Who Holds the Deed to the Property When a Satisfaction of Mortgage Is Filed?

by Mallory Malesky, Demand Media Google

    The purchase of a property is completed and finalized after sellers and buyers sign some important documents. The terms "deed," "mortgage," "title" and "satisfaction" are all terms you'll become familiar with if you're in the process of buying a house.

    Purchase

    Most people utilize a mortgage loan to finance the purchase of their home. Obtaining a mortgage loan involves completing the application, a financial review and a final approval. Purchasing the property involves making an offer to the seller, and reaching a final selling price. From here, your mortgage lender prepares the loan documents for you to sign at the closing. These include the promissory note and security instrument. At around the same time, the seller signs a deed -- typically a warranty deed -- granting his ownership in the property to you.

    The Mortgage

    When your loan is approved, the lender assumes a risk that you won't repay the loan. To secure the loan in its favor, the lender holds the property itself as collateral. The security instrument you sign at the closing will be a mortgage or deed of trust, depending on the state your property is located in. A mortgage document explains the details of the loan, like the repayment term length and interest rate. Additionally, the mortgage acts to place a lien on the property in favor of the lender. The lien remains until the loan is paid in full.

    Satisfaction

    Once the final mortgage loan payment is made, the lender drafts a document known as a satisfaction. Sometimes this document can also be called a release of mortgage. The document explains that the borrower has repaid the loan in full and as agreed upon. Because the borrower is no longer in debt to the lender, the satisfaction also acts to remove the lien from the property.

    Deed and Title

    When the seller signs the deed at the time of purchase, you are listed as the grantee, which makes you the rightful owner of the property. However, as long as there is an unpaid balance on your mortgage loan, you do not hold a free and clear title. This is because of the lien created by the lender. The deed and mortgage documents are filed with the public land records system in the county where the property is located. A title search on your property would reveal that you own the property, subject to an outstanding mortgage loan in favor of your lender for the total amount of the loan. The satisfaction of mortgage is also filed on record. If a title search is completed afterwards, it would show you as the owner with no liens -- or free and clear.

    About the Author

    Mallory Malesky began writing professionally in 2008. Since then, her work has been published on various websites. She has worked in the mortgage industry since 2009. Malesky graduated from Indiana University of Pennsylvania with a Bachelor of Science in natural science.