Real Property – Mortgage Satisfaction – Alabama
Assignments Generally: Lenders, or holders of mortgages or deeds of trust, often assign mortgages or deeds of trust to other lenders, or third parties. When this is done the assignee (person who received the assignment) steps into the place of the original lender or assignor. To effectuate an assignment, the general rules is that the assignment must be in proper written format and recorded to provide notice of the assignment.
Satisfactions Generally: Once a mortgage or deed of trust is paid, the holder of the mortgage is required to satisfy the mortgage or deed of trust of record to show that the mortgage or deed of trust is no longer a lien on the property. The general rule is that the satisfaction must be in proper written format and recorded to provide notice of the satisfaction. If the lender fails to record a satisfaction within set time limits, the lender may be responsible for damages set by statute for failure to timely cancel the lien. Depending on your state, a satisfaction may be called a Satisfaction, Cancellation, or Reconveyance. Some states still recognize marginal satisfaction but this is slowly being phased out. A marginal satisfaction is where the holder of the mortgage physically goes to the recording office and enters a satisfaction on the face of the the recorded mortgage, which is attested by the clerk.
Assignment: An assignment of mortgage must be in writing and recorded. 35-4-51.
Demand to Satisfy: The Mortgagee (holder of the mortgage) must satisfy the mortgage upon payment and demand from the mortgagors (borrowers) to satisfy the mortgage. 35-10-26.
Recording Satisfaction: Upon demand, the Mortgagee “shall file a properly executed and notarized satisfaction of the mortgage or otherwise cause the mortgage to be satisfied”. 35-10-26
Marginal Satisfaction: Marginal satisfaction is still recognized. 35-10-27.
Penalty: If the mortgagee fails to satisfy the mortgage within 30 days of demand, the Mortgagee may be liable for statutory damages of $200.00. 35-10-30.
Acknowledgment: An assignment or satisfaction must contain a proper Alabama acknowledgment, or other acknowledgment approved by Statute. 34-4-29.
What instruments admitted to record; filing as notice of contents; section cumulative.
Except as may be otherwise provided by the Uniform Commercial Code, all deeds, mortgages, deeds of trust, bills of sale, contracts, or other documents purporting to convey any right, title, easement, or interest in any real estate or personal property and all assignments of mortgages, deeds of trust, or other securities for debt or extension agreements with respect thereto, when executed in accordance with law, shall be admitted to record in the office of the probate judge of any county. Their filing for registration shall constitute notice of their contents.
This section shall not be construed as superseding or repealing any other laws effective in Alabama relative to the subject matter in this article, but shall be held and construed to be cumulative.
Title revested upon payment of debt.
The payment or satisfaction of the real property mortgage debt divests the title passing by the mortgage. “Payment or satisfaction of the real property mortgage debt” shall not occur until there is no outstanding indebtedness or other obligation secured by the mortgage, and no commitment or agreement by the mortgagee to make advances, incur obligations or otherwise give value (collectively referred to as “extend value”), under any agreement, including, without limitation, agreements providing for future advances, open end, revolving or other lines of credit, or letters of credit. Except as otherwise specifically provided to the contrary in the Alabama Residential Mortgage Satisfaction Act, upon the written request to satisfy a mortgage signed by the mortgagors and by all other persons who have a right to require the mortgagee to extend value or signed by other authorized representatives on behalf of the mortgagors and such other persons, which notice shall actually be served upon the mortgagee, and provided there is no outstanding obligation secured by the mortgage at that time, the mortgagee shall file a properly executed and notarized satisfaction of the mortgage or otherwise cause the mortgage to be satisfied in accordance with other applicable provisions of law. From and after such written request for mortgage satisfaction, neither the mortgagors nor any other person who signed such request, or on whose behalf such request was signed, shall have the right to request or demand that the mortgagee extend value under the mortgage or other agreements and the mortgagee shall be released from all obligations and commitments to extend value thereunder.
Entry of full payment or satisfaction in record; Generally.
If a mortgage or deed of trust which is of record has been fully paid or satisfied, the mortgagee or transferee or assignee of the mortgage, or trustee or cestui que trust of the deed of trust, who has received payment or satisfaction, must on request in writing of the mortgagor, or of a creditor of the mortgagor having a lien or claim on the property mortgaged, or of a purchaser from the mortgagor, or owner of the lands mortgaged, or a junior mortgagee, or of the debtor in a deed of trust, enter the fact of payment or satisfaction on the margin of the record of the mortgage or deed of trust. Such entry must be witnessed by the judge of probate, or his clerk, who, in his official capacity, must attest said satisfaction, and for making such attestation the judge of probate is entitled to a fee of $.25. Or satisfaction may be made by an attorney-in-fact authorized by an instrument executed and acknowledged as is required of conveyances and filed for record, which entry need not be attested. Such entry operates as a release of the mortgage or deed of trust, and is a bar to all actions thereon.
(a) If, for 30 days after such request, the mortgagee or assignee or transferee, trustee or cestui que trust, fails to make any entry required by this article he forfeits to the party making the request $200.00 unless there is pending, or there is instituted, an action within that time, in which the fact of partial payment or satisfaction is or may be contested. In construing this article, the right of action given herein shall be considered as a personal right, and shall not be lost or waived by a sale of the property covered by the mortgage or deed of trust before a demand was made for the satisfaction to be entered upon the record.
(b) All actions for the recovery of the penalties mentioned in this article shall be brought in the county where such mortgage or other instrument is recorded.
(c) This section does not apply to satisfactions of residential mortgages which are governed by the Alabama Residential Mortgage Satisfaction Act.