Reconveyance

Overview

Reconveyance occurs when a mortgage debt is fully paid off. The lender issues a reconveyance deed or document to transfer ownership back to the borrower, thereby releasing the lien and providing a clear title to the property owner.

Key Concepts

Mortgage Debt: The outstanding amount of money that a borrower owes to a lender under a mortgage agreement.
Lender: The bank or financial institution that issued the mortgage loan.
Equity Owner: The individual or entity that holds ownership interest in the property.
Clear Title: A title free of liens or legal questions about the property’s ownership.

Examples

Residential Property: After Jane repaid her entire mortgage loan, her lender issued a reconveyance deed, which Jane then recorded in her county’s public records office to clear the mortgage lien.
Commercial Property: XYZ Corporation paid off their commercial real estate mortgage. Their lender provided a reconveyance document, successfully transferring the property title back to XYZ Corporation without any remaining lien.

Frequently Asked Questions

What is a reconveyance deed?

A reconveyance deed is a document issued by the lender to release the borrower from the mortgage agreement and transfer the property title back to the borrower.

How do I obtain a reconveyance deed?

Upon final payment of your mortgage, the lender will typically prepare and provide the reconveyance deed. You may need to request it formally and ensure it gets recorded in public records.

Is there a fee for reconveyance?

Some jurisdictions may charge a fee for recording the reconveyance deed in public records. Check with your local county recorder’s office for specific costs.

How long does the reconveyance process take?

The timeframe for reconveyance can vary, but typically the process is completed within 30 to 60 days after the final mortgage payment.

What happens if the reconveyance deed is not recorded?

If not recorded, the lender’s lien on the property may still appear in public records, potentially complicating future transactions involving the property.

Lien: A legal claim against a property, often used as collateral to satisfy a debt.
Deed of Trust: A document that conveys property to a trustee as security for a loan.
Title Insurance: An insurance policy protecting against loss from title defects.
Mortgage: A loan for purchasing property, secured by the property itself.

Online Resources

References

Real Estate Principles (12th Edition) by David C. Ling and Wayne R. Archer.
The Real Estate Handbook by Jacobus Charles J.

Suggested Books for Further Studies

“The Book on Managing Rental Properties” by Brandon Turner and Heather Turner
“Real Estate License Exams for Dummies” by John A. Yoegel

Real Estate Basics: Reconveyance Fundamentals Quiz

### What takes place during the reconveyance process? - [ ] A new mortgage is created. - [x] The lender transfers the property title back to the borrower. - [ ] A temporary lien is placed on the property. - [ ] The ownership deed is lost. > **Explanation:** During reconveyance, the lender transfers the property title back to the borrower once the mortgage is fully paid off. ### What document is issued to indicate a successful reconveyance? - [x] Reconveyance deed - [ ] Title insurance policy - [ ] Deed of trust - [ ] Mortgage note > **Explanation:** A reconveyance deed is issued by the lender to release the borrower from the mortgage agreement and transfer the title back to the borrower. ### Who records the reconveyance deed? - [x] The borrower or their representative - [ ] The lender - [ ] The title insurance company - [ ] The real estate agent > **Explanation:** It is typically the borrower's responsibility to ensure that the reconveyance deed is recorded with the local county recorder's office. ### What is the effect of recording the reconveyance deed? - [ ] Establishes a new mortgage - [x] Removes the lender’s lien from public records - [ ] Transfers property to the state - [ ] Provides title insurance to the borrower > **Explanation:** Recording the reconveyance deed removes the lender’s lien from public records, giving the borrower a clear title to the property. ### When is a reconveyance deed typically issued? - [ ] When the property is sold - [ ] During the initial loan application - [ ] Immediately after home purchase - [x] After the mortgage is fully paid off > **Explanation:** A reconveyance deed is issued after the borrower has fully paid off the mortgage loan. ### What happens if the reconveyance deed is not recorded? - [x] The lender’s lien may still appear in public records - [ ] The property is transferred to a trustee - [ ] The borrower must reapply for another loan - [ ] Imposes penalties on the borrower > **Explanation:** If not recorded, the lender’s lien may still appear in public records, causing complications with future transactions involving the property. ### Who commonly prepares the reconveyance deed? - [x] The lender - [ ] The local government office - [ ] The borrower - [ ] The title insurance company > **Explanation:** The lender usually prepares the reconveyance deed upon the final repayment of the mortgage loan. ### What descriptive term best fits reconveyance? - [ ] Loan creation - [x] Debt retirement - [ ] Title defect - [ ] Interim financing > **Explanation:** Reconveyance fits the descriptive term "debt retirement," as it involves clearing the mortgage debt and transferring the property title back to the borrower. ### How is reconveyance related to a clear title? - [ ] It creates a lender's claim on the title - [ ] It imparts a negotiable instrument - [x] It gives the property owner a clear title - [ ] It initiates the title search process > **Explanation:** Reconveyance gives the property owner a clear title by removing the lender’s lien from the records. ### What primary obligation is met to start the reconveyance process? - [ ] Secure a new loan - [x] Full repayment of the mortgage - [ ] Purchase title insurance - [ ] Obtain a title search > **Explanation:** The primary obligation is the full repayment of the mortgage, which initiates the reconveyance process.