Steps to Take if a Mortgage Lender Fails to Fulfill all Requirements Upon Satisfaction of a Mortgage

It’s an exciting time for most homeowners, as they finally own their homes free and clear.

Under Florida real estate law, once you pay off your mortgage, whoever holds the loan must show it’s no longer a lien against your home or other property. It’s an exciting time for most homeowners, as they finally own their homes free and clear.

Unfortunately, sometimes a lender fails to timely record what’s called a “satisfaction of mortgage,” a legal document that lets everyone know your loan has been satisfied. If you’re getting ready to make the last payment on your mortgage—or if you’ve already made it but haven’t received your satisfaction of mortgage—a real estate attorney can help or answer your questions.

How Do Florida Mortgage Satisfactions Work?

Making the final payment on your mortgage doesn’t automatically free you from the lien used to buy it. While lenders are given a certain amount of time to fulfill their satisfaction of mortgage obligations, here’s what you should know to ensure yours follows through in a timely manner once you satisfy the lien.

Florida Statute 701.04 sets forth the steps a lender must take to remove and cancel its lien on your home, condominium, or other property, and the lender cannot substitute in its own procedures.

The two Florida real estate statutory requirements a lender must follow to cancel mortgages, liens, and judgments are:

1. Written acknowledgment. Upon receiving your final payment, the lender must execute and file a written, notarized document (typically referred to as a release or satisfaction of mortgage) that acknowledges the mortgage is satisfied or paid in full. They must also file the document with the clerk of the county where your property is located.
2. Notice to the property owner. Once the lender files the proper documentation with the county, they are required to notify you as the property owner that they’ve completed this step. The lender must provide you with written notice that they filed the satisfaction or release with the clerk and that the lien has been released. This notice confirms you now have legal title to the property and there is no mortgage lien remaining against it.

Assuming your final payment completely satisfies the debt and there are no other encumbrances, the lender must complete the above steps within 60 days of receiving the payment.

However, keep in mind that if a mortgage is paid off through a foreclosure sale to a third-party buyer, the defaulting homeowner is not entitled to the lender’s documentation showing their debt’s been paid or satisfied.

Remedies Property Owners Can Seek

What happens if a lender fails to meet its obligations under Florida real estate law? The law is clear: the lender must timely prepare and record in the public records a satisfaction of judgment.

If your lender fails to execute and record a satisfaction of mortgage within the mandated 60-day period, you can file a lawsuit that seeks a court order that either:

• Directs the lender to execute a satisfaction of mortgage.
• Extinguishes the lien against the property.

If you’re forced to bring a civil action against your lender, you could be entitled to attorney fees and costs under the law. You may also pursue a quiet title action, which is a lawsuit specifically designed to clear any encumbrances or “clouds” from your property’s title.

Exceptions to Mortgage Discharge

Though not common, there are times a release or satisfaction of mortgage entered in the public records doesn’t remove the bank’s lien against the chain of title. The two most common reasons for this happening are:

1. A mistake, accident, or fraud. If you get a notice from your lender showing the mortgage has been satisfied but there’s still a balance due on your loan, some sort of error has most likely occurred. Once the lender’s advised of the discrepancy, they’re entitled to fix the mistake in the public record without penalization. Though Florida real estate law finds the cancellation and discharge of a mortgage prevents a lender from collecting any more money from a homeowner, if there’s been a mistake, accident, or some kind of fraud, Florida courts have held this rule does not apply.
2. Foreclosure judgment. As mentioned above, if you default on your mortgage, your lender canforeclose on your property to get the monies owed to it. In these cases, Florida law finds a lender doesn’t need to file a satisfaction after the foreclosure sale. The title is considered clear for the third-party buyer at the foreclosure sale, but a defaulting homeowner doesn’t get recorded documentation that suggests they’ve paid their debt in full.

Seeking Real Estate Law Advice

Every Florida homeowner who’s successfully paid off their mortgage has the right to celebrate! If you’re involved with a lender who hasn’t or refuses to issue a satisfaction of mortgage within the timeframe prescribed by Florida real estate law, it’s a good idea to speak with a real estate lawyer to learn about your rights.

Munizzi Law Firm offers trusted legal services Central Florida homeowners can rely on to ensure they obtain clear title to their property. Contact us today to learn more about mortgage satisfaction and how a lawyer can be one of your most valuable allies in any real estate transaction.