What Is a Master Mortgage?

The master mortgage contract is the primary mortgage.
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A master mortgage is the mother ship of all home loan contracts. The master document is the primary reference used throughout the life of your home loan, with all its subsequent variations. The term "master mortgage" was devised by major lending institutions and governments to refer to a written contract used to record a lien on a property. In the master mortgage, the lien is the sales price agreed upon by lender and borrower, and it must be satisfied before you can take possession of your new castle.

Master Mortgage Requirements

The master mortgage is created when a property is sold for the first time. When the balance is paid and the property is resold, a new master mortgage is created to replace the old one.The master mortgage is consulted each time a property is sold to ensure that all related debts have been paid. The master mortgage includes documents related to the mortgage originator's file, as a part of standard record-keeping protocol. In Boone County, Kentucky, for example, requirements to record a master mortgage include an entitlement on the face of the document that reads, "Master form recorded by (name of person recording)"; forms of covenants, conditions, obligations, powers and other clauses related to the mortgage contract; the full name of the person recording the master form; a preparation statement; a return address; and filing fee.

Due Diligence

When you are buying property, especially foreclosures, tax liens and multiple mortgages may not be obvious. It is imperative to have a title search done on the property by a reputable property title insurance company before you sign a contract or make a deposit. A title search is a formal inquiry into the lineage of the property deed. A title search will uncover any hidden debts relative to the mortgage that you will automatically be liable for if you purchase it.

Liens and Second Mortgages

With or without a mortgage, property owners are responsible for all preexisting debts related to a property. If all related debts are not paid, the bank will retain the property. A lien is a claim against the property made to satisfy the property owner's outstanding debt. For example, a business owner who owes taxes on her business may have a lien placed on her property to satisfy the debt with the Internal Revenue Service. Second mortgages occur when an owner has multiple home loans on the same property. All outstanding debts related to a property must be satisfied before you can take possession of it.

Record Keeping

In Texas, for example, a master mortgage may be recorded in any county without acknowledgement or proof, according to the Uniform Commercial Code. In addition, the master contract must contain the statement: "Master form recorded by (name of person causing the recording)." The master document is recorded by the county clerk who indexes the contract under the name of the person recording it. Upon written request, the lender is legally obliged to produce a copy of the master mortgage, without charge, to the borrower, the borrower's interest or succeeding agent.


The master mortgage on a condominium unit is different than a traditional home in that the borrower is primarily responsible for the property contained within the four walls of the individual condo unit. The condo owner is only partially responsible for the common areas of the condominium complex, such as common buildings, exteriors, hallways and pools. Although a new master mortgage on the individual condo unit is created each time it is resold, the common areas that individual condo owners have a collective responsibility for are referred to in the condominiums' master mortgage and master insurance policy.

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