Protect yourself from unreleased trusts

An unreleased trust is a prior Deed of Trust on a property that has yet to be released from the property at the Land Records Office. This does not mean that it is still an active loan or that there is a balance owed.

In fact, the loan has usually been paid off years ago. However, even though a mortgage has been paid in full, it still needs to have the lien released. When a Deed of Trust is taken out either at the time of a purchase or as part of a refinance, it is recorded at the courthouse as a lien on the property. This lien needs to be released in order for a seller to provide clear title to the purchaser.

Sometimes a title search will reveal that even though the Deed of Trust was paid, it was not released. Since this is a cloud on title and the Regional Sales Contract requires that the seller provide a property free of all existing liens, the unreleased trust must be released prior to settlement.

I was told that the title search revealed an unreleased trust, what can I do about it now?

Hopefully you have records of the loan having been paid off. If the unreleased trust was paid off as part of a refinance, you can contact the prior title company for information in regards to the payoff and release. Most likely you paid the prior title company a lien release/release procurement fee, and they did not finish doing the job. If you paid off the mortgage on your own and not as part of a refinance, you can contact the bank that was paid off and request a lien release directly from them.

How can I protect myself better so that this will not happen again in the future?

Whenever you pay off a mortgage (and this includes a home equity line of credit), make sure to keep proof of payoff. If you use a title company, make sure to keep a copy of the HUD-1 Settlement Statement showing the payoff. If you pay it off yourself, make a copy of the payoff check. In either scenario, keep copies of your monthly statements, so you will always have a record of the account information.

Related Articles

Leave a comment

You are commenting as guest.
  • Ways to save at closing

    Title charges are the largest chunk of closing costs and can vary by hundreds of dollars.

    Learn more

  • What are closing costs?

    The real estate closing process involves loan steps, legal steps and title steps.

    Learn more

  • What's title insurance?

    Insure your legal ownership just like you'd insure the building, but for lots cheaper.

    Learn more

Connect with us

Our blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. Rate tables and figures that appear on our blog are deemed reliable but not guaranteed. For current rates & policies, refer to our Quick Quote and Consumer Guide. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on our blog.