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The third important document is the mortgage -- called a deed of trust in many states. If you get a mortgage, typically the lender will have to go to court to foreclose should you go into default. However, with a deed of trust, you get a deed to the property and immediately deed it -- in trust -- to a trustee (or trustees) selected by your lender.
The deed of trust gives the trustee the "power to sell" your house at a foreclosure sale, if you are in default. State laws differ dramatically as to how and when the trustees can proceed to a foreclosure sale.
The mortgage -- or the deed of trust -- is recorded among the land records in the jurisdiction where your house is located.
Now, you have paid off your loan -- either because you sell the property, you refinance, or you just decided to make all payments so that you have a house "free and clear" of that lien on your property.
If you sell your house or refinance your existing loan, the settlement (escrow) company will take on the responsibility of releasing the old mortgage from land records.
However, if you just pay off the loan and keep the house, the old mortgage (deed of trust) must be released from land records. All too often (as happened to our two readers) the lender just sends a letter advising that the loan has been paid off.
That is not sufficient: The lender should prepare a release (often called certificate of satisfaction), and that document must be recorded on the same land records where your original mortgage was recorded. You want the world to know that you now own the property free and clear of that old loan.
If your lender is a national bank, you can complain to the Office of the Comptroller of the Currency -- a federal agency (www.occ.treas.gov). If your lender is a credit union, you can file a complaint with the National Credit Union Administration (www.ncua.gov). Alternatively, you should send a complaint letter to your state's banking office and to your state's office of attorney general.
You cannot let this sit. In my experience with clients whose loan has been paid off but not released from land records, many times the existing lender no longer exists and it is a real hassle to find out who currently has the obligation to release that loan.
Ultimately, you may have to file a lawsuit to quiet title, but that's time-consuming and expensive.
Incidentally, you should have received the deed when you first bought the house. The settlement (escrow) company records the deed, and when it is returned from the recorder's office, the original should be sent to you.
DEAR BENNY: I purchased a home in April 2009. The house is relatively new, built in 1995. I purchased the home with an FHA loan, as a short sale. My concern is disclosure. My home is constantly creaking and cracking. I did have a home inspection before I purchased the home; however, it was not noticeable during the inspection. Are the previous owners responsible for disclosing the "noises"? Should I contact a real estate lawyer? --Diana
DEAR DIANA: There are two things you have to do first before you talk with an attorney. First, review your sales contract. Does it say that you bought the property in its "as is" condition? If so, then you may have a hard time convincing anyone -- a judge or the seller -- that the seller has any obligation to you.
Second, you should have a licensed home improvement contractor (or a licensed structural engineer) make a determination of the cause and source of the noise. Perhaps, it is routine settling; new houses often "creak" as they settle down on the ground. You should also find out how much it will cost to correct -- if correction is even possible.
There are things that you can do, without having to spend money on a lawyer. It may very well be that there is no way to solve the problem, and that in time, the problems will go away. It may also be that the cost to correct is minimal, and it would make sense for you to bite the bullet, pay the cost, instead of filing suit against the seller.
Over the years, I have advised my clients that sometimes it pays just to fix the problem instead of spending a lot of money (and time) on litigation.
Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to firstname.lastname@example.org.
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