Ever wondered about the mysterious world of Deeds of Trust and the curious connection to Reconveyance? Let’s dive into a story highlighting why understanding this can be crucial.
Imagine a seller, happily residing in their Belmont home for over 30 years, managing to pay off their mortgage in due course. All seemed well until they decided to sell in 2019, and an unexpected hiccup surfaced.
Picture this: In the midst of the home transaction, we and the Title company stumbled upon a surprising hitch – a lien lurking in the shadows of the title report. Cue a call to the seller, asking for mortgage account details to wrap up the final payment before closing. Now, here’s the twist – the seller had already paid off the loan. To add a touch of irony, in their practical wisdom, they had shredded what they deemed unnecessary papers, only to find out they needed them. Result? A collective head-scratching moment for everyone involved!
Days were spent trying to rectify this before the close of escrow loomed near.
Here’s the scoop: A reconveyance deed is like the hero that conveys the title back to the trustor-borrower when the borrowed money is fully repaid. Picture it as the grand finale in the mortgage repayment saga.
So, why do these things go awry? Often, when a new lender acquires the original lender, they might need old documents for proof. But what if the new lender vanishes into financial thin air? Well, your proof of reconveyance might vanish with it.
When this crucial step is overlooked, a lien hangs around like an uninvited guest on the property’s record. Before the title can transfer, that lingering loan must be fully paid off.
Now, if you’ve got your paperwork game strong and received a Deed of Reconveyance from the lender, it’s a smooth process—hand it over to the Title company, and voila, the lien disappears.
But, what if you never got the reconveyance notice, or ended up shredding everything in a frenzy of moving prep? Brace yourself, because the only way forward is to post a bond until the issue is resolved. And no, the bond is not refundable.
Opting for a bond is the last resort, and it’s not a cheap ticket. You’re looking at a sum double the face value of the original loan, with a premium ranging from 2% to 5%, depending on your financial profile.
The lesson here? Ensure that a Deed of Reconveyance is recorded when you pay off or secure a new loan. And those seemingly bothersome letters from your lender? They might hold the key to averting a future headache. So, embrace the paperwork—it could be your ticket to a hassle-free real estate journey. 🏡✨
As always, call us if you need more explanation or if you’re considering a move. We’re always here to help.
Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 30 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California. They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.
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The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax, insurance or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.
Drew Morgan—Broker Associate 01124318 | Christine Morgan—Sales Associate 01174047
CEO & President of MorganHomes, Inc. Real Estate licensed under RE/MAX Star Properties 01811140
