UNRELEASED DEEDS OF TRUST A PRERENNIAL - Old Republic · PDF fileOld Republic Title Fall 2014...

FALL 2014 AGENT SEMINAR:

UNRELEASED DEEDS OF TRUST: A PERENNIAL PROBLEM

Old Republic Title Fall 2014 Agent Seminar: Unreleased Deeds of Trust: A Perennial Problem

I. How to Insure With One in the Chain of Title: Practical Solutions

A. Look at the Applicable Statute of Limitations (SOL)

1. This is easy to check, and takes the least amount of effort, but you have to

remember what kind of Deed of Trust it is—there are different SOLs for different DoTs!

2. Code Sections: Va. Code §8.01-241, Va. Code §8.01-242

3. 10 year statute of limitations after maturity date stated in Deed of Trust. Can be

extended for an additional 10-year period by recording a certificate. The additional 10-

year period commences from the date of filing.

4. If due date is not stated in document, statute of limitations to collect amount due

is 20 years from date of deed of trust.

5. Credit line deed of trust statute of limitations is 40 years from date of deed of

trust.

6. Open question: what if no maturity date is stated in the Deed of Trust, but other

information contained in the Deed of Trust allows the maturity date to be calculated? A

prudent reading of these statutes would be to allow such a Deed of Trust to be

enforceable 10 years after the calculated maturity date under Va. Code §8.01.241. Note

that Va. Code §8.01.242 only applies when there is “no date is fixed for the maturity of

the debt secured.” It does not say “no date stated.” Arguably, if the means to calculate

the maturity date is contained in the deed of trust, then the maturity date is indeed “fixed”

and §8.01.242 does not apply.

7. Are you close to the end of the SOL? Consider escrowing sufficient funds until

the SOL runs out. Consult your underwriter before pursuing this as an option.

B. Does the grantor’s name on the Deed of Trust have possible variations? If

so, consider checking the land records again for a release.

1. Consider foreign names that may use one or two names for the “last name” (Eg.,

should “Miguel Cuaco Vasquez” be indexed under “Vasquez” or “Cuaco Vasquez”, as if

the latter were hyphenated?)

2. Consider extremely common names that are known to have multiple variations,

such as “Smith” (e.g., “Smyth”, “Smitty”, “Smidt”, “Smythe”, etc.)


3. Consider names that could be easily reversed (e.g., is your guy indexed as “John

David” or “David John”?)

4. Sometimes, the possibilities of variations are not always apparent. Does

“Kephart” sound like it would have variations? Try: Kephart, Gephart, Gephardt,

Gebhart, Gebhardt, Capehart, Capeheart, Keephart, Kephurt, Keepheart, and Kiphart.

5. Search indexes other than Grantor’s index, such as the Grantee index. It’s

possible the same lender owned the loan at the time of payment.

C. Obtain a Letter of Indemnity (LOI) from Prior Settlement Agent

1. What they are

a) A letter of indemnity is a letter from one underwriter to another. When a

title issue arises, the underwriter insuring the current transaction does not want

to insure over known risks. We are generally in the business of risk elimination,

not risk assumption. And yet is it not always practical to eliminate a risk. And

so when a title issue arises that is covered under a prior policy, sometimes the

most expedient thing to do is for the underwriter of the prior policy create a

letter of indemnity, making a promise to the underwriter of the current

transaction to indemnify or pay back the current underwriter should the title

issue cause a claim. In exchange for this promise, this letter of indemnity, the

current underwriter issues a policy without exception to the title issue, allowing

the transaction to proceed.

2. Limitations

a) Policy limits: a letter of indemnity is limited by the policy limits stated in

the policy. This is usually spelled out in the terms of the letter of indemnity. An

underwriter is only liable for the policy limits stated in the policy. See, e.g.,

ORT Form 4445 (Expanded Homeowners Policy 12/2/13, “Owner’s Coverage

Statement: Your policy is limited by all of the following: The Policy Amount”)

b) Caution: Don’t accept an LOI when the title issue exceeds policy limits.

This point flows from the preceding one.

3. OR policy: If you are clearing a title issue through the use of an LOI from

another underwriter, be sure to attach a copy of the letter of indemnity to the policy

you remit. If a claim occurs, we will access our copy of the policy you submitted. If

the source of the claim is covered by that LOI, we won’t know it unless a copy of the

LOI is attached to your policy.

4.


5.4. Pitfall: Sometimes, you contact a prior settlement company to ask, “What did

you do about this title issue?” the prior settlement company responds by saying that they

did nothing—they got an LOI from the underwriter prior to their transaction, a copy of

which they forward on to you. Remember: that LOI does nothing for you. You must get

another LOI from the prior settlement company that indemnifies Old Republic.

6.5. LOIs aren’t always an available solution

a) Owner did not obtain a policy or cannot locate one

b) Title issue is post policy, such as a current owner refinance not being

released.

c) The prior underwriter is no longer in business

d) The difference between the amount of the prior policy and the current

policy is significant.

e) After 8/15/14, the new Closing Disclosure will list owner’s coverage as

“optional”. Do the degree that this change encourages consumers to decline

owner’s coverage, we may find more and more instances where an LOI is not an

option.

7.6. LOIs are not a solution, just a stopgap measure. You must still pursue

obtaining a release.

D. Obtain a Release from the lender

1. Statutory basis: Va. Code § 55-66.3, Va Code § 55-66.4:1

2. Having trouble finding the lender or the successor thereto? Search the FDIC

Directory: http://www2.fdic.gov/idasp/index.asp

3. Consider using ReQuire or a similar release tracing service.

E. Obtain a release from the settlement company that paid off the loan

1. Statutory basis: Va. Code § 55-66.3

2. How it works

a) After or with payoff, Provide Notice of Intent to Release to lienholder

(1) Must be by certified mail/guaranteed overnight delivery

(2) Provide copy of payoff letter

(3) Provide copy of proposed release to be filed

(4) See proposed form in Va. Code § 55-66.3(E)(1).

Formatted: Indent: Left: 1.5", Outlinenumbered + Level: 4 + Numbering Style: a, b,

c, … + Start at: 1 + Alignment: Left + Aligned

at: 1.56" + Indent at: 1.56"


b) Wait 90 days for lienholder to respond by certified mail/guaranteed

overnight delivery that it has recorded a release, that the loan is not paid in full,

or that it otherwise objects

c) File a release

(1) See form in Va. Code § 55-66.3(E)(2).

(2) Release includes an affidavit.

(3) Release includes settlement agent’s CRESPA (now RESA)

registration number.

(4) Include also a copy of the Notice of Intent

d) After filing, send a copy of the recorded release to lien creditor or loan

servicer

3. Limitations

a) This does apply in situations where the settlement agent closes a HELOC

after receiving a “zero” balance letter. See Va. Code § 55-66.3(D) (“Satisfied

by payment" includes obtaining written confirmation from the lien creditor that

the underlying obligation has a zero balance.)

b) Retroactive effect: see Va. Code § 55-66.3(E)(5a) (“The procedure

authorized by this subsection for the release of a deed of trust may be used to

effect the release of a deed of trust after July 1, 2002, regardless of when the

deed of trust was created, assigned or satisfied by payment made by the

settlement agent.”)

c) If unimproved land, the lien must be $1 million or less. See Va. Code §

55-66.3(E)(5b).

d) Does not apply to real estate containing 5 or more residential units. Va.

Code § 55-66.3(E)(5b).

e) Does not allow for partial certificates of satisfaction. Va. Code § 55-

66.3(E)(5c).

F. Obtain a release from the underwriter that insured the transaction that paid

off the loan

1. Statutory basis: Va. Code § 55-66.3(E).

2. Procedure and limitations are the same as release filed by settlement agent.

G. Obtain a Deed of Release from the Trustees


1. Statutory basis: Va. Code § 55-59.4(B)

B. Upon discharge (other than by sale by the trustee) of all debts, duties and obligations

imposed by the deed upon the grantor, including any expenses incurred preparatory to

sale, then upon the grantor's request the trustee shall execute and deliver a good and

sufficient deed of release at the grantor's own proper costs and charges.

2. Notice “shall”; by statute this is not optional, and yet in practice many trustee’s

are hesitant to perform this function in recognition of their liability to the grantee under a

Deed of Trust.

3. For trustees to consider this, you will need to have sufficient evidence of

payment.

H. Pitfall: your evidence of payoff may not be for your unreleased DoT

1. Scenario: Current owner has refinanced multiple times with the same lender.

The 1997 DoTs is unreleased. Owner produces a 2004 HUD showing a payoff. The loan

number for the payoff is not reflected. Is this the payoff of your unreleased DoT?

Maybe. Perhaps instead it is the payoff an intervening loan that was made in 2001. That

2001 loan was what paid off the 1997 loan. But the 2001 loan did not show up on your

title work because it was released, and your title examiner only reports what is

unreleased.

2. Advice: when in doubt, ask your examiner to report all DoTs—both released and

unreleased, so that you can get the full picture.

I. Help the consumer find evidence of payoff to identify the lender and loan

number

1. Sometimes it is difficult to figure out what lender and loan number was paid off.

The title search may not reveal and -the former borrower claims to have lost his or her

records on the matter.

2. Investigate: what realtor did the consumer use? Realtor may have a copy of the

HUD or other useful documents.

3. What year was the loan paid off? Have the consumer find a copy of his or her

tax filing for that year, or any prior year. That filing may contain a statement from the

lender of the mortgage interest paid for that year. That will give you the lender’s name,

loan number and other valuable information that may be helpful in helping you track

down a release. While many people fail to keep their records pertaining to refinances and

purchase transactions, most people abide by a higher standard of care for their filings

with the IRS.


J. A refinance with the same lender - Ask your title examiner for a copy of the

DoT that presumably paid off the unreleased DoT in question.

1. Va. Code § 58.1-803(D) requires language to be typed on a Deed of Trust that

secured a loan paying off another loan from the same lender. That language recites Deed

Book and Page of the DoT being paid off. If that is your unreleased DoT, then you will

discover through this method the identity of the lender, allowing you to pursue a release.

K. Obtain a judicial release if you have proof of payment

1. Statutory basis: Va. Code § 55-66.5

L. Old School: marginal notations

1. Statutory basis: Va. Code § 17.1-228

2. Former practice required the clerk to record in the margin of the recorded deed of

trust the deed book and page number of the certificate of satisfaction that purported to

release it. If a release is missing from an older Deed of Trust, check its margin. Perhaps

the release was misindexed, and the notation will lead you to it.

M. Obtain an Indemnity from the Current Owner

1. In the right circumstances, this is an option. At a minimum, we must be satisfied

that the unreleased Deed of Trust is indeed paid and that the current owner has the

inclination and means to pay it off if it is not.

N. To disclose or not to disclose – Insuring over or insuring around

1. Should a purchaser be made aware of the unreleased DOT and be the one to

decide whether title insurance is sufficient for their comfort level?

2. If yes, the purchaser must be informed of the unreleased deed of trust as soon as

it is discovered and it is clear a release will not be obtained by the time of settlement. The

purchaser decides whether to proceed with the transaction with this affirmative coverage,

or not. The purchaser may require the seller to clear title prior to settlement. This is true

whether we have an indemnity agreement from another title underwriter or not.

a) The following should appear in Schedule B-1:


(1) “Release of record the deed of trust from (names) to (names),

trustees, dated (date), recorded (date) in (DB/page or Instrument No.---)

in the principal amount of $ (amount). AS TO OWNER’S POLICY

ONLY: Subject to the Conditions and Stipulations contained in the

Policy, the Company hereby insures the insured against loss or damage

by reason of the enforcement or attempted enforcement of this deed of

trust until such time as it is released of record or the statute of limitations

has run on its enforceability.”

b) The requirement will then appear in the owner’s title policy, but not in the

loan policy.

3. If you know a release is being processed, you do not need to inform the purchaser

“As to owner’s policy only” affirmative coverage.

4. In a refinance transaction, the owner should be made aware of the necessity to

follow up “now” rather than when they might sell in the future.

II. How to Prevent Unreleased DOTs: Practical Advice

A. Have an internal system for checking that releases are recorded.

1. Lenders have 90 days to record a release. If you do not use a release tracking

system such as ReQuire, make sure to check the land records after 90 days for a release.

If none is found, contact the lender. Follow up on a regular basis until the release is

recorded. It’s easy with today’s computerized calendar to schedule the follow up.

2. If the lender sends the release to your office, remember Va. Code § 55-525.11

requires the settlement agent to disburse funds within 2 business days of receipt. For non-

attorney settlement agents, the Bureau of Insurance had determined release documents

fall under this Code section.

3. Some settlement agents cut a check to the Clerk and leave it outstanding as a

reminder to follow up on the release. If the fee is not paid to the Clerk, it must be

refunded to the borrower, and a revised HUD-1 sent to all parties.

4. Regardless of the method, devise one and use it consistently. Doing so will

eliminate the unreleased DOT issue in the future.

B. Paying off private noteholders

1. Ask for the release up front as a condition of sending the money—many will

comply, even though by statute a noteholder could stand firm on Va. Code § 55-66.3

which allows a noteholder 90 days from payoff to execute a certificate of satisfaction.


2. Create an escrow—perhaps with a third party—to exchange the release for the

money

C. Paying off HELOCs and other credit lines

1. In notice to lender to request a payoff

a) Specify that this is to “close the loan” and that “no further draws are to

be made”

b) Have borrower sign it

c) Make it “irrevocable”

2. Read payoff letter carefully for special instructions on how to close the loan (e.g.,

maybe a separate form needs to be filled out and signed by borrower)

3. Confiscate HELOC check book, credit cards, etc.

4. In payoff, if not by wire, repeat information above in payoff request

D. Pitfall: Your payoff may not be for your unreleased DoT

1. Scenario: Current owner has more than one property and has more than one loan

with the same lender. Perhaps the client gave you the wrong loan number. Or perhaps

the lender gave you the wrong payoff.

2. Advice: Do what you can to match the payoff to the DoT

a) Check the name on each: do they match?

b) Check the property address on each: do they match?

c) Check the loan number on each: do they match?

d) Does the amount of the payoff make sense given the amount and age of

the DoT?

E. Consider using a release tracking system such as ReQuire, but make sure to

follow up within their electronic system to determine the release has actually been

recorded.


CITED CODE PROVISIONS (in order of citation)

§ 8.01-241. Limitation of enforcement of deeds of trust, mortgages and liens for unpaid purchase money.

A. No deed of trust or mortgage heretofore or hereafter given to secure the payment of money, and no lien heretofore or hereafter reserved to secure the payment of unpaid purchase money, shall be enforced after 10 years from the time when the original obligation last maturing thereby secured shall have become due and payable according to its terms and without regard to any provision for the acceleration of such date; provided that the period of one year from the death of any party in interest shall be excluded from the computation of time.

B. Notwithstanding the limitations prescribed by subsection A, a deed of trust or mortgage given, and a lien reserved to secure the payment of money, for which the original obligation last maturing thereby secured became due and payable according to its terms between July 1, 1988, and July 1, 2000, without regard to any provision for the acceleration of the date such obligation became due and payable, shall not be enforced after July 1, 2010. However, the provisions of this subsection shall have no effect on the rights of a person who (i) acquired an interest in the real property securing such deed of trust or mortgage between July 1, 2008, and the date of enactment of this subsection and (ii) would otherwise have priority over or take free of such deed of trust or mortgage under the laws of the Commonwealth at that time.

C. The limitations prescribed by this section may be extended by the recordation of a certificate in the form provided in § 8.01-241.1 prior to the expiration of the limitation period prescribed herein in the clerk's office in which such lien is recorded and executed either by the party in whom the beneficial title to the property so encumbered is vested at the time of such recordation or by his duly authorized attorney-in-fact, or agent. Recordation of the certificate shall extend the limitations of the right to enforce the lien for 10 years from the date of the recordation of the certificate. The clerk of the court shall index the certificate in both names in the index of the deed book and give reference to the book and page in which the original writing is recorded. Unless the deed or deeds executed pursuant to the foreclosure of any mortgage or to the execution of or sale under any deed of trust is recorded in the county or city where the land is situated within one year after the time the right to enforce the mortgage or deed of trust shall have expired as hereinabove provided, such deed or deeds shall be void as to all purchasers for valuable consideration without notice and lien creditors who make any purchase of or acquire any lien on the land conveyed by any such deed prior to the time such deed is so recorded.

(Code 1950, § 8-11; 1950, p. 19; 1977, c. 617; 1980, c. 499; 1994, c. 547; 1999, c. 788; 2008, c. 226; 2009, c. 163.)


§ 8.01-242. Same; when no maturity date is given; credit line deeds of trust.

No deed of trust or mortgage given to secure the payment of money, other than credit line deeds of trust described in § 55-58.2, and no lien reserved to secure the payment of unpaid purchase money, in which no date is fixed for the maturity of the debt secured by such deed of trust, mortgage, or lien, shall be enforced after twenty years from the date of the deed of trust, mortgage, or other lien; provided that the period of one year from the death of any party in interest shall be excluded from the computation of time, and provided further that the limitation may be extended by recordation of a certificate within the twenty-year period in the manner set forth in § 8.01-241. No credit line deed of trust described in § 55-58.2 in which no date is fixed for the maturity of the debt secured thereby shall be enforced after forty years from the date of the credit line deed of trust; provided that the period of one year from the death of any party in interest shall be excluded from the computation of time.

(Code 1950, § 8-12; 1977, c. 617; 1994, c. 547; 1999, c. 788.)


§ 55-66.3. Release of deed of trust or other lien.

A. 1. Except as provided in Article 2.1 of this chapter, after full or partial payment or satisfaction has been made of a debt secured by a deed of trust, vendor's lien, or other lien, or any one or more obligations representing at least 25 percent of the total amount secured by such lien, but less than the total number of the obligations so secured, or the debt secured is evidenced by two or more separate written obligations sufficiently described in the instrument creating the lien, has been fully paid, the lien creditor shall issue a certificate of satisfaction or certificate of partial satisfaction in a form sufficient for recordation reflecting such payment and release of lien. This requirement shall apply to a credit line deed of trust prepared pursuant to § 55-58.2 only when the obligor or the settlement agent has paid the debt in full and requested that the instrument be released.

If the lien creditor receives notice from a settlement agent at the address identified in its payoff statement requesting that the certificate be sent to such settlement agent, the lien creditor shall provide the certificate, within 90 days after receipt of such notice, to the settlement agent at the address specified in the notice received from the settlement agent.

If the notice is not received from a settlement agent, the lien creditor shall deliver, within 90 days after such payment, the certificate to the appropriate clerk's office with the necessary fee for recording by certified mail, return receipt requested, or when there is written proof of receipt from the clerk's office, by hand delivery or by courier hand delivery.

If the lien creditor has already delivered the certificate to the clerk's office by the time it receives notice from the settlement agent, the lien creditor shall deliver a copy of the certificate to the settlement agent within 90 days of the receipt of the notice at the address for notification set forth in the payoff statement.

If the lien creditor has not, within 90 days after payment, either provided the certificate of satisfaction to the settlement agent or delivered it to the clerk's office with the necessary fee for filing, the lien creditor shall forfeit $500 to the lien obligor. No settlement agent or attorney may take an assignment of the right to the $500 penalty or facilitate such an assignment to any third party designated by the settlement agent or attorney. Following the 90-day period, if the amount forfeited is not paid within 10 business days after written demand for payment is sent to the lien creditor by certified mail at the address for notification set forth in the payoff statement, the lien creditor shall pay any court costs and reasonable attorney's fees incurred by the obligor in collecting the forfeiture.

2. If the note, bond or other evidence of debt secured by such deed of trust, vendor's lien or other lien referred to in subdivision 1 or any interest therein, has been assigned or transferred to a party other than the original lien creditor, the subsequent holder shall be subject to the same requirements as a lien creditor for failure to comply with this subsection, as set forth in subdivision 1.

B. The certificate of satisfaction shall be signed by the creditor or his duly authorized agent, attorney or attorney-in-fact, or any person to whom the instrument evidencing the indebtedness


has been endorsed or assigned for the purpose of effecting such release. An affidavit shall be filed or recorded with the certificate of satisfaction, by the creditor, or his duly authorized agent, attorney or attorney-in-fact, with such clerk, stating that the debt therein secured and intended to be released or discharged has been paid to such creditor, his agent, attorney or attorney-in-fact, who was, when the debt was satisfied, entitled and authorized to receive the same.

C. And when so signed and the affidavit hereinbefore required has been duly filed or recorded with the certificate of satisfaction with such clerk, the certificate of satisfaction shall operate as a release of the encumbrance as to which such payment or satisfaction is entered and, if the encumbrance be by deed of trust, as a reconveyance of the legal title as fully and effectually as if such certificate of satisfaction were a formal deed of release duly executed and recorded.

D. As used in this section:

"CRESPA" means Chapter 27.3 (§ 55-525.16 et seq.) of Title 55.

"Deed of trust" means any mortgage, deed of trust or vendor's lien.

"Lien creditor" and "creditor" shall be construed as synonymous and mean the holder, payee or obligee of a note, bond or other evidence of debt and shall embrace the lien creditor or his successor in interest as evidenced by proper endorsement or assignment, general or restrictive, upon the note, bond or other evidence of debt.

"Payoff letter" means a written communication from the lien creditor or servicer stating, at a minimum, the amount outstanding and required to be paid to satisfy the obligation.

"Satisfactory evidence of the payment of the obligation secured by the deed of trust" means (i) any one of (a) the original canceled check or a copy of the canceled check, showing all endorsements, payable to the lien creditor or servicer, as applicable, (b) confirmation in written or electronic form of a wire transfer to the bank account of the lien creditor or servicer, as applicable, or (c) a bank statement in written or electronic form reflecting completion of the wire transfer or negotiation of the check, as applicable; and (ii) a payoff letter or other reasonable documentary evidence that the payment was to effect satisfaction of the obligation secured or evidenced by the deed of trust.

"Satisfied by payment" includes obtaining written confirmation from the lien creditor that the underlying obligation has a zero balance.

"Servicer" means a person or entity that collects loan payments on behalf of a lien creditor.

"Settlement agent" has the same meaning ascribed thereto in § 55-525.16, provided that a person shall not be a settlement agent unless he is registered pursuant to § 55-525.30 and otherwise fully in compliance with the applicable provisions of Chapter 27.3 (§ 55-525.16 et seq.) of Title 55.

"Title insurance company" has the same meaning ascribed thereto in § 38.2-4601, provided that the title insurance company seeking to release a lien by the process described in subsection E


issued a policy of title insurance, through a title insurance agency or agent as defined in § 38.2-4601.1, for a real estate transaction wherein the loan secured by the lien was satisfied by payment made by the title insurance agency or agent also acting as the settlement agent.

E. Release of lien by settlement agent or title insurance company.

A settlement agent or title insurance company may release a deed of trust in accordance with the provisions of this subsection (i) if the obligation secured by the deed of trust has been satisfied by payment made by the settlement agent and (ii) whether or not the settlement agent or title insurance company is named as a trustee under the deed of trust or otherwise has received the authority to release the lien.

1. Notice to lienholder.

a. After or accompanying payment in full of the obligation secured by a deed of trust, a settlement agent or title insurance company intending to release a deed of trust pursuant to this subsection shall deliver to the lien creditor by certified mail or guaranteed overnight delivery service a notice of intent to release the deed of trust with a copy of the payoff letter and a copy of the release to be recorded as provided in this subsection.

b. The notice of intent to release shall contain (i) the name of the lien creditor, the name of the servicer if loan payments on the deed of trust are collected by a servicer, or both names, (ii) the name of the settlement agent, (iii) the name of the title insurance company if the title insurance company intends to release the lien, and (iv) the date of the notice. The notice of intent to release shall conform substantially to the following form:

NOTICE OF INTENT TO RELEASE

Notice is hereby given to you concerning the deed of trust described on the certificate of satisfaction, a copy of which is attached to this notice, as follows:

1. The settlement agent identified below has paid the obligation secured by the deed of trust described herein or obtained written confirmation from you that such obligation has a zero balance.

2. The undersigned will release the deed of trust described in this notice unless, within 90 days from the date this notice is mailed by certified mail or guaranteed overnight delivery service, the undersigned has received by certified mail or guaranteed overnight delivery service a notice stating that a release of the deed of trust has been recorded in the clerk's office or that the obligation secured by the deed of trust described herein has not been paid, or the lien creditor or servicer otherwise objects to the release of the deed of trust. Notice shall be sent to the address stated on this form.

(Name of settlement agent)

(Signature of settlement agent or title insurance company)


(Address of settlement agent or title insurance company)

(Telephone number of settlement agent or title insurance company)

(Virginia CRESPA registration number of settlement agent at the time the obligation was paid or confirmed to have a zero balance)

2. Certificate of satisfaction and affidavit of settlement agent or title insurance company.

a. If, within 90 days following the day on which the settlement agent or title insurance company mailed or delivered the notice of intent to release in accordance with this subsection, the lien creditor or servicer does not send by certified mail or guaranteed overnight delivery service to the settlement agent or title insurance company a notice stating that a release of the deed of trust has been recorded in the clerk's office or that the obligation secured by the deed of trust has not been paid in full or that the lien creditor or servicer otherwise objects to the release of the deed of trust, the settlement agent or title insurance company may execute, acknowledge and file with the clerk of court of the jurisdiction wherein the deed of trust is recorded a certificate of satisfaction, which shall include (i) the affidavit described in subdivision 2 b of this subsection and (ii) a copy of the notice of intent to release that was sent to the lender, the servicer, or both. The certificate of satisfaction shall include the settlement agent's CRESPA registration number, issued by the Virginia State Bar or the Virginia State Corporation Commission, that was in effect at the time the settlement agent paid the obligation secured by the deed of trust or obtained written confirmation from the lien creditor that such obligation has a zero balance. The certificate of satisfaction shall note that the individual executing the certificate of satisfaction is doing so pursuant to the authority granted by this subsection. After filing or recording the certificate of satisfaction, the settlement agent or title insurance company shall mail a copy of the certificate of satisfaction to the lien creditor or servicer. The validity of a certificate of satisfaction otherwise satisfying the requirements of this subsection shall not be affected by the inaccuracy of the CRESPA registration number placed thereon or the failure to mail a copy of the recorded certificate of satisfaction to the lien creditor or servicer and shall nevertheless release the deed of trust described therein as provided in this subsection.

b. The certificate of satisfaction used by the settlement agent or title insurance company shall include an affidavit certifying (i) that the settlement agent has satisfied the obligation secured by the deed of trust described in the certificate; (ii) that the settlement agent or title insurance company possesses satisfactory evidence of payment of the obligation secured by the deed of trust described in the certificate or written confirmation from the lien creditor that such obligation has a zero balance; (iii) that the lien of the deed of trust may be released; (iv) that the person executing the certificate is the settlement agent, the title insurance company, or is duly authorized to act on behalf of the settlement agent or title insurance company; and (v) that the notice of intent to release was delivered to the lien creditor or servicer and the settlement agent or title insurance company received evidence of receipt of such notice by the lien creditor or servicer. The affidavit shall be substantially in the following form:

AFFIDAVIT OF SETTLEMENT AGENT OR TITLE INSURANCE COMPANY


The undersigned hereby certifies that, in accordance with the provisions § 55-66.3 of the Code of Virginia of 1950, as amended and in force on the date hereof (the Code) (a) the undersigned is a settlement agent or title insurance company as defined in subsection D of § 55-66.3 of the Code or a duly authorized officer, director, member, partner or employee of such settlement agent or title insurance company; (b) the settlement agent has satisfied the obligation secured by the deed of trust; (c) the settlement agent or title insurance company possesses satisfactory evidence of the payment of the obligation secured by the deed of trust described in the certificate recorded herewith or written confirmation from the lien creditor that such obligation has a zero balance; (d) the settlement agent or title insurance company delivered to the lien creditor or servicer in the manner specified in subdivision E 1 of § 55-66.3 of the Code the notice of intent to release and possesses evidence of receipt of such notice by the lien creditor or servicer; and (e) the lien of the deed of trust is hereby released.

____________________________________

(Authorized signer)

3. Effect of filing.

When filed or recorded with the clerk's office, a certificate of satisfaction that is executed and notarized as provided in this subsection, and accompanied by (i) the affidavit described in subdivision 2 b of this subsection, and (ii) a copy of the notice of intent to release that was sent to the lender, lien creditor or servicer shall operate as a release of the encumbrance described therein and, if the encumbrance is by deed of trust, as a reconveyance of the legal title as fully and effectively as if such certificate of satisfaction were a formal deed of release duly executed and recorded.

4. Effect of wrongful or erroneous certificate; damages.

a. The execution and filing or recording of a wrongful or erroneous certificate of satisfaction by a settlement agent or title insurance agent does not relieve the party obligated to repay the debt, or anyone succeeding to or assuming the responsibility of the obligated party as to the debt, from any liability for the debt or other obligations secured by the deed of trust that is the subject of the wrongful or erroneous certificate of satisfaction.

b. A settlement agent or title insurance agent that wrongfully or erroneously executes and files or records a certificate of satisfaction is liable to the lien creditor for actual damages sustained due to the recording of a wrongful or erroneous certificate of satisfaction.

c. The procedure authorized by this subsection for the release of a deed of trust shall constitute an optional method of accomplishing a release of a deed of trust secured by property in the Commonwealth. The nonuse of the procedure authorized by this subsection for the release of a deed of trust shall not give rise to any liability or any cause of action whatsoever against a settlement agent or any title insurance company by any obligated party or anyone succeeding to or assuming the interest of the obligated party.


5. Applicability.

a. The procedure authorized by this subsection for the release of a deed of trust may be used to effect the release of a deed of trust after July 1, 2002, regardless of when the deed of trust was created, assigned or satisfied by payment made by the settlement agent.

b. This subsection applies only to transactions involving the purchase of or lending on the security of real estate located in the Commonwealth that is either (i) unimproved real estate with a lien to be released of $1 million or less or (ii) real estate containing at least one but not more than four residential dwelling units.

c. The procedure authorized by this subsection applies only to the full and complete release of a deed of trust. Nothing in this subsection shall be construed to authorize the partial release of property from a deed of trust or otherwise permit the execution or recordation of a certificate of partial satisfaction.

(Code 1919, § 6456; 1926, p. 80; 1930, p. 69; 1932, p. 120; 1944, p. 198; 1958, c. 14; 1962, c. 39; 1972, c. 280; 1975, c. 469; 1980, c. 116; 1986, c. 462; 1987, c. 673; 1988, c. 546; 1991, c. 414; 1996, cc. 895, 949; 1997, c. 221; 2000, c. 28; 2001, c. 711; 2002, cc. 845, 862; 2003, c. 745; 2004, c. 596; 2006, c. 907; 2009, cc. 254, 421; 2010, c. 236.)


§ 55-66.4:1. Permissible form for certificate of satisfaction or certificate of partial satisfaction.

Any release by a certificate of satisfaction or certificate of partial satisfaction shall be in conformity with §§ 55-66.3, 55-66.3:1, and 55-66.4 and shall conform substantially with the following forms:

CERTIFICATE OF SATISFACTION

Place of Record ............

Date of Note/Deed of Trust ............

Face Amount Secured/Face Amount of Note: ............

Deed Book .......... Page ............

Name(s) of Grantor(s)/Maker(s); ............

Name(s) of Trustee(s) ............

Face Amount of Note(s) $ ............

I/we, holder(s) of the above-mentioned note(s) secured by the above-mentioned

deed of trust, do hereby certify that the same has/have been paid in full,

and

the lien therein created and retained is hereby released. GIVEN UNDER MY/OUR

HAND(S) THIS .......... DAY OF ................., 20 . . . .

............

............

(NOTE HOLDERS)

Commonwealth of Virginia,

County/City of .................... to wit:

Subscribed, sworn to and acknowledged before me by ............

this ................... day of ...................., 20 ............

My Commission Expires: ............

............

NOTARY PUBLIC

VIRGINIA;


IN THE CLERK'S OFFICE OF THE CIRCUIT COURT

This certificate was presented, and with the Certificate annexed, admitted to

record on .................... at ........ o'clock .... .m.

Clerk's fees: $ ........ have been paid.

Attest: ..., Deputy Clerk

or:

CERTIFICATE OF PARTIAL SATISFACTION

Place of Record ............

Date of Deed of Trust ............

Deed Book ......... Page ............

Name(s) of Grantor(s) ............

Name(s) of Trustee(s) ............

Maker(s) of Note(s) ............

Date of Note(s) ............

Face Amount of Note(s) $ ............

The lien of the above-mentioned deed of trust securing the above-mentioned

note is released insofar as the same is applicable to .............

(description of property) recorded in deed book .............. at page

........ in the clerk's office of this court. The undersigned is/are the

legal

holder(s) of the obligation, note, bond or other evidence of debt secured by

said deed of trust.

Given under my/our hand(s) this ................ day of

...................., 20 ............

............

............

(NOTE HOLDERS)

Commonwealth of Virginia,

County/City of .................... to wit:


Subscribed, sworn to and acknowledged before me by ............

this ............ day of .............., 20 .......

My Commission Expires: ............

............

NOTARY PUBLIC

The clerk shall satisfy the requirements of § 17.1-228.

Certificates conforming to this section prior to the amendment effective July 1, 1984, shall be deemed to be in substantial conformity thereto.

(1975, c. 469; 1977, c. 254; 1982, c. 420; 1983, c. 220; 1984, c. 376; 1990, c. 328; 1994, c. 929; 1995, c. 271; 1996, c. 949; 2014, c. 330.)


§ 55-59.4. Powers and duties of trustee in event of sale under or satisfaction of deed of trust.

A. In the event of sale under a deed of trust, the trustee shall have the following powers and duties in addition to all others:

1. Written one-price bids may be made and shall be received by the trustee from the beneficiary or any other person for entry by announcement of the trustee at the sale. Any person other than the trustee may bid at the foreclosure sale, including a person who has submitted a written one-price bid. Upon request to the trustee or trustees, any other bidder in attendance at a foreclosure sale shall be permitted to inspect written bids. Whenever the written bid of the beneficiary is the highest bid submitted at the sale, such document shall be filed by the trustee with his account of sale required under § 64.2-1309. The written bid submitted pursuant to this subsection may be prepared by the beneficiary, its agent or attorney.

2. The trustee may require of any bidder at any sale a cash deposit of as much as ten per centum of the sale price (unless the deed of trust specifies a higher or lower maximum, which may be done by the words "bidder's deposit of not more than ________ dollars may be required," or words of like purport), before his bid is received, which shall be refunded to the bidder unless the property is sold to him, otherwise to be applied to his credit in settlement or, should he fail to complete his purchase promptly, to be applied to pay the costs and expense of sale and the balance, if any, to be retained by the trustee as his compensation in connection with that sale.

3. The trustee shall receive and receipt for the proceeds of sale, account for the same to the commissioner of accounts pursuant to § 64.2-1309 and apply the same, first, to discharge the expenses of executing the trust, including a reasonable commission to the trustee; secondly, to discharge all taxes, levies, and assessments, with costs and interest if they have priority over the lien of the deed of trust, including the due pro rata thereof for the current year; thirdly, to discharge in the order of their priority, if any, the remaining debts and obligations secured by the deed, and any liens of record inferior to the deed of trust under which sale is made, with lawful interest; and, fourthly, the residue of the proceeds shall be paid to the grantor or his assigns; provided, however, that the trustee as to such residue shall not be bound by any inheritance, devise, conveyance, assignment or lien of or upon the grantor's equity, without actual notice thereof prior to distribution; provided further that such order of priorities shall not be changed or varied by the deed of trust. The trustee's deed shall show the trustee's mailing address.

B. Upon discharge (other than by sale by the trustee) of all debts, duties and obligations imposed by the deed upon the grantor, including any expenses incurred preparatory to sale, then upon the grantor's request the trustee shall execute and deliver a good and sufficient deed of release at the grantor's own proper costs and charges.

(1979, c. 12; 1997, c. 842; 1998, c. 610; 2010, c. 417.)


§ 58.1-803. Deeds of trust or mortgages; maximum tax.

A. A recordation tax on deeds of trust or mortgages is hereby imposed at a rate of 25 cents on every $100 or portion thereof of the amount of bonds or other obligations secured thereby. In the event of an open or revolving deed of trust, the amount of the obligation for purposes of this section shall be the maximum amount which may be outstanding at any one time. In any case in which the amount which may be secured under a deed of trust or mortgage is not ascertainable, or in which the obligations described are not fully secured because they exceed the fair market value of the property conveyed, the tax shall be based upon the fair market value of the property conveyed, determined as of the date of the deed of trust or mortgage. The fair market value of the property shall include the value of any realty required by the terms of the deed of trust or mortgage to be constructed thereon.

B. On deeds of trust or mortgages upon the works and property of a railroad lying partly within the Commonwealth and partly without the Commonwealth, the tax shall be only upon such proportion of the amount of bonds, or other obligations secured thereby, as the number of miles of the line of such company in the Commonwealth bears to the whole number of miles of the line of such company conveyed by such deed of trust or mortgage.

Upon deeds of trust or mortgages conveying other property lying partly within the Commonwealth and partly without the Commonwealth the tax herein imposed shall be only upon such proportion of the debt secured as the value of the property located within the Commonwealth, or which may be brought into the Commonwealth, bears to the entire amount of property conveyed by such deed of trust or mortgage.

C. On deeds of trust or mortgages, which provide for an initial issue of bonds, to be followed thereafter by additional bonds, unlimited in amount, if such deed of trust or mortgage provides that as and when such additional bonds are issued a supplemental indenture shall be recorded in the office in which the original deed of trust or mortgage is first recorded, which supplement shall contain a statement as to the amount of the additional bonds to be issued, then the tax shall be paid upon the initial amount of bonds when the original deed of trust is recorded and thereafter on each additional amount of bonds when the supplemental indenture relating to such additional bonds is recorded.

On deeds of trust or mortgages which are supplemental to or wrap around existing deeds of trust, or which modify the terms of an existing debt with the same lender, on which the tax imposed hereunder has already been paid, the tax shall be paid only on that portion of the face amount of the bond or obligation secured thereby which is in addition to the amount of the existing debt secured by a deed of trust or mortgage on which tax has been paid. The instrument shall certify the amount of the existing debt.

D. On deeds of trust or mortgages, the purpose of which is to refinance an existing debt, which debt is secured by a deed of trust or mortgage on which the tax imposed hereunder has been paid, the tax shall be paid only on that portion of the amount of the bond or other obligation secured thereby determined in accordance with the following schedule:


On the first $10 million of value as determined pursuant to this section, 18 cents ($0.18) upon every $100 or portion thereof;

On the next $10 million of value as determined pursuant to this section, 16 cents ($0.16) upon every $100 or portion thereof;


On the next $10 million of value as determined pursuant to this section, 12 cents ($0.12) upon every $100 or portion thereof; and

On all over $40 million of value as determined pursuant to this section, 10 cents ($0.10) upon every $100 or portion thereof, incorporated into this section.

The instrument shall certify the deed book and page number of the recorded instrument on which the tax for the original debt was paid. For purposes of this subsection, the term "value" means the portion of the amount of the bond or other obligation secured by the property conveyed by the deed of trust.

E. The maximum tax on the recordation of any deed of trust or mortgage or on any indenture supplemental thereto, other than instruments subject to subsection D, shall be determined in accordance with the following schedule:

On the first $10 million of value as determined pursuant to this section, 25 cents ($0.25) upon every $100 or portion thereof;



On the next $10 million of value as determined pursuant to this section, 16 cents ($0.16) upon every $100 or portion thereof; and

On all over $40 million of value as determined pursuant to this section, 13 cents ($0.13) upon every $100 or portion thereof, incorporated into this section.

(Code 1950, § 58-55; 1972, c. 186; 1977, c. 611; 1978, cc. 68, 805; 1982, c. 630; 1983, c. 553; 1984, c. 675; 1998, c. 349; 2004, Sp. Sess. I, c. 3; 2012, cc. 505, 820.)


§ 55-66.5. Releases made by court; costs and attorney fees.

A. Any person who owns or has any interest in real estate or personal property on which such encumbrance exists may, after 20 days' notice thereof to the person entitled to such encumbrance, apply to the circuit court of the county or city in whose clerk's office such encumbrance is recorded to have the same released or discharged. Upon proof that the encumbrance has been paid or discharged or upon a finding by the court that more than 15 years have elapsed since the maturity of the lien or encumbrance, raising a presumption of payment which is not rebutted at the hearing, such court shall order the clerk to record a certificate of satisfaction or a certificate of partial satisfaction which, when so recorded, shall operate as a release of such encumbrance.

All releases made prior to June 24, 1944, by any court under this section upon such presumption of payment so arising and not rebutted shall be validated.

B. If the court finds that the person entitled to such encumbrance cannot with due diligence be located, and that notice has been given such person in the manner provided by § 8.01-319 or 55-66.10, or that tender has been made of the sum due thereon but has been refused for any reason by the party or parties to whom due, the court may in its discretion order the sum due to be paid into court, to be there held as provided by law, and to be paid upon demand to the person or persons entitled thereto. The court shall order the same to be recorded as provided in subsection A hereof, which certificate of satisfaction or certificate of partial satisfaction shall operate as a release of the encumbrance.

C. Upon a finding by the court that the holder of a mortgage or deed of trust which has been fully paid or discharged has unjustifiably and without good cause failed or refused to release such mortgage or deed of trust, the court, in its discretion, may order that costs and reasonable attorneys fees be paid to the petitioning party. This subsection shall not preclude a separate suit by the petitioning party for actual damages sustained by reason of such failure or refusal to release the encumbrance.

(Code 1919, § 6456; 1926, p. 81; 1930, p. 70; 1932, p. 121; 1944, p. 199; 1956, c. 426; 1975, c. 469; 1987, c. 604; 1992, c. 532; 1999, c. 66; 2006, c. 907.)


§ 17.1-228. Recording releases of deeds of trust, partial releases of deeds of trust, court ordered releases, or other liens or assignments in cities and counties using microfilm.

Notwithstanding any other provision of law, whenever the writings required by law to be recorded in the deed book in the office of the clerk of the circuit court of any city or county are recorded by a microphotographic process or by any other method or process which renders impractical or impossible the subsequent entering of marginal notations upon a recorded instrument, an appropriate certificate, certificate of satisfaction, certificate of partial satisfaction, certified copy of order, or other separate instrument setting forth the necessary information shall be recorded and indexed according to law.

When existing deed books in the office of the clerk of the circuit court of any county or city are to be microfilmed or digitally reproduced for security purposes, the clerk may provide that marginal notations to accomplish the release of deeds of trust or other liens shall not be made in such deed book so microfilmed or digitally reproduced.

(1975, c. 469, § 17-60.1; 1978, c. 629; 1991, c. 414; 1998, c. 872; 2008, cc. 823, 833.)

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