Deed of Release
What is 'Deed of Release'
A deed of release is a legal document that removes a previous claim on an asset or provides documentation of release in a binding agreement. A deed of release may be included when a lender transfers the title of a real estate property to a new homeowner. It may also be used in business agreements or employment terminations and resignations.
BREAKING DOWN 'Deed of Release'
A deed of release is a legal document that releases parties in a deal from previous obligations. It is most commonly used to transfer the title of a real estate property to the homebuyer once the mortgage has been paid in full. Companies may also provide a deed of release when an employee leaves a company.
Mortgage Deed of Release
When most individuals purchase a home, they do so with the help of a mortgage offered by a financial institution. When a home buyer obtains a mortgage to finance the purchase of real estate, the bank providing the funds for the mortgage doesn't just lend them the money in good faith - the bank takes a legal claim against the house as collateral. A mortgage deed of release is created when a borrower completes their mortgage payment terms or makes a full prepayment to pay off the loan. In a mortgage loan the lender holds the title to the real estate property and is formally the owner of the property until full payment is made. The title provides secured collateral for the loan payments throughout the life of the loan reducing the default risk for the lender. The deed of release is typically created by the lending institution’s legal counsel. It reports that the loan has been paid in full under the terms required. It also states that the title has been transferred to the homeowner. After the title and deed of release are provided to the homeowner they own the asset free and clear. The homeowner is no longer subject to any terms or obligations of the lender and the lending account is closed.
Employment Deed of Release
Employment agreements are a second scenario where a deed of release may be used. A deed of release can free an employer and employee of any obligations they had under the employment agreement. In some cases a deed of release may give an employee a designated payment. This may occur in the case of a severance package. The deed of release can include the terms of the severance including payment and length of time payments will last following the release. A deed of release may also include confidential information that cannot be shared or restraint clauses that prevent a departing employee from forming a similar business or soliciting customers from the company.