Release of Mortgage - 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.
Utah Law
Assignment: An assignment must be in writing
and recorded.
Demand to Satisfy: None required. Lender
or servicer who fails to release the security interest on a secured loan
within 90 days after receipt of the final payment of the loan is liable.
(see below)
Recording Satisfaction: Any trust deed,
... reconveyance of the trust property, if acknowledged as provided by
law, is entitled to be recorded.
Marginal Satisfaction:
Penalty: A secured lender or servicer who
fails to release the security interest on a secured loan within 90 days
after receipt of the final payment of the loan is liable to another secured
lender on the real property or the owner or titleholder of the real property
for:
(a) the greater of $1,000 or treble actual damages incurred because
of the failure to release the security interest, including all expenses
incurred in completing a quiet title action; and
(b) reasonable attorneys' fees and court costs.
Acknowledgment: An assignment or satisfaction
must contain a proper Utah acknowledgment, or other acknowledgment approved
by statute.
Utah Statutes
57-1-36. Trust deeds -- Instruments entitled to be
recorded -- Assignment of a
beneficial interest.
Any trust deed, substitution of trustee, assignment of a
beneficial interest under a trust deed, notice of default, trustee's deed,
reconveyance of the trust property, and any instrument by which any trust
deed is subordinated or waived as to priority, if acknowledged as provided
by law, is entitled to be recorded. The recording of an
assignment of a beneficial interest in the trust deed does not
in itself impart notice of the assignment to the trustor, his heirs or
personal representatives, so as to invalidate any payment made by any of
them to the person holding the note, bond, or other instrument evidencing
the obligation by the trust deed.
57-1-38. Release of security interest.
(1) As used in this section:
(a) "Secured lender" means:
(i) a mortgagee on a mortgage;
(ii) a beneficiary on a trust deed;
(iii) a person that holds or retains legal
title to real property as security for financing the purchase of the real
property under a real estate sales contract; and
(iv) any other person that holds or retains
a security interest in real property to secure the repayment of a secured
loan.
(b) (i) "Secured loan" means a loan or
extension of credit, the repayment of which is secured by a mortgage, a
trust deed, the holding or retention of legal title under a real estate
sales contract, or other security interest in real property, whether or
not the security interest is perfected.
(ii) A judgment award secured by a judgment
lien is not of itself a secured loan. A subsequent written agreement between
a judgment creditor and a judgment debtor concerning payment of the judgment
is a secured loan if it otherwise qualifies under the definition in Subsection
(1)(b)(i).
(c) "Security interest" means an interest
in real property that secures payment or performance of an obligation.
Security interest includes a lien or encumbrance.
(d) "Servicer" means a person that services
and receives loan payments on behalf of a secured lender with respect to
a secured loan.
(2) This section may not be interpreted
to validate, invalidate, alter, or otherwise affect the foreclosure of
a mortgage, the exercise of a trustee's power of sale, the exercise of
a seller's right of reentry under a real estate sales contract, or the
exercise of any other power or remedy of a secured lender to enforce the
repayment of a secured loan.
(3) A secured lender or servicer who
fails to release the security interest on a secured loan within 90 days
after receipt of the final payment of the loan is liable to another secured
lender on the real property or the owner or titleholder of the real property
for:
(a) the greater of $1,000 or treble
actual damages incurred because of the failure to release the security
interest, including all expenses incurred in completing a quiet title action;
and (b) reasonable attorneys' fees and
court costs.
(4) A secured lender or servicer is not
liable under Subsection (3) if the secured lender or servicer:
(a) has established a reasonable procedure
to release the security interest on a secured loan in a timely manner after
the final payment on the loan;
(b) has complied with this procedure in
good faith; and
(c) is unable to release the security
interest within 90 days after receipt of the final payment because of the
action or inaction of an agency or other person beyond its direct control.
