By utilizing a lien release tracking service, you can move onto the next closing and ensure releases, satisfactions, and reconveyances are done right and on-time.
Release tracking is a search of the official records to confirm that documents, also called instruments, identified in the title commitment are properly released. If the required releases aren’t recorded, this results in a title defect that will impact the new homeowner.
Release Tracking is part of the post-closing due diligence performed after a real estate transaction by the title agent, but it’s only one small part of an agent’s responsibilities. Voluntary and involuntary liens like mechanic’s liens, Home Equity Lines of Credit, mortgages, judgements require a release or satisfaction to be filed by the lien holder before the sale of the property and the issuance of a new title policy. Unfortunately, not all parties are aware of their responsibility to file the release or sometimes a document is rejected by the county recorder.
A missed release means the new homeowner inherits a title defect on their property.
Why PropLogix Release Tracking?
7 Reasons You Need to Track Every Release
Whether you do it yourself or choose to use a third-party like PropLogix, this guide explains why checking the public record for releases is still essential. The post-closing process has grown more complicated. Download this guide to get a deeper understanding of why you need to track every release.
There is a lot that goes on behind the scenes of a real estate transaction and the settlement or title agent is responsible for coordinating all the parties involved. The job for the title agent doesn’t end at the closing table. Post-closing tasks are just as important in protecting the property rights of the homebuyer as other work leading up to the closing day.
Some title companies or law firms in charge of your closing have a post-closing department or a designated employee to carry out the post-closing duties.
The typical post-closing responsibilities of a settlement agent include:
Funding Authorization
Funding Disbursement
Recording
Issue Final Policy
Payoff existing liens like mortgages and/or judgements on the property
Obtain and pay final utility bill
Obtain releases for those liens
Sending final documents to all parties like the deed
Document Retention
Guaranteeing all liens are properly released is part of the requirement to issue a homeowner’s and lender’s title policy. While eRecording tools have helped mitigate recording issues, not all municipalities have adopted the technology and some documents are still rejected or recorded with erroneous information. These documents must be corrected and resubmitted. Otherwise, the new owner will inherit a title defect.
Questions to Ask when Obtaining A Mortgage Satisfaction
What are my state’s regulations?
Lenders and creditors are required to release a fully paid debt. The time requirements for when that release must be filed varies by state.
Has the lender received all documents to satisfy the mortgage?
The American Land Title Association recommends submitting the payoff letter and all other required documents to the lender within two business days of the date of settlement.
A mortgage is a type of lien placed on a property if the purchase is financed by a lender. When a homeowner pays off the mortgage either through the sale of the property or final payment, a subsequent document called a satisfaction or release is recorded.
A mortgage is a voluntary lien because as a homebuyer, you agree to the terms of the loan with your lender. You know how much you will owe them and what your mortgage rate will be based on the loan estimate and final Closing Disclosure. Other voluntary liens include a HELOC or a home equity loan, which are two of the ways homeowners can refinance and cash out the equity in their homes.
An involuntary lien is imposed on property without the owner’s consent. This usually happens when homeowners are unable to pay taxes or other fees to governing authorities. An example of an involuntary would be a property tax lien or a mechanic’s lien.
Documents that require a subsequent release or satisfaction
Liens are never “erased” in the public record. Instead, a document is recorded with a number corresponding to the original lien once they have been paid off. For every lien that’s recorded, a subsequent document must be filed to release that lien.
Different regions will have different terms and requirements for these documents. Some of the terms to know include:
Instruments Listed in Title Commitment
Mortgage
Deed of Trust
Home Equity Line of Credit (HELOC)
Judgement Liens
Lis Pendens
UCC Financing Statements
Notices of Commencement
Subsequent Documents
Satisfaction
Release
Termination
Subordination
Every document tracked, No hidden fees
Learn how to get started with PropLogix Release Tracking
Depending on your area, you may hear the term Deed of Reconveyance instead of Satisfaction of Mortgage. These two documents basically signal the same thing: the mortgage on a property has been paid in full. A mortgage holder issues a deed of reconveyance to transfer the title from the lender to the borrower and officially release the lien on the property.
Both the satisfaction of mortgage and the deed of reconveyance release or extinguish the lien created by the mortgage.
These are the most common instruments that are tracked with release tracking services. HELOCS and home equity loans (second mortgages) are the second most common.
Which document is used in your area is largely based on the jurisdiction’s prevailing legal theory.
Industry Best Practices Clash with Industry Expectations
Part of the title agent or agent-attorney’s responsibility is to ensure all documents listed in the Title Commitment are recorded properly.
All of the documents related to the previous owner like the mortgage, a Home Equity Line of Credit (HELOCs), or any judgements or liens must have a release filed to officially extinguish the lien.
During the post-closing process, the title agent confirms that documents are properly notarized, executed, and in recordable form. These documents are sent to the appropriate recording authority where they will appear in public records.
If a lien isn’t properly released this results in a defect, or cloud, on the new owner’s title.
In order to protect a homebuyer’s property rights, it’s important to track these documents after closing. This follow up search is often referred to as a “continuation search.” This is usually done before or when the title insurance policy is issued.
Best practices suggest issuing the policy within 30 days of settlement (the closing date) or when all of the commitment requirements have been met.
Unfortunately, title agents have no control over when or whether the document is properly recorded. Some states have statutory time frames for the public recorder to enter the documents into the public record, but some don’t. There’s also no guarantee that the documents will be recorded. In fact, it’s estimated that 10 million documents are rejected by county and city recorders every year. Despite the advent of e-recording, which helps reduce rejections not all recording offices offer this option.
Additionally, settlement agents face pressure to issue policies before the statutory time frame that require the documents to be recorded. In order to meet these expectations, some agents issue policies in the hope that post-closers won’t miss any documents in a continuation search or that a mutual indemnity agreement will cover any future problems.
In order to meet both industry expectations and best practices, title agents, like the team at Liberty Title, use PropLogix Release Tracking to check after every closing and resolve any issues.
How To Start Ordering
Once your order has been placed, we’ll track all the instruments listed in the title commitment according to that property’s statutory time frame. This means that a final release may not be recorded until anywhere from 30-90 days depending on your state’s regulations. We provide email updates when an order is received, when releases have been recorded, and when resolution issues arise. In some cases, lien holders may require an authorization form from the borrower before proceeding.
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