One would be well-advised not to be too hasty to torch the dreaded mortgage documents until you have verified that all the proper steps have been taken so that the world knows and has proof that you have in fact paid off that nagging debt. The town land records is the depository of all important documents relating to the ownership of land in that particular town, including mortgages.
When you first borrow the money from a lender the mortgage is “recorded”; that is a copy is made of the original document and made available for public examination in the land record books at the Town Clerk’s office. In addition another copy is made and stored on microfilm or similar secure medium. The original mortgage is returned to the lender.
By recording mortgages lenders insure that the property secured by the mortgage will not be sold without the lender being paid all of the money that it is owed. A prospective new purchaser will arrange for a lawyer to perform a search of the town land records or a “title search” to ferret out any such loans against the property to make sure that they are paid at the time of transfer.
Once a mortgage is “recorded” on the land records it will stay there forever even if it is paid in full at some later date. In order for the mortgage to be “released” or terminated one must obtain another document known as a “Release of Mortgage” or “Satisfaction of Mortgage” and arrange to record that document on the Town land records as well.
The Town Clerk may have placed a notation on the page where the mortgage was originally recorded advising that a document releasing this mortgage has been recorded in the land records in a particular volume and page or you may have to search the land record indexes to find that release document. Until that release is recorded the mortgage debt will still appear to be outstanding even if it was actually paid!
Since many mortgages are sold to out-of-state lenders (many times even more than once) it is not always an easy task to obtain a release.
Of course, the lender will be quick to accept your payment but they may need to be prodded to provide the release. Under most circumstances a release should be in your hands within 60 days of payment.
It is essential that one obtains and records a release when finally paying off a mortgage debt. Lenders are required to provide such a release upon receipt of the funds to pay off the mortgage debt but they sometimes do not follow through or take several months to provide the release.
If a lender fails to provide a release within a reasonable time after payment and is formally notified of the request for a release the State of Connecticut has a law which can impose penalties and damages on the lender.
On occasion people will pay off a mortgage, obtain a release, and then file it away for safekeeping. Several years later when they wish to sell their property a title search will reveal an unpaid mortgage on the land records. They will protest that the particular mortgage was paid off years ago but by failing to record the release on the land records they will still be in a bind.
Cancelled checks do not provide sufficient proof of final payment. They will be required to find the release or obtain another release. With the great number of lenders being merged into a few large lenders it is often difficult to find the records of a lender that merged with another lender ten years ago.
At the same time you pay off a mortgage and secure a release for recording you should also verify that future tax bills and homeowner’s insurance bills are now mailed directly to you instead of to the lender, if those bills were being paid by your lender.
Should your burn your mortgage when it is returned to you from the lender? My advice is to make sure a release of mortgage is recorded and keep the returned documents in a safe place. Burn a steak on the grill to celebrate the payoff of a mortgage instead.
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