discharge not record at the registry of deed

13 Replies

Hello Everyone,

Quick question:

I am in the process of closing on a primary single family residence. 

Apparently, according to my lender/closing attorney, the seller's lender sent the discharge paperwork to the seller like 10 years ago when he paid off his mortgage. 

Unfortunately, the seller never had it recorded at the registry of deed, because he did not know.

My lender recommended that I still can go ahead and proceed with the closing as the seller will get the discharge record in a few weeks post the closing.

I am just getting nervous as I never ran into this problem before. Usually, the seller will get the money from buyer, and the discharge would be in place and record within 1-2 days apart from the closing date. 

I just want to find out if anyone ever ran into this issue before.

I also want to get some opinions if I should proceed with the closing, or wait until the seller is addressing his discharge paperwork/record.

Thank you ahead.

@Chan K.

Not sure about your state laws but in Michigan I don't know how you can convey clear title until it is cleared up. I would wait so everyone works as fast as they can to clear up if it were me. If it closes then everybody stops working.

Originally posted by @Charles Kao :

@Chan K.

Not sure about your state laws but in Michigan I don't know how you can convey clear title until it is cleared up. I would wait so everyone works as fast as they can to clear up if it were me. If it closes then everybody stops working.

actually this is far more common than what we think.. 

title companies many times will remove that exception if there is some shred of proof that its been paid.. 

not the end of the world by any means 

Full disclosure, recording a satisfaction of mortgage here is only $30.00 and may be significantly more expensive in your municipality.

If I were in your situation and if I had your same concerns I would have the Lender overnight the unrecorded satisfaction of mortgage to my attorney and I would take it to the Register of Deeds myself to have it recorded.

However, I don't really see this any differently than if the Seller were to have a currently active mortgage. Just get proof, in writing, from the Lender that the mortgage was paid in full and the satisfaction of mortgage will be recorded within xx days. Would be the same if they were paying off a mortgage at closing and the Lender had to provide a payoff letter.

Just my $0.02

@Jay Hinrichs you are correct. My lender and closing attorney told me that this situation occurred frequently. Typically, the seller does not know that he has to record his discharge at the registry of deed after he paid off his mortgage. 

@Charles Kao I agreed that after the light is off, then everybody is stepping off. So I need something in writing to assure and bind the accountability from the seller and closing attorney/my lender. 

@Brad L. My lender and closing attorney called the seller's lender to confirm that he is paying off his mortgage already. My lender already agreed to write something up for me to make sure that I feel comfortable. Unfortunately, if I decided to close, I don't think I have enough time to go back/forth to get that paperwork wrap up before 9 AM tomorrow. What trouble me even more is that I did not find this out until late in the afternoon today, and my closing is tomorrow at 9 AM tomorrow. 

I did the following:

1) I called an attorney that I closed with in the past to get his opinion, but he has not called me back yet

2) I called the registry of deed, and they told me that they don't have any problem with my closing without the seller record is discharge

3) I talked to my lender. He called the seller lender to confirm that the seller already paid off his mortgage 10 years ago. The lender agreed to write something up for me at closing. 

For now, I decided that I am going to proceed with the closing with some write up from my lender with key point: mortgage already been paid, and that seller to record his discharge within xx-day/week. Then I will have seller sign off on it too. 

If I ever got a call back from the attorney that I called in 1) prior to 9 AM to stop, then I will cancel the closing.

In the meantime, I will write up a letter to bring into the closing with me as well to be prepared for the lender and seller to sign off in case the lender forgot his write up.

Thank you everyone for your insight and valuable feedback.

I didn't realize you close at 9 AM tomorrow, my advice obviously wouldn't work on a 4 business hour timeline. 

Did the attorney/title company not send out a title commitment, which showed this old unsatisfied mortgage, prior to this afternoon or did they miss the mortgage in their title search? If so, that's pretty bad and I'm confused on how your Lender got your loan this far.

Regardless, good luck. I hope it works out for you.

Originally posted by @Brad L. :

I didn't realize you close at 9 AM tomorrow, my advice obviously wouldn't work on a 4 business hour timeline. 

Did the attorney/title company not send out a title commitment, which showed this old unsatisfied mortgage, prior to this afternoon or did they miss the mortgage in their title search? If so, that's pretty bad and I'm confused on how your Lender got your loan this far.

Regardless, good luck. I hope it works out for you.

closings have gotten so sloppy over the years you have to pretty much demand to get a copy of the title commitment thye just don't send them to you.. but most buyers just trust their closer to say title is good or not.  

@Brad L. the lender/closing attorney never sent out title commitment. FYI: I never got such letter even when I closed on the multifamily rental with the portfolio lender. 

Typically, they send something call HUD and lending commitment letter. The commitment letter is pretty stating that I am getting the financing to buy the house 100%. The HUD just list all the closing fee, and the down payment that I have to bring in.

"If they miss the mortgage in their title search", all these things happened in the background. I don't have much insight. 

@Jay Hinrichs is correct. "buyers just trust their closer to say title is good" this is guy like the flow since I start buying my first home, rental .. etc. I never have a separate attorney to confirm that the title is clear. 

Originally posted by @Chan K. :

@Brad L. the lender/closing attorney never sent out title commitment. FYI: I never got such letter even when I closed on the multifamily rental with the portfolio lender. 

Typically, they send something call HUD and lending commitment letter. The commitment letter is pretty stating that I am getting the financing to buy the house 100%. The HUD just list all the closing fee, and the down payment that I have to bring in.

"If they miss the mortgage in their title search", all these things happened in the background. I don't have much insight. 

@Jay Hinrichs is correct. "buyers just trust their closer to say title is good" this is guy like the flow since I start buying my first home, rental .. etc. I never have a separate attorney to confirm that the title is clear. 

on the west coast I can speak for NV  CA OR WA.. we get title commitments ( which in our vernacular is prelim title report) within 24 to 72 hours of opening escrow.. its standard operating procedure.. in states were the title plants are not digitized it can take a week at least and then it goes to the attorney who just says title is clear you have have to request it specifically from what I have seen.

also when the attorney has to pay an abstractor many times they wont order title until a week before closing because they have to pay for it and don't want to get stuck with the bill if it sale fails.   So for my upper end deals 500 to 2 million In Charleston for instance I insist on title being run the day I open escrow it still takes 7 to 10 days..  

This is a non-issue. A lender would not be pushing a borrower to close unless the unreleased trust issue has already been "solved" (figured out) and that item has been removed from the title insurance commitment. 

Confirm that is accurate and close.

@Chan K. Congrats Chan, hope all goes well. We spoke several months ago. Since than I purchased an 11 unit in griffin Ga and a triplex in Atlanta ga i5 mins away from the airport. I made both purchases 4th qtr last year.

Originally posted by @Jay Hinrichs :
Originally posted by @Brad L.:

I didn't realize you close at 9 AM tomorrow, my advice obviously wouldn't work on a 4 business hour timeline. 

Did the attorney/title company not send out a title commitment, which showed this old unsatisfied mortgage, prior to this afternoon or did they miss the mortgage in their title search? If so, that's pretty bad and I'm confused on how your Lender got your loan this far.

Regardless, good luck. I hope it works out for you.

closings have gotten so sloppy over the years you have to pretty much demand to get a copy of the title commitment thye just don't send them to you.. but most buyers just trust their closer to say title is good or not.  

That's unfortunate, very different from here. Always have title commitment in hand 10 days before closing at the latest.