Partial Release of Property From Mortgage by Individual Holder
Assignments Generally: Lenders, or holders
of mortgages or deeds of trust, often assign mortgages or deeds of trust
to other lenders, or third parties. When this is done the assignee
(person who received the assignment) steps into the place of the original
lender or assignor. To effectuate an assignment, the general rules
is that the assignment must be in proper written format and recorded to
provide notice of the assignment.
Satisfactions Generally: Once a mortgage
or deed of trust is paid, the holder of the mortgage is required to satisfy
the mortgage or deed of trust of record to show that the mortgage or deed
of trust is no longer a lien on the property. The general rule is that
the satisfaction must be in proper written format and recorded to provide
notice of the satisfaction. If the lender fails to record a satisfaction
within set time limits, the lender may be responsible for damages set by
statute for failure to timely cancel the lien. Depending on your state,
a satisfaction may be called a Satisfaction, Cancellation, or Reconveyance.
Some states still recognize marginal satisfaction but this is slowly being
phased out. A marginal satisfaction is where the holder of the mortgage
physically goes to the recording office and enters a satisfaction on the
face of the the recorded mortgage, which is attested by the clerk.
Illinois Law
Execution of Assignment or Satisfaction: Must
be signed by mortgagee.
Assignment: An assignment must be in writing
and recorded.
Demand to Satisfy: Release required within
60 days of payoff. No request by the mortgagor is required.
Recording Satisfaction: Upon full payoff
of the mortgage, the mortgagee shall provide a written release to the recorder
or registrar for recording or registering. The recorder, or registrar,
upon receipt of such a release and the payment
of the recording or registration fee, shall record or
register the release.
Marginal Satisfaction: Not allowed. Satisfaction
must be by separate instrument.
Penalty: If any mortgagee, knowing the
mortgage to be paid, shall not, within one month after the payment
of the debt, record the satisfaction in the official records, he
shall be liable for and pay to the party aggrieved the sum of $200 which
may be recovered by the party aggrieved in a civil action, plus reasonable
attorney's fees.
Acknowledgment: An assignment or satisfaction
must contain a proper Illinois acknowledgment, or other acknowledgment
approved by statute.
Illinois Statutes
Sec. 2. Every mortgagee of real property, his assignee
of record, or other legal representative,
having received full satisfaction and payment of all such sum or sums of
money as are really due to him from the mortgagor,
and every trustee, or his successor in trust, in a deed of trust in the
nature of a mortgage, the notes, bonds
or other indebtedness secured thereby having been fully paid
before September 7, 1973, shall, at the request of the mortgagor, or grantor
in a deed of trust in the nature of a mortgage,
his heirs, legal representatives or assigns, in case such mortgage
or trust deed has been recorded or
registered, make, execute and deliver to the mortgagor or grantor
in a deed of trust in the nature of
a mortgage, his heirs, legal representatives
or assigns, an instrument in writing
executed in conformity with the provisions of this section
releasing such mortgage or deed of trust in the nature of a mortgage,
which release shall be entitled to be recorded or registered
and the recorder or registrar upon receipt of such a release and
the payment of the recording fee therefor shall record or register the
same. Mortgages of real property and deeds of trust in the
nature of a mortgage shall be released of record only in the
manner provided herein; however, nothing contained in
this Act shall in any manner affect the validity of any release of a mortgage
or deed of trust made prior to January 1, 1952
on the margin of the record. Every mortgagee of real property,
his assignee of record, or other legal representative, having received
full satisfaction and payment of all such sum
or sums of money as are really due
to him from the mortgagor, and every trustee, or his successor in trust,
in a deed of trust in the nature
of a mortgage, the notes, bonds or
other indebtedness secured thereby having been fully paid after
September 7, 1973, shall make, execute and deliver to
the mortgagor or grantor in a deed of trust in
the nature of a mortgage, his
heirs, legal representatives or assigns,
an instrument in writing releasing such mortgage or deed of
trust in the nature of a mortgage or shall deliver that
release to the recorder or registrar for recording or registering.If the
release is delivered to the mortgagor or grantor, it must
have imprinted on its face in bold letters at least 1/4
inch in height the following: "FOR THE PROTECTION OF THE OWNER, THIS RELEASE
SHALL BE FILED WITH THE RECORDER OR THE REGISTRAR OF
TITLES IN WHOSE OFFICE THE MORTGAGE OR DEED
OF TRUST WAS FILED". The recorder, or registrar, upon receipt
of such a release and the payment
of the recording or registration fee, shall record or
register the release.
Sec. 3. An instrument in writing which releases a mortgage or
trust deed of real property may be acknowledged or proved in
the same manner as deeds for the conveyance of land.
Sec. 4. If any mortgagee or trustee, in a deed in the nature of
a mortgage, of real property, or his executor or
administrator, heirs or assigns, knowing the same to be paid, shall
not, within one month after the payment
of the debt secured by such mortgage or trust deed, comply with the requirements
of Section 2 of this Act, he shall, for every
such offense, be liable for and pay to the party aggrieved
the sum of $200 which may be recovered by the party
aggrieved in a civil action, together
with reasonable attorney's fees.
In any such action, introduction of a loan payment book
or receipt which indicates that the obligation has been
paid shall be sufficient evidence to raise
a presumption that the obligation has been paid. Upon a finding
for the party aggrieved, the court shall order the mortgagee
or trustee, or his executor or administrator, heirs or
assigns, to make, execute and deliver the release
as provided in Section 2 of this Act. The successor in interest to the
mortgagee or trustee in a deed in the nature of
a mortgage shall not be liable for the penalty prescribed in this
Section if he complies with the requirements of Section 2 of this Act within
one month after succeeding to the interest.
