Partial Release of Property From Mortgage by Individual Holder
Assignments Generally:
Lenders, or holders of mortgages
or deeds of trust, often assign mortgages or deeds of trust to other lenders,
or third parties. When this is done the assignee (person who received
the assignment) steps into the place of the original lender or assignor.
To effectuate an assignment, the general rule is that the assignment must
be in proper written format and recorded to provide notice of the assignment.
Satisfactions Generally:
Once a mortgage or deed of trust is paid, the holder of the mortgage is required to satisfy the mortgage
or deed of trust of record to show that the mortgage or deed of trust is
no longer a lien on the property. The general rule is that the satisfaction
must be in proper written format and recorded to provide notice of the
satisfaction. If the lender fails to record a satisfaction within
set time limits, the lender may be responsible for damages set by statute
for failure to timely cancel the lien. Depending on your state, a satisfaction
may be called a Satisfaction, Cancellation, or Reconveyance. Some
states still recognize marginal satisfaction but this is slowly being phased
out. A marginal satisfaction is where the holder of the mortgage
physically goes to the recording office and enters a satisfaction on the
face of the the recorded mortgage, which is attested by the clerk.
Rhode Island Law
Assignment:
Assignee may not enforce rights until assignment
is recorded.
Demand to Satisfy:
A request must be made and reasonable
charges for the satisfaction tendered to the mortgagee, who, within ten
days after receipt, must discharge the mortgage of record.
Recording Satisfaction:
Satisfaction (discharge) may be recorded by the mortgagee indicating upon the recorded mortgage document
that same is cancelled and satisfied, and signing the document. Satisfaction
may also be achieved by a separate document (a deed of release) duly acknowledged
and recorded.
Marginal Satisfaction:
Satisfaction (discharge) may be recorded by the mortgagee indicating upon the recorded mortgage document
that same is cancelled and satisfied, and signing the document.
Penalty:
If mortgagee fails to discharge the mortgage
within 10 days of request and receipt of fee, the mortgagee shall pay a
penalty to the mortgagor for noncompliance in the amount of fifty dollars
($50.00) for a first day of noncompliance and five dollars ($5.00) for
each day thereafter that the party remains in noncompliance. The mortgagor
shall also be entitled to a reimbursement of reasonable attorney's fees.
(See below, § 34-26-5, for details).
Acknowledgment:
An assignment or satisfaction must
contain a proper Rhode Island acknowledgment, or other acknowledgment approved
by Statute.
Rhode Island Statutes
§ 34-26-2 Right to discharge on satisfaction of mortgage
- Escrow accounts. -
(a) Every mortgagee of real estate, his, her
or its heirs, executors, administrators, successors, or assigns, having
received full satisfaction for the money due on the mortgage, shall, within
thirty (30) days after final payment, discharge the mortgages provided
in § 34-26-3 or by separate instrument of release of the mortgage,
and shall send the discharge to be recorded in the proper record book with
suitable references to the original record, including the mortgagor's name
and address, which shall forever afterwards discharge, defeat and release
the mortgage and perpetually bar all actions to be brought thereon in any
court. Upon forwarding the discharge for recording the mortgagee shall
notify the mortgagor. Any mortgagor or his agent upon tendering final payment
to the mortgagee in full satisfaction of the mortgage may in writing require
the mortgagee to issue the discharge by separate instrument of release,
directly to a designated person or real estate closing officer within the
thirty (30) day period.
(b) Every mortgagee of real estate, his, her or its
heirs, executors, administrators or successors or assigns, having received
full satisfaction for the money due on the mortgage, shall, within thirty
(30) days after final payment, disburse to the mortgagor any and all funds
held in escrow under the terms of the mortgage.
§ 34-26-3 Methods of discharge. -
A mortgage may be discharged in whole or in part
by an entry acknowledging the satisfaction thereof or the payment thereon,
as the case may be, made on the face or back of the mortgage, or upon
the face or margin of the record of the mortgage, in the records of
land evidence, and signed by the mortgagee or by his or her executor, administrator,
successor, or, if the mortgage be assigned, by the assignee or his or her
executor or administrator; and such entry shall have the same effect
as a deed of release duly acknowledged and recorded.
§ 34-26-4 Requiring assignment of mortgage in lieu
of discharge - Enforcement by incumbrancers. -
Where a mortgagor is entitled to redeem, he or
she shall by virtue of this section have power to require the mortgagee,
instead of discharging or reconveying, and on the terms on which he or
she would be bound to discharge or reconvey, to assign the mortgage debt
and convey the mortgaged property to such third person as the mortgagor
directs; provided, that the mortgagor assumes the expense of making the
assignment and conveyance, and obligates himself or herself to have the
same recorded, and the fact of the transfer being made shall be prima facie
evidence that the assumption of expense and the obligation have been made;
and the mortgagee shall, by virtue of this section, be bound, on being
relieved of all expense and having the obligation made to him or her, to
assign and convey accordingly; and the right shall belong to and be capable
of being enforced by each incumbrancer, or by the mortgagor, notwithstanding
any intermediate incumbrance, but a requisition of an incumbrancer shall
prevail over a requisition of the mortgagor and, as between incumbrancers,
a requisition of a prior incumbrancer shall prevail over a requisition
of a subsequent incumbrancer. This section does not apply in the case of
a mortgagee being or having been in possession.
§ 34-26-5 Liability of mortgagee for
failure to discharge, release, or transfer mortgage. -
(a) If any mortgagee, his, her or its heirs,
executors, administrators, agents, successors, or assigns, shall not,
within ten (10) days after a request made in that behalf and a tender of
all reasonable charges therefor, discharge the mortgage in one of the modes
aforesaid, or otherwise make and execute a release and quitclaim of
the estate so mortgaged, and acknowledge it before some proper officer,
or transfer the mortgage if required under the provisions of § 34-26-4,
he, she, or they so refusing shall be liable to make good all damages
that shall accrue for want of the discharge, release, or transfer, to be
recovered in a civil action; and in case judgment shall pass against the
party sued, the mortgagee shall pay the plaintiff reasonable attorney's
fees and triple costs upon the suit;
(b) In the event of noncompliance with the provisions
of either this section and/or § 34-26-2, the mortgagee shall pay a
penalty to the mortgagor for noncompliance in the amount of fifty dollars
($50.00) for a first day of noncompliance and five dollars ($5.00) for
each day thereafter that the party remains in noncompliance. The mortgagor
shall also be entitled to a reimbursement of reasonable attorney's fees,
if applicable, for the costs incurred by the mortgagor and/or his, her
or its attorneys in attempting to obtain a discharge to which the mortgage
was lawfully entitled pursuant to the provisions of this section and/or
§ 34-26-2. Demand for penalties and, if applicable, attorney's fees
and costs pursuant to this section may be made to the department of business
regulation, in those instances in which the mortgagee is a regulated institution
as defined in Title 19, and the department shall direct such regulated
institutions to pay applicable penalties and reimburse effected mortgagors
for attorneys fees and costs incurred, on confirmed instances of noncompliance.
The department may promulgate rules and regulations governing the processing
of such reimbursement. In those instances in which the mortgagee is not
a regulated institution as defined in Title 19, the Department shall provide
the mortgagor with the name, address and telephone number of the regulatory
agency having jurisdiction over the actions of such mortgagees.
(c) As used herein, the term "first day of noncompliance"
shall mean the first day following the last day for a mortgagee or similar
party to discharge the mortgage.
§ 34-26-6 Other forms of discharge or
release preserved. -
Nothing contained in this chapter shall be so
construed as to defeat, invalidate, annul, or render ineffectual any other
legal or equitable discharge, payment, satisfaction, or release of any
mortgage.
