Assignment of Deed of Trust by Individual Mortgage 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.
Colorado Law
Assignment: It is recommended that an assignment
be in writing and recorded.
Demand to Satisfy: None required.
Recording Satisfaction: Upon full payoff
and receipt from debtor of the reasonable costs of recording (and within
90 days thereof), the creditor or holder of the debt shall record with
the appropriate clerk and recorder the documents necessary to release or
satisfy the lien of record or, in the case of an indebtedness secured by
a deed of trust to a public trustee, file with the public trustee the documents
required for a release as prescribed by section 38-39-102, whereupon immediately
upon execution of the release of the lien of deed of trust by the public
trustee, the public trustee shall cause such release to be recorded in
the office of the county clerk and recorder of the county in which the
property described in such release is located.
Marginal Satisfaction: Not allowed.
Penalty: Any creditor who fails to timely
comply with the obligations of recording satisfaction shall be liable to
the owner of the real property encumbered by such indebtedness.
Acknowledgment: An assignment or satisfaction
must contain a proper Colorado acknowledgment, or other acknowledgment
approved by Statute.
Colorado Statutes
38-35-124. Requirements upon satisfaction of indebtedness.
... when all indebtedness, whether absolute or contingent,
secured by a lien on real property has been satisfied, unless the debtor
requests in writing that the lien not be released, the creditor or
holder of the indebtedness shall, within ninety days after the satisfaction
of the indebtedness and receipt from the debtor of the reasonable costs
of procuring and recording the release documents, record with the
appropriate clerk and recorder the documents necessary to release or satisfy
the lien of record or, in the case of an indebtedness secured by a deed
of trust to a public trustee, file with the public trustee the documents
required for a release as prescribed by section 38-39-102. If the debtor
requests in writing that the lien be released, or fails to request in writing
that the lien not be released, then the debtor's request or the actual
release shall cancel any obligations on the part of the creditor or holder
to make any further loan or advance that would be secured by the lien.
If the person satisfying the indebtedness requests in writing delivery
to him of the cancelled instruments of indebtedness at the time of satisfaction,
the creditor or holder shall be relieved of any further obligation or liability
under this section after such delivery has been completed. Upon satisfaction
of the indebtedness, the creditor or holder shall return to the person
satisfying the indebtedness all papers and personal property of the debtor
which have been held by the creditor or holder in connection with the indebtedness.
Any
person who fails to comply with this section shall be liable to the owner
of the real property encumbered by such indebtedness.
38-39-102 - When liens of deeds of trust shall be released.
(1) (a) Except as otherwise provided in subsection (3.5) of this
section, liens of deeds of trust to the public trustee, upon compliance
with the provisions of such deeds of trust, shall be released by the public
trustee upon the:
(I) Receipt of a written request of the owner of the evidence of
debt secured by such deed of trust, or the agent or attorney thereof, or
a title insurance company providing an indemnification agreement and affidavit
described in paragraph (c) of subsection (3) of this section, which request
shall be duly executed and acknowledged;
(II) Production of the original cancelled evidence of debt such
as a note or bond as evidence that the indebtedness secured by such deed
of trust has been paid; except that such production may be omitted in the
circumstances contemplated in subsection (3.5) of this section; and (III)
Receipt by the public trustee of the fee prescribed by section 38-37-104
(1) (a) and the fee for recording the release.
(b) Immediately upon execution of the release of the lien of deed
of trust by the public trustee, the public trustee shall cause such
release to be recorded in the office of the county clerk and recorder
of the county in which the property described in such release is located.
(2) If the purpose of the deed of trust has been fully or partially
satisfied and the indebtedness secured by such deed of trust has not been
paid, the public trustee shall release the lien of the deed of trust as
to all or portions of the property encumbered by the deed of trust pursuant
to the provisions of subsection (1) of this section if the request to release
certifies that the purpose of the deed of trust has been fully or partially
satisfied and if either the original evidence of debt is exhibited or the
owner is an entity described in paragraph (b) of subsection (3.5) of this
section that has made, in the owner's request for release or partial release,
the certification contemplated in paragraph (a) of subsection (3.5) of
this section.
(3) With respect to either subsection (1) or (2) of this section,
if such original evidence of debt cannot be produced, the public trustee
may accept one of the following in lieu thereof:
(a) An indemnification agreement accompanied by a certified copy
of an authorizing resolution passed by the board of directors of a bank,
as defined in section 11-1-102 (2), C.R.S., an industrial bank, as provided
for in article 22 of title 11, C.R.S., a savings and loan association licensed
to do business in Colorado, a federal housing administration approved mortgagee,
or a federally chartered credit union operating in Colorado or a state-chartered
credit union, as defined in section 11-30-101, C.R.S., or an indemnification
agreement which has been duly authorized by any agency of the federal government
or by any federally created corporation which originates, guarantees, or
purchases loans indemnifying the public trustee against claims for issuing
a release under this subsection (3) made within the time period described
in subsection (7) of this section, which indemnification agreement is satisfactory
to the public trustee;
(b) A corporate surety bond issued by a company authorized to issue
such bonds in the state of Colorado with the public trustee as obligee,
conditioned against the delivery of any such original evidence of debt
to the damage of the public trustee and in a sum equal to the original
principal amount recited in such deed of trust, which corporate surety
bond shall remain in full force and effect for the time period described
in subsection (7) of this section; or
(c) An indemnification agreement from a title insurance company
licensed and qualified in Colorado in a form acceptable to the public trustee
indemnifying the public trustee from any and all damages as the result
of issuing such release accompanied by an affidavit executed by an officer
of the title insurance company stating that the title insurance company
has caused the debtedness secured by the deed of trust to be satisfied
in full. (3.5) (a) If the owner of the evidence of debt is a financial
institution described in paragraph (b) of this subsection (3.5), the public
trustee may accept, in lieu of production or exhibition of the original
evidence of debt required by subsection (1) or (2) of this section, a certification
made in the owner's request for release or partial release certifying that
the owner is a financial institution described in paragraph (b) of this
subsection (3.5), that the original evidence of debt is not being exhibited
or produced, and that the owner agrees that the owner is obligated to indemnify
the public trustee pursuant to this paragraph (a). Whether such agreement
is contained in the certification, the owner, by requesting release or
partial release without production or exhibition of the evidence of indebtedness,
shall be deemed to have agreed to indemnify the public trustee for any
and all damages, costs, liabilities, and reasonable attorney fees incurred
as a result of the action of the public trustee taken in accordance with
such request, and no separate indemnification agreement shall be necessary
for the agreement to indemnify to be effective. Venue for any action based
upon such indemnification agreement shall be proper only in the county
in which the public trustee receiving the certification is located.
(b) Only the following financial institutions shall be entitled
to submit a certification pursuant to paragraph (a) of this subsection
(3.5):
(I) A bank, as defined in section 11-1-102 (2), C.R.S.;
(II) An industrial bank, as defined in section 11-22-101 (1), C.R.S.;
(III) A savings and loan association licensed to do business in
Colorado;
(IV) A supervised lender, as defined in section 5-1-301 (46), C.R.S.,
that is licensed to make supervised loans pursuant to section 5-2-302,
C.R.S., and that is either:
(A) A public entity, as defined in paragraph (c) of this subsection
(3.5); or
(B) An entity in which all of the outstanding voting securities
are held, directly or indirectly, by a public entity;
(V) An entity in which all of the outstanding voting securities
are held, directly or indirectly, by a public entity also owning, directly
or indirectly, all of the voting securities of a supervised lender, as
defined in section 5-1-301 (46), C.R.S., that is licensed to make supervised
loans pursuant to section 5-2-302, C.R.S.;
(VI) A federal housing administration approved mortgagee;
(VII) A federally chartered credit union doing business in Colorado
or a state chartered credit union, as defined in section 11-30-101, C.R.S.;
(VIII) An agency of the federal government; or
(IX) A federally created corporation that originates, guarantees,
or purchases loans.
(c) For purposes of this subsection (3.5), "public entity" means
an entity that has issued voting securities that are listed on a national
securities exchange registered under the federal "Securities Exchange Act
of 1934".
(4) A public trustee shall have no duty to retain the original cancelled
evidence of debt or deed of trust upon a release granted pursuant to this
section.
(5) The lien of any deed of trust to the public trustee which secures
an obligation other than an evidence of debt shall be released by the public
trustee pursuant to the provisions of subsection (1) of this section as
to all or portions of the property encumbered by the deed of trust upon
the:
(a) Receipt of a written request of the beneficiary or assignee
of such deed of trust, which request shall be duly executed and acknowledged;
(b) Presentation to the public trustee of an affidavit of such beneficiary
or assignee stating that the purpose of the deed of trust has been fully
or partially satisfied; and
(c) Receipt by the public trustee of the fee prescribed by section
38-37-104 (1) (a) and the fee for recording the release.
(6) The public trustee shall have no liability to any person, and
no action may be commenced against the public trustee, as a result of issuing
a release or partial release of a deed of trust under subsection (3) of
this section, unless such action is rommenced within six years from the
date of the recording of such release or partial release or within the
period of time prescribed by any statute of limitation of this state
in which a suit to enforce payment of the indebtedness or performance
of the obligation secured by said deed of trust may be commenced, whichever
is less. Nothing in this article shall be construed to waive immunity
of a public trustee that is provided in sections 24-10-101 to 24-10-120,
C.R.S.
(7) The indemnification agreements or the corporate surety bond
described in this section shall, in each case, remain effective for the
time period described in subsection (6) of this section or until such time
as any claim made against the public trustee within such time period has
been finally resolved, whichever is longer.
(8) If the written request to release the lien of any deed of trust
is a fraudulent request, the release by the public trustee based upon such
request shall be void.
38-39-104 - Satisfaction of mortgage.
The lien of any mortgage encumbering property within the state of
Colorado can be released only by the mortgagee executing a separate
instrument of release executed under the formalities prescribed by
the law regulating conveyances. All releases made prior to July 1, 1973,
either on the mortgage or on the record of the mortgage, and signed by
the mortgagee, shall have the same effect as a separate instrument of release
legally executed by the mortgagee.
