How to Partially Discharge a Mortgage
During the life of a loan, there may come a time when a borrower will want to release part of the mortgage. This is common for mortgages that span multiple units or parcels. It is possible to release only the specific unit or parcel by preparing a "Partial Discharge of Mortgage." This document, which should only be prepared upon a significant reduction in the principal balance of the loan, will release part of the property while keeping the original mortgage in place.
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Instructions
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Process the funds and reduce the principal. Make any necessary entries to your accounting system. For larger amounts, insist upon a certified or bank check. You want to make absolute certain that you have the proper funds before giving up part of your collateral.
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Review the original mortgage, specifically the legal description. This is usually attached at the end of the mortgage or in the first couple of pages, usually as "Schedule A." The legal description, also known as a "Metes and Bounds Description." Outlines the property and breaks it down by distance and, if necessary, into individual parcels or units. Segregate the portion of the property you will be discharging.
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Prepare a "Partial Discharge of Mortgaged Property" document. This is a brief document, not more than two or three pages which states: (a) you've received payment and have agreed to release part of the premises in return and (b) you are releasing the specific parcel from the mortgage. Insert the specific language from the legal description that relates to that particular part of the property.
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Record the discharge document with the clerk of the county where the original mortgage is recorded. It will be attached to and become an integral part of the original mortgage. Contact the county clerk's office for fee information. Once recorded, that part of the property will be released while the rest of the mortgage will remain intact.
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