Deed of Reconveyance

What it is

A deed of reconveyance is a legal document that transfers clear title of a property from a lender (or trustee under a deed of trust) back to the borrower after the mortgage or trust deed has been paid in full. Recording this document with the county recorder’s office removes the lender’s lien from the public land records and restores the borrower’s free-and-clear title.

How it works

• Issuance: After the loan is satisfied, the lender (or trustee) prepares the deed of reconveyance, includes a legal description of the property, has the document notarized, and records it with the local county recorder.
• Timing: Recording typically occurs within weeks of payoff; title companies often handle recording as part of a sale or refinance closing.
• Effect: A recorded deed of reconveyance shows that the lender no longer holds a security interest in the property. Title searches will reflect that the lien has been released.
• Variations by state: Some states use deeds of trust (with a trustee) or use a “satisfaction of mortgage” document instead; these instruments serve the same purpose.

What the deed usually includes

• Names and addresses of the borrower(s) and lender/trustee
• Legal description and parcel number of the property
• Statement that the mortgage or trust deed has been paid and the property is reconveyed to the borrower
• Signature lines for parties and a notary acknowledgment

Important considerations

• Recording is essential: If the deed of reconveyance is not recorded or is recorded with errors, the lien may remain on the title and can complicate sales or refinancing.
• Second liens: Reconveyance of a first mortgage does not affect second mortgages, home equity loans, or other subordinate liens.
• Tax liens and government foreclosure: A reconveyance does not protect against local government actions for unpaid property taxes; such tax liens can still lead to foreclosure.
• Nonjudicial foreclosure states: Procedures vary; reconveyance does not alter state foreclosure processes where applicable.

Example

A homeowner borrows $400,000 secured by a deed of trust. After the loan is fully repaid, the lender certifies the payoff, prepares a deed of reconveyance, and records it. The public record then shows the borrower holds title free of that lender’s lien.

Frequently asked questions (brief)

Q: What’s the difference between a security interest and a deed of reconveyance?
A: The security interest is the lender’s right to the property while the loan is outstanding; a recorded deed of reconveyance proves that right has been released.

Q: What happens if the reconveyance isn’t filed or is filed incorrectly?
A: The lien may remain on the title, causing problems with selling, refinancing, or obtaining clear title until corrected.

Q: Is reconveyance the same as conveyance?
A: No. Conveyance transfers ownership from one party to another. Reconveyance specifically transfers title back to the borrower after satisfaction of the loan.

Conclusion

A deed of reconveyance is the formal, recorded release of a lender’s interest in property once a mortgage or deed of trust is paid. Proper preparation and timely recording are critical to clear title and to avoid future problems when selling or refinancing.