What is a reconveyance deed?

Understanding a deed of reconveyance

A reconveyance deed — or deed of reconveyance — is a document that is typically completed by your lender after you’ve completely paid off your mortgage. You can think of this deed as legal proof that you now own your home and that your lender has removed the mortgage lien against your property.

Depending on your state, a deed of reconveyance can also be known as a satisfaction of mortgage, a full reconveyance document or simply a reconveyance deed.

How does a deed of reconveyance work?

When you buy a home with a mortgage, you may officially own the home, but your lender has a claim (lien) on the property. The lender uses the home as collateral for the mortgage. Your lender also holds the official title to your home until the loan is satisfied (paid off).

Once your mortgage is paid off, your lender must remove the lien on your home and transfer the title back to you. The deed of reconveyance is the legal document that allows your lender to complete this process.

“The importance of a Reconveyance Deed cannot be overstated, as it serves as a legal proof that the mortgage has been fully paid off and the lien holder (usually a bank or financial institution) no longer has any claim on the property,” said Alex Coffman, co-owner of Teifke Real Estate in Texas. “Without this deed, the property still appears encumbered, making it difficult for the owner to sell or refinance.”

In some states, a “deed of trust” is used instead of a mortgage, but the process is essentially the same. Once your home is paid off, your mortgage lender will submit a “satisfaction of mortgage” document, which transfers the title of your home to you and removes the lien on the home.

If you want to sell your home, a deed of reconveyance needs to be submitted as part of the closing process. The deed shows that the proceeds from the sale of the home will satisfy the mortgage obligation and release the lien your lender has on the home.

What information is included in a deed of reconveyance?

A deed of reconveyance has some basic information, including:

• Full name and address of the borrower (you)
• Name and address of your lender (also known as the “trustee”)
• Property legal information, including parcel number
• Declaration (and documentation) of mortgage payoff and transfer of ownership to you
• Owner and lender signatures
• Notary stamp

The document is very formal and can be hard to understand, but the bottom line is that this deed records the date of the title transfer, documentation that you paid off the mortgage and you as the “lien-free” owner of the property.

The process of obtaining a deed of reconveyance

Once you’ve paid off your mortgage or closed on your home, your lender is obligated to submit a deed of reconveyance to your title company typically within 30 to 60 days — depending on your state law.

Once the deed of reconveyance is submitted, you should be able to get a copy of it from your title insurance company or directly from your county or state assessor. It’s a good idea to examine the document for errors and report any mistakes right away.

Your title insurance company or lender will then submit the document to your local county or municipality for official recording. This legally removes the mortgage lien from your home and transfers the home title into your ownership.

If your title insurance company or lender sends the document directly to you for filing, you’ll need to contact your county assessor to submit the document. Make sure the appropriate signatures and a notary stamp are included — otherwise it may not get officially recorded.

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What happens if the deed of reconveyance isn’t recorded?

If you pay off your mortgage and a deed of reconveyance isn’t submitted to your county assessor, there may be no legal record that you own the title to the property. This can prevent you from selling or refinancing the home if a deed is not submitted as part of that process.

The county may also still legally show a lien on your property from your lender, which can cause title issues when you go to transfer the property to another owner. If there is a failure to promptly record a deed of reconveyance on your property, contact your local county assessor's office to help resolve the issue.

Bottom line

While the reconveyance process itself is usually straightforward, follow up with your lender if you don't receive the deed in a reasonable time frame. You want to promptly record the deed with your county. This ensures a clean title and full, hassle-free ownership of your property.