Deed Of Reconveyance

AAA

DEFINITION of 'Deed Of Reconveyance'

A document issued by a mortgage holder indicating that the borrower is released from the mortgage debt. The deed of reconveyance transfers the property title from the lender (also called the beneficiary) to the borrower (also called the trustor). This document is most commonly issued when a mortgage has been paid in full. It contains a legal description of the property and the property’s parcel number and is often notarized. Some states use a satisfaction of mortgage document instead of a deed of reconveyance.

INVESTOPEDIA EXPLAINS 'Deed Of Reconveyance'

The deed of reconveyance is recorded in the county where the property is held. Once the deed has been recorded, any search on that property will show that liens have been paid in full. A property with a lien against it cannot be sold, unless the lien is a mortgage that will be paid in full from the proceeds of the home sale. In such situations, recording the deed of reconveyance is part of the closing process of the home’s sale, and its recording is commonly handled by a title insurance company.

While the mortgage is outstanding, meaning that the borrower still owes the bank something for the loan used to purchase the home, the bank has a security interest in the home. If the borrower stops paying the mortgage, the bank can foreclose on the borrower, evicting him or her and selling the home to fulfill the unpaid mortgage obligation. The deed of reconveyance proves that the bank no longer has a security interest in the home because the borrower has repaid the debt in full. A homeowner with a deed of reconveyance cannot be foreclosed on by the bank. That being said, the homeowner is still at risk of foreclosure by local government if he or she doesn’t make timely property tax payments.

RELATED TERMS
  1. Deed Of Surrender

    A legal document that transfers property ownership for a specified ...
  2. Security Interest

    A legal claim on collateral that has been pledged, usually to ...
  3. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  4. Defeasance Clause

    A mortgage provision indicating that the borrower will be given ...
  5. Property Lien

    A property lien is a legal claim on a tract of real estate granting ...
  6. Title

    The right to the ownership and possession of any item that may ...
Related Articles
  1. Holding Titles On Real Property
    Retirement

    Holding Titles On Real Property

  2. Attention Home Buyers! Why You Need ...
    Home & Auto

    Attention Home Buyers! Why You Need ...

  3. Measuring The Benefits Of Home Ownership
    Home & Auto

    Measuring The Benefits Of Home Ownership

  4. Investing In Property Tax Liens
    Investing Basics

    Investing In Property Tax Liens

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center