Deed of Reconveyance

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A deed of reconveyance is a legal document indicating the transfer of property rights from a lender back to a borrower after full loan repayment. The lender directs a trustee to issue a deed of reconveyance to release the borrower from a debt obligation once it’s settled. For reconveyance of deeds, download and complete this customizable deed of reconveyance form to facilitate the legal transfer of property rights.

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A deed of reconveyance is a legal document indicating the transfer of property rights from a lender back to a borrower after full loan repayment. The lender directs a trustee to issue a deed of reconveyance to release the borrower from a debt obligation once it’s settled. For reconveyance of deeds, download and complete this customizable deed of reconveyance form to facilitate the legal transfer of property rights.

What Is a Deed of Reconveyance?

When a party obtains a mortgage (home loan) to buy a property, the borrower signs a document indicating that he or she conveyed the property as a security interest to the lender as long as the mortgage is outstanding. 

If the borrower defaults on the loan, the lender can foreclose on the property and transfer the title of the property. However, if the borrower clears the loan, he or she will receive a deed of reconveyance that secures the borrower’s interest in the property, especially if borrowers also pay property taxes on time. Reconveyance means transferring the title of a property to the borrower once a mortgage has been fully settled. 

Therefore, a deed of reconveyance is a document issued by a lender to a borrower after he or she has completed the repayment of a mortgage loan. A reconveyance of deed signals that the borrower has fulfilled the debt obligation and transfers property rights from lender to borrower.

Parties of the Deed of Reconveyance

There are three main parties in a deed of reconveyance:

  • Lender/Beneficiary/Mortgage holder — Often, a bank or financial institution provides a loan with the borrower’s house as collateral and relinquishes its interest to the collateral once the loan has been paid in full. The lender may also be referred to as the beneficiary because it benefits from the interests secured in the property until the debt is paid off. 
  • Borrower/Homeowner — The borrower obtains a home loan by pledging the home or other property as security with the anticipation of receiving the property’s title from the lender once the borrower settles the debt. 
  • Trustee — A neutral third party, often a title company, the trustee holds the title on behalf of the lender during the loan term. The trustee is typically responsible for drafting the deed of conveyance and issuing it to the borrower and the county recorder’s office once the debt is cleared. 

These are the parties in the standard deed of reconveyance. However, the parties may vary depending on the loan agreement terms and according to state law. 

Key Terms

There are several key terms found in a reconveyance form, including:

  1. Lien — the legal claim over a property used as collateral for a loan.
  2. Principal — the amount of money borrowed in a loan. This does not include interest or fees that may accrue over the loan’s lifetime. These are deducted first before the principal from any payment made according to the amortization schedule.
  3. Equity — the difference between the value of a property and the loan amount. Equity increases over time as the borrower pays off the principal. 
  4. Trustee — neutral third party who holds the property title with a lien until the debt is paid.
  5. Trustor — the borrower, the party that secures a loan by pledging property as collateral. 
  6. Beneficiary — the party that lends money to a borrower and gets beneficiary interest in a property in the form of a lien.  

Why Is a Deed of Reconveyance Important?

A deed of reconveyance is important because it shows that the borrower has fulfilled his or her debt obligations with the lender. The implications of this include the following:

  • Proof of ownership with a free and clear title — The deed of reconveyance releases any claim the lender had on the property and indicates the asset’s rightful owner. It also shows that the title is clear and free from any claims and that the homeowner can sell the home or use it as security for another loan. A deed of reconveyance form transfers the property title from lender to borrower. 

  • Legal requirement — State law requires lenders to file a deed of reconveyance within 72 days of the debt settlement to the county recorder and the borrower within a certain period (usually 30–60 days) after the final loan payment. 

What Should Be Included in the Deed of Reconveyance?

The following details should be included in a valid deed of reconveyance sample:

  • The names of the parties — The document should indicate the full legal names and contact information of both the lender and the borrower. 
  • Description of the property — Indicate the complete legal description of the property that makes the subject of the agreement, including details like the parcel number and any other information in the original title.
  • Loan information — Provide the relevant loan details, including the original principal amount, loan date, and repayment terms.
  • Confirmation that the borrower has cleared the obligation — Confirm that the borrower paid off his or her mortgage, including when the last payment was received.
  • Signatures — The trustee must sign the deed of reconveyance in the presence of a notary public for it to be valid.
  • Recording information — Depending on the state, the trustee must file the deed with the county recorder’s office and send a copy to the borrower. In some states, the trustee must only send the document to the borrower, who is responsible for recording it with the county office. The deed should indicate when the document was recorded.

How a Deed of Reconveyance Works

After a borrower has fully repaid his or her loan, the lender will prepare a deed of reconveyance form as legal proof that the debt has been paid. The trustee then transfers the property title to the borrower and issues the deed of reconveyance as evidence that the borrower paid off the mortgage. Reconveyance of deeds completes the purchase process for the homeowner.

Difference Between a Deed of Reconveyance & Satisfaction of Mortgage

The main difference between the reconveyance of deeds and satisfaction of mortgage documents is the type of mortgage instrument used, which often depends on state law. Depending on the state where the property is located, the lender might opt for a satisfaction of the mortgage rather than a deed of reconveyance. In states where a deed of trust is used, a neutral third party (the trustee) holds the property’s title in trust for the lender (the beneficiary). Once the borrower pays the loan in full, the trustee signs a deed of reconveyance to transfer the title to the borrower. The deed transfers the property from the trustee to the borrower.

A satisfaction of mortgage is used in states where a standard mortgage agreement is used. The satisfaction of mortgage is prepared and signed by the lender once the borrower fulfills his or her debt obligations. The document transfers the property from the lender to the borrower.

Full Reconveyance Form vs. Deed of Release

A deed of release indicates that a property owner has fulfilled all the mortgage settlement terms, while a deed of reconveyance transfers full ownership of the title rights to the owner.

Difference Between a Deed of Trust, Grant Deed, and Property Deed

In real estate, different deeds serve varying purposes according to the use context. The word “deed” refers to a legal document that transfers ownership of property from one party to another. These three main types of deeds differ as follows:

  • A deed of trust is an instrument used to secure a loan against a borrower’s real property. Through the trust deed, the borrower (trustor) transfers the legal title of a property to a neutral third party called a trustee, who holds it on behalf of the mortgage lender. Once the loan is paid in full, the borrower may receive what is called a full reconveyance, which transfers the title of the property back to the borrower.

  • A grant deed is a legal document that transfers a title from a grantor (seller) to a grantee (buyer). The instruments guarantee that the grantor has not previously sold the property to another person or entity and that the title is clean without any undisclosed encumbrances. 

  • A property deed is a general term that includes trust deeds, grant deeds, and other real estate deeds used to establish the ownership of property that is the subject of transfer from one party to another. 

How To Write a Deed of Reconveyance

Once the borrower fully settles his or her debt obligation, the lender sends instructions to the trustee indicating that the debt obligations related to the property have been fulfilled. The trustee then drafts the deed of reconveyance to transfer property rights to the borrower. The process of writing the document differs for each party as follows: 

1. Trustee

  • Coordinate with the counterpart. The trustee coordinates with both the borrower and the lender to get the details to include in the deed of reconveyance form. The trustee then prepares the deed of reconveyance according to the terms of the deed of trust, ensuring that all relevant details are correct, including the property description and the names and addresses of the trustor and lender. 
  • Define the terms. Because the deed of reconveyance is based on the deed of trust that outlines the loan agreement between the trustor and the lender, the trustee is not at liberty to negotiate any new terms. Therefore, all terms should be readily available and easy to verify.
  • Fill in all the necessary information. The trustee is responsible for preparing and filling in all the required information in the deed of reconveyance.

2. Borrower/Trustor

  • Coordinate with the counterpart. The borrower maintains consistent communication with the lender and requests the deed of reconveyance form to be issued once the loan is paid in full. The deed of reconveyance is the legal means by which the trustor regains the title to his or her property. 
  • Define the terms. There is no room to negotiate any terms after the borrower has repaid the loan. The loan terms were defined in a separate legal instrument. The deed of reconveyance pulls its terms from existing documents and is only created after the borrower has been discharged from his or her debt obligation for the property. 
  • Fill in all the necessary information. Since the trustee is responsible for filling out all the relevant details to create the deed of reconveyance, the borrower simply confirms and affirms the accuracy of the document. 

3. Lender

  • Coordinate with the counterpart. Upon receipt of the final payment, the lender initiates the preparation of the deed of reconveyance form. The lender provides all the details necessary for the trustee to prepare an accurate deed of reconveyance to relinquish the lien on the property. 
  • Define the terms. There is no room for negotiating for a deed of reconveyance because the terms were previously defined in the initial loan and/or purchase agreement. 
  • Fill in all the necessary information. The lender confirms the details in the deed of reconveyance after it is filled out by the trustee. 

How To Use a Deed of Reconveyance

When a mortgage whose terms were outlined in a deed of trust is paid in full, a deed of reconveyance is prepared to discharge the trustor from his or her debt obligation on the property. 

Common Use Cases

The deed of reconveyance is used to discharge the trustor from the debt obligation after completion of the final debt payment. Other common use cases include the following:

  • Clearing liens — The deed of reconveyance clears any liens, claims, or encumbrances on a property after a mortgage has been paid in full. It shows that the borrower has fulfilled his or her obligations to the lender.
  • Proof of ownership — A homeowner can present the deed of reconveyance as needed as proof of full ownership of the property.
  • Resolving title issues — Since the law requires that the deed document be recorded in the relevant county office, the document rectifies any potential discrepancies by ensuring that public records reflect the current ownership status of the property described therein. Anyone who requests information about the property will be able to determine its history. However, if no deed of reconveyance is recorded or if there are errors in the document recorded in the county office, the title may have issues that will need to be resolved before the property can change hands again.

When Not To Use the Deed of Reconveyance

It is generally not legally viable to use a deed of reconveyance in the following circumstances:

  • To amend the terms of the original mortgage loan agreement;
  • To address disputes regarding debt settlement; or
  • To rectify errors in the original loan agreement.

Frequently Asked Questions

How do I get a deed of reconveyance?

After you’ve completed your mortgage payments, ask your lender for a reconveyance of deed. Your lender will then engage the trustee to prepare the document. Since the deed of reconveyance is a public record that you have settled your loan obligation, you can use it to secure another mortgage or present it as evidence of unencumbered ownership of your property. Even though the process is clear, it may be helpful to work with an experienced real estate lawyer in your area.

Who signs a deed of reconveyance?

After a borrower settles his or her property debt obligation, a reconveyance of deed is necessary. The document is prepared and signed by the trustee, a neutral third party who holds the title on behalf of the lender and prepares the deed at the lender’s request. Notably, the deed of reconveyance must be signed, notarized, and recorded with the county recorder’s office so that public records will reflect that the property is free from the lien. 

How do I file reconveyance?

The trustee named on the deed of trust will generally issue a copy of the deed of reconveyance to the borrower and record it with the county recorder’s office. However, if the trustee fails to record the document but issues a signed and notarized copy to the borrower, the borrower may record it using the following steps:

  • Submit the document to the local recorder’s office. Present the deed of reconveyance at the county recorder’s office based on the property’s location. You may be required to fill out a form or provide additional information.
  • Pay the recording fee. Though it differs from state to state, this fee usually ranges from $20 to $75 for the first page.
  • Record the deed. The office will record the deed by filing the document in the relevant property records.
  • Confirmation of record. You should receive a stamp or certificate showing that your deed has been duly recorded.
What is a substitution of trustee and full reconveyance?

A substitution of trustee and full reconveyance are two documents combined as one. The first document is the substitution of trustee, used within the context of the trust deed to replace the trustee who holds the property deed for the benefit of the lender within the mortgage term. The full reconveyance part of the document indicates that the borrower has paid the mortgage in full. The substitution of trustee and full reconveyance is used when the original trustee is unable, unwilling, or unavailable to execute a reconveyance deed and release the lien on the property.