Paid Off Loans Can Come Back to Bite

Any time a home loan is paid off in full, the paid-off lender is supposed to prepare and record a “reconveyance deed” with the County Recorder acknowledging the full payment, releasing the obligation. In years past escrow and title companies had people dedicated to following up on paid-off loans to ensure this vital step had occurred. Few escrow and title companies still perform this function, potentially creating problems for the original borrower. Although they are paid-off, loans without the required “reconveyance deed” recorded can cause significant delays to both sale and refinance transactions. Whenever a real estate loan is paid in full, follow up to make sure that a written confirmation is received within 30 days of the full payment.