transaction conducts its due diligence. Sometimes years will have passed by, and the lenders may not even exist anymore. This can make the process of securing after-the-fact reconveyances quite difficult, leaving borrowers with the last resort of initiating litigation to clear title. As a result, it is imperative that any property owner who has paid off a loan confirms with the lender that it has reconveyed its deed of trust. This can save a lot of headache down the road.
If you find yourself in the unfortunate situation of having paid off your loan, but you are unable to sell or refinance due to an encumbrance that should have been released, you can resolve the matter effectively and efficiently with proper legal counsel. The lawyers at Beresford Booth have extensive experience with addressing title issues, including securing reconveyances in such circumstances, and we would be happy to assist you with your real estate needs.
BERESFORD BOOTH PLLC has made this content available to the general public for informational purposes only. The information on this site is not intended to convey legal opinions or legal advice.