Can You Get a Full Reconveyance When You Refinance?
A reconveyance is the document a lender records when a loan has been paid in full by the borrower. It is the evidence that the loan is no longer an encumbrance on the property that the deed secured. When a borrower takes out a loan on real property, the lender holds a deed of trust as security, and the deed contains a request for full reconveyance. When the underlying note is paid in full, the reconveyance is recorded by the title company that is the trustee at the county recorder where the property is located.
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Pay The Loan Off
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Pay off the existing loan on your property when you refinance. This is done by a third-party title company (trustee) that receives funds from the new lender at the closing of a refinance and then pays off the old loan.
Request a Reconveyance
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Request a full reconveyance from the old lender. This is done by the title company that is the acting trustee after it has received the new loan proceeds from a refinance. It is considered a neutral third party in real estate transactions. In a refinance transaction, the title company orders the reconveyance automatically.
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Record the Reconveyance
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The old lender signs the reconveyance and sends it to the title company which then records it at the county recorder so it becomes part of the public record. The title company does not receive the original at this time. It usually takes the county recorder several months before they send the original reconveyance back to the title company.
Keep the Original Reconveyance in a Safe Place
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Place the signed and recorded reconveyance in a safe place after it comes back from the county recorder, because it is the evidence that the old loan is no longer a lien on the property.
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