Reconveyance is a term used in some states which use deeds of trust as a mortgage on real property to secure payment of a loan or other debt. A deed of reconveyance is used in conjunction with a deed of trust and its purpose is to clear the title of any liens pertaining to the note and deed of trust which secures that note. The parties involved in the deed of trust are the Trustor (the Borrower), the Trustee (title company, bank, or third party), and the Beneficiary (the lender).
Under a deed of trust, the borrower transfers title in the real property to the trustee, which holds it for the benefit of the lender. Reconveyance means the transfer of title by the trustee back to the borrower when the secured debt is fully paid. The lender must surrender the promissory note to the trustee who cancels it and then reconveys title to the borrower and records the reconveyance. Once a deed of reconveyance is recorded, the title becomes clear of the lien.
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