People often confuse the term “Grant Deed” vs “Deed of Trust”. A deed signifies the passage of property ownership from one person to another. Transferring title to real property can be completed by a Grant Deed, Quitclaim Deed, Interspousal Transfer Deed, Trust Transfer Deed or other type of deed that transfers ownership/title. On the contrary, a property loan (or mortgage) in California is memorialized with a Deed of Trust and Promissory Note (debt instrument) and the house becomes collateral under the Deed of Trust.  The Deed of Trust is recorded against the real property and serves as the security interest to protect and secure the debt owed to the lender. When then a loan is paid in full, steps must be taken to reconvey a deed of trust that is recorded against the real property. A reconveyance deed is an official note from the Beneficiary which officially shows that a Promissory Note has been satisfied and released.

There are three parties to a deed of trust:

  1. The Trustor, also known as the borrower who puts up the house;
  2. The Beneficiary, the lender who provides the purchase money or loan; and
  3. The Trustee, the person the Beneficiary designates to sell the collateral if the loan is not repaid in full.
“Using A People’s Choice to reconvey my recorded deed of trust was easy and inexpensive. We were able to do everything over the phone and they emailed me ready-to-sign documents.” James T.
“Could not be happier with the professional and prompt service I received. They even recorded the reconveyance for me as well.” James T.

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Steps to Recovey a Deed of Trust

In order to reconvey a deed of trust, the full reconveyance must be recorded within 21 days of receipt of the documents from the Beneficiary. The deed of reconveyance must be recorded in the county where the property is located. Locate the name of the Trustee in the recorded Deed of Trust. The Trustee is the entity or person that must record the reconveyance. Often with personal loans, the Trustee is a title company. The beneficiary/lender can file a substitution of trustee, substituting themselves in as Trustee to avoid paying title company fees to process the reconveyance. In addition, the original note and the deed of trust must be delivered to the Trustor. If the deed of reconveyance is lost, it puts a cloud on the title. Lastly, once the deed is recorded, any property search will show that all liens have been satisfied in full. In other words, when you reconvey a deed of trust, the loan no longer shows up against the property because it has been paid in full.

Keep in mind, a bank or lender must reconvey a deed of trust when a homeowner refinances their existing loan. In other words, the homeowner must have their current deed of trust reconveyed. (The homeowner pays off their existing loan and receives a new loan thus requiring a deed of trust reconveyance.)

Reconveyance of Loan Paid in Full

Monica purchases a house in Beverly Hills, California and puts down $400,000 and borrows $1 million from Bank of America. The $1 million is memorialized with a Promissory Note (debt instrument) and the house becomes collateral under the Deed of Trust (security instrument). When Monica finishes paying off her loan, Bank of America, the beneficiary, must notify the Trustee that the loan is paid off. The Trustee must complete the Request for Reconveyance.

Reconveyance through Refinance

Drew purchases a house in Santa Ana, California and puts down $100,000 and borrows $500,000 from Bank of America. The $500,000 is memorialized with a Promissory Note (debt instrument) and the house becomes collateral under the Deed of Trust (security instrument). Drew decides to refinance his home loan to get a lower interest rate. He obtains a new loan from Chase Bank for $500,000. Chase bank pays off Drew’s outstanding loan with Bank of America. Bank of America, the Beneficiary, must tell the Trustee that the loan is paid off. The Trustee must complete the Request for Reconveyance. Chase Bank becomes the new Beneficiary and Trustee for the refinanced loan.

Contact A People’s Choice for more information about how to reconvey a deed of trust in California. We can draft the legal documents you need to help you reconvey a deed of trust. Call us today at 800-747-2780.

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