Satisfaction, Release or Cancellation of Mortgage by Individual
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 releaseandthepaymentof therecordingor 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 assigneeof record, orotherlegalrepresentative,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 natureofamortgage, the notes,bondsorother indebtednesssecured thereby having been fully paid before September 7, 1973, shall, at the request of the mortgagor, or grantor inadeed of trustinthe nature of a mortgage, his heirs, legal epresentatives or assigns, in case such mortgageor trustdeedhasbeenrecordedor registered, make, execute and deliver to the mortgagor or grantor in a deedoftrustinthe nature ofamortgage,his heirs,legal representatives or assigns, an instrument in writing executed in conformitywith 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 inthenature 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 paymentof allsuch sumor 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 natureof a mortgage,the notes,bondsorother indebtedness secured thereby having been fully paid afterSeptember 7, 1973,shallmake, execute and deliver to the mortgagor or grantor in a deed oftrust inthenatureofamortgage, hisheirs,legal representativesorassigns,an instrument in writing releasing such mortgage or deed of trust in the nature of a mortgage or shall deliver thatrelease to the recorder or registrar for recording or registering. If the release is delivered to the mortgagor or grantor,it musthave 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 OFTITLES IN WHOSE OFFICE THE MORTGAGE OR DEED OF TRUST WAS FILED". The recorder, or registrar, upon receipt of suchareleaseandthe paymentof the recording or registration fee, shall record or register the release.
Sec. 3. An instrument in writing which releases a mortgage ortrust 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 realproperty,or his executor or administrator, heirs or assigns, knowing the same to be paid, shallnot,withinonemonthafterthe paymentof the debt secured by such mortgage or trust deed, comply with the requirements of Section 2 of this Act, he shall, foreverysuch offense,beliablefor and pay to the party aggrieved the sum of $200 which may be recoveredbythe partyaggrievedinacivil 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.
