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Palo Alto real estate attorney Julia Wei providing commentary & insight into trends in California real estate law & lending law, mortgages & foreclosures.

The Deed of Reconveyance

January 30th, 2008 · 11 Comments · California Lending & Mortgage Law, Trust Deeds

And today, a guest blog from Eric Hartnett, Esq.  For those of us who have refinanced our loans, we have seen the Deed of Reconveyance before.  However, given the flurry of refinance loans in for the last 10 years, it became common that lenders, trustees and title companies would fail to request and record the Deed of Reconyance.

Eric writes:

Your Loan Secured by a Deed of Trust has been Paid Off – What Now?

You can finally see the light at the end of the tunnel and you’ve paid off your loan.  CONGRATULATIONS!

When you took out a loan and as security for the loan (evidenced by the Promissory Note or Loan Agreement), you agreed to have a Deed of Trust recorded against your home. California is a "trust deed" state rather than a "mortgage" state but in common parlance, most folks refer to their loan as a "mortgage."

Whether the loan is a 30 year mortgage or a 3 month loan, if you have made all of your loan payments, then you will want the lien (Deed of Trust) removed from your property (one does not actually have the Deed of Trust "removed," rather it is reconveyed to you, the borrower). What are the necessary steps under California law to accomplish this?

A reconveyance for a Deed of Trust upon satisfaction of any loan obligations is addressed in California Civil Code § 2941. §2941(b)(1) provides that if you have satisfied your loan obligations, then the lender (beneficiary under a Deed of Trust) or its assignee shall within 30 calendar days execute and deliver to the Trustee of the Deed of Trust several documents. These documents include the original note (i.e. the Promissory Note), Deed of Trust, and a request for a full reconveyance. The Trustee shall then execute the full reconveyance and shall record the full reconveyance with the county recorder within 21 days after receipt by the Trustee of the original note.

Of course, the above-described situation is the ideal scenario. What if the Trustee or the lender (beneficiary) do not fulfill their duties? You, as the trustor/borrower, have options. First, if the full reconveyance has not been recorded within 60 days of your last required loan payment, then you can make a written request to the beneficiary/lender to issue a full reconveyance under Civil Code §2941 (b)(2). Second, if the full reconveyance has not been executed and recorded despite you making all the payments and writing the aforementioned request to the lender, then 75 days after the last required loan payment was made you may have a title insurance company record a release of the obligation. Civil Code §2941(c).

Additionally, should you encounter an uncooperative Trustee or lender after you have satisfied your loan obligations, please note that there are civil and criminal penalties for some violations of Civil Code §2941.

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11 Comments so far ↓

  • griffen

    Oh for the love of Pete, THANK YOU for explaining this in plain English! The letter I just rec’d titled, “Substitution of Trustee and Full Reconveyance” scared the bejesus out of me, and I read many other web answers in law speak, not understanding any of it, until I read this post. Again, MANY THANKS!

  • What exactly is a Scottish Trust Deed

    Really good explanation. We provide similar information on our fresh finance blog

  • Trust Deeds

    Great post, i like your work

  • Laura

    That if a partial reconveyance was never filed, the property foreclosed sold to a new owner. Can the previous mortgage company then issue a partial reconveyance to the previous owner and record it? What rights do the new owners have?

  • Steve Lozano

    Thanks for the explantion on sub of trusteee and full reconveyance, I thought I was sold out by my lender, great explanation.

  • CESAR NAVAS

    In the age of show me the note fraudclosures and who owns my loan, can a full reconveyance be accomplished at all if lender does not have the original note or deed of trust ?

    Please advise.

  • VINOD MEHTA

    Hi Ms. Wei:

    I had refinanced my loan in August 1992.
    Pay off to Fremont Bank and refinanced with new lender, WHL Financial. Title company shows that I had paid off to Fremont. I have closing documents from Title company. Howeverf, during my search at the County office, I did’t find Reconveyance deed recording. I called Fremont Bank, they said that they do not keep any records of old loans more than 7 years.

    My questions is, when refinancing a loan from one lender to another (no change in loan amount) need previous lender to record with the county Reconveyance deed? If yes, can I force Fremont Bank to issue me a letter of payoff and re record the reconveyance deed in the county?

    Thanks.

    Vinod Mehta

  • julia

    Dear Vinod –

    Thanks for reading. This happened a lot during the peak of the refinance heyday.

    See the statute regarding reconveyances discussed here: http://dirtblawg.com/2011/06/how-the-deed-of-reconveyance-works-in-california.html

    If you have your closing statement showing the loan payoff to Fremont, then the lender should issue a “Request” for reconveyance to the trustee. The trustee then records the reconveyance. Alternatively, you can try going through the title company that handled the escrow and see if they have contacts for you.

    If you are getting nowhere with the lender, call my office to make an appointment and you can retain us to get involved.

  • craig gilmore

    hello. thanks for the informative site!
    i am in the middle of refinancing my home and during this process the refinancing bank brought it to attention that a rental property that i own free and clear still has not been cleared of the original loan that i had [and paid off] on it. the previous owners, that i purchased from years ago, have since passed away, and so i have no idea how i could possibly rectify the sittuation.
    any suggestion of how to approach this?

  • craig gilmore

    p.s. the previous owners of my rental units had been carrying the note on the property. the service center that collected the loan doesn’t have records because of the length of time it has been since the loan was paid off….

  • brian penaranda

    hi,my wife and i bought a land in california city (kern county,ca.) and we had paid off the loan on march 2011.we have received a “substitution of trustee and deed of reconveyance”.my question is,is this the title itself?and should i supposed to receive other papers aside fom this?

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