A release is required on paid-off mortgage


December 04, 2005

In 2000 I sold my house in Baltimore City. The buyer was $6,600 short, so I allowed her to repay that amount to me over 60 months. When the final payment is made, will a payment-in-full letter suffice, or will I need to have the second mortgage released? If the mortgage has to be released by me, how do I go about getting that done?

When a mortgage is fully paid, a formal document releasing the mortgage should be filed in the land records of the county where the property is located. The release gives notice to all persons that the lien on the mortgage has been cleared and that the mortgage holder no longer has any interest in the property.

Maryland law requires that any person who has a lien on real property in the state, or an agent of the lienholder, must provide a release upon written request after payment has been made and the lien has been satisfied.

If the lien instrument is a deed of trust, the original promissory note marked "paid" or "canceled" by the holder or his agent constitutes an executed release. If the lien instrument is a mortgage, the original mortgage marked "paid" or "canceled" by the mortgagee or his agent constitutes an executed release.

Alternatively, the trustee or beneficiary of a deed of trust or the holder of a mortgage can execute a separate, notarized release instrument which recites that the indebtedness has been paid and the property is released from the lien.

When the mortgage or deed of trust is secured by the borrower's principal dwelling, state law requires the holder of the deed of trust or mortgage to furnish a release without request. The release must be notarized in recordable form. If the holder does not record the release, the holder must furnish the borrower with the release instrument and a notice disclosing the location where the release should be recorded and the estimated amount of any fee required. Currently, it costs $30 for recordation.

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