A mortgage is considered an encumbrance against a parcel of real property. Once it is paid off, the mortgage holder is supposed to satisfy the mortgage to officially show that the mortgage is not a lien on the property anymore. The satisfaction needs to be in a particular format and recorded so that future purchasers know that the mortgage was paid off. When a lender fails to record a satisfaction in the appropriate time frame, it can be responsible for certain damages. If you are a lender, buyer, or seller that needs to make sure mortgage discharge documents are prepared and recorded, the Boston real estate attorneys at Pulgini & Norton have experience in all aspects of property transactions and may be able to assist you.
Mortgage Discharge DocumentsWhen you pay off your mortgage, a mortgage discharge should be recorded with the Registry of Deeds to clear the title to your house. The discharge is usually a page that the lender prepares and issues. Often, it is filed directly by the bank or a settlement attorney. However, in some cases, the discharge may be transmitted directly to the person who is paying off the mortgage upon making a final mortgage payment, and that person needs to record the discharge so that clear title can be conveyed to someone else.
Under Massachusetts General Laws, Chapter 183, Section 55, a mortgage servicer, mortgagee, or note holder who is paid in full and receives satisfaction of the mortgage terms is supposed to cause a discharge to be recorded within 45 days of receipt of payment and provide a copy to the settlement agent, closing attorney, or other person sending the payoff.
Additionally, if the discharge documents are provided to the person sending the payoff, and it is someone other than the settlement agent or closing attorney, a transmittal with specific text is supposed to accompany it. The text explains that a discharge is enclosed and that in order to release the mortgage from the property's title, the discharge needs to be recorded along with accompanying documentation (when appropriate) at the same registry of deeds where the deed was recorded. The text will also state that the discharge should be recorded as soon as possible. The recording fees are supposed to be included with the letter and discharge document.
The mortgage holder should also execute the discharge. If the holder is not the holder of record, the discharge needs to specify how the holder became the holder of the mortgage. It should also specify recording information for the documentation that supports the holder's status, record the documentation along with the discharge, or give the settlement agent, closing attorney, or person transmitting the payoff the recordable discharge and whatever documentation is necessary to show the holder's status of record.
If a mortgage servicer, mortgagee, or note holder accepts full payment and satisfaction according to the mortgage or note, but it fails to record or provide the discharge papers to the appropriate parties, it can be held liable for damages. The amount of damages can be equal to the greater of $2,500 or the actual damages due to the failure, plus attorneys' fees and costs.
Explore Your Options With a Real Estate Attorney in BostonFailing to record a mortgage discharge can result in a clouded title that makes it difficult to sell a property or maintain its highest possible value. Whether you are a lender or another party, our experienced Boston real estate lawyers can help ensure that mortgage discharge documents are properly prepared and recorded. The mortgage attorneys at Pulgini & Norton also advise and represent buyers, sellers, and lenders in Waltham, Newton, Andover, and other cities in Massachusetts. Call us at 781-843-2200 or contact us via our online form for a free consultation.