Reconveyance is the transferring of a property title to a buyer after a secured debt, such as a deed of trust or mortgage, has been paid in full. In many jurisdictions, when a mortgage or property loan has been paid in full, the lender must issue a document indicating that the loan has been paid in full and the title has been transferred to the buyer. This document is often called a reconveyance, reconveyance deed or deed of reconveyance. It signifies that the property is owned in full by the person who was issued the document. The document also is recorded in the local government's public records for official confirmation of the transfer and to avoid disputes or problems that might be caused by lost or forged deeds of reconveyance.
Differences in Laws and Terminology
The procedure that is used for home loans is similar in many places, although the specific requirements or laws might be different from one place to the next. The terminology that is used also might be different. For example, in some jurisdictions, the document that is used to signify that the loan has been paid in full is called a satisfaction of mortgage instead of a reconveyance. A reconveyance usually is used in conjunction with a deed of trust rather than a mortgage, although the term "mortgage" is often used colloquially to refer to any home loan.
There are three parties involved when a deed of trust is used in the purchasing of a home: the buyer, the lender and the trustee. The buyer is also called the trustor. A bank or other financial institution typically is the lender and is also called the beneficiary. The trustee is the person or entity, such as a title company, that holds the property title for the lender and typically is responsible for selling the property if the buyer fails to make the proper payments on the loan.
How Reconveying Takes Place
When the terms of the property loan have been satisfied, the lender instructs the trustee to reconvey the legal title to the buyer. The trustee then issues a deed of reconveyance and gives the buyer the title and sometimes a copy of the original deed of trust. This typically is legally required to be done within a certain period of time, such as 21 days or 30 days. The deed of reconveyance usually must be notarized — or officially certified as being valid — and recorded at the appropriate local government office.
A deed of reconveyance typically must include certain specific details, such as the name of the buyer, the name and address of the lender and the address and legal description of the property. Information about the loan, such as the monetary amount and details of its registration, also is included. The document also includes all applicable dates and the name of the jurisdiction whose law governs the transaction.