Clearing Public Record of a Loan
The following is for general informational purposes only and should not be considered legal advice. Therefore, we suggest that you contact an attorney for any legal advice on your specific situation.
WHEN FINAL PAYMENT IS MADE ON A NOTE SECURED BY A DEED OF TRUST:
- The BORROWER (original Trust or present owner) must obtain from the LENDER (Beneficiary of the Deed of Trust):
- The original Note marked “Paid;”
- A Request for Reconveyance addressed to the Trustee (usually printed on the back of the original Deed of Trust); and
- The original Deed of Trust (or a certified copy obtained from the County Recorder)
EXPLANATION. A Deed of Trust is a three party document prepared, signed and recorded to secure repayment of a loan. The Borrower (property owner) is named as “Trustor,” the Lender is called the “Beneficiary,” and a third party is called a “Trustee.”
The Trustor grants the property “in trust with power of sale” to the Trustee to secure payment to the Beneficiary. In theory, title to the property is conveyed to the Trustee. No formal acceptance by the Trustee is necessary.
Banks, title companies, and other financing firms print Deed of Trust forms naming themselves as Trustees. These forms are given to lenders. When a form is used, the company named in the form becomes the Trustee, sometimes without knowing it.
Although ownership of the property may have changed during the term of the Deed of Trust, the Reconveyance must show the name of the original Trustor. The Trustee reconveys the property to the “party entitled thereto,” who is the present owner of the property.