By now, you’ve heard us preaching about Payoff Tracking. We’re frequently asked to provide resolution services for problems on the title commitment that wouldn’t be there if the last title agent had made sure the prior owner’s mortgage satisfaction was actually recorded. Let me share an example… this is one we’re close to getting resolved for some Florida-based homeowners, but it’s been a doozy!
How an Unrecorded Partial Lien Release became a Homeowner's Worst Nightmare...
In 2008, our Homeowners bought a newly constructed house from a developer. The entire development was encumbered by the developer’s construction loan, but as parcels were sold off, partial releases for the individual lots were recorded. Except for our Homeowners -- payment was made to the lender, but just due to oversight, the partial release was never recorded and no one seemed to notice, that is, until now.
Fast forward to 2017 when our Homeowners try to take out a home equity line of credit, only to find out that their new lender won’t close the HELOC until the partial release from the prior construction loan is recorded. Needless to say, the current homeowners were furious. But we can take care of it easily, right? Just call the lender, send them proof of the payment, and viola, you’re done … Nope! The construction loan was held by a lender that, like many, filed bankruptcy and was dissolved later in 2008. There’s no more lender to call. And all the assets were sold off to different entities – some of which also are no longer around.
We used our detective skills to track this one down, and the company that purchased the commercial assets has their legal department working on the release. But it’s taken a couple of months to figure it out. If the original title agent had simply checked for the partial release post-closing, the entire problem would have been avoided.