Discharge of Mortgage by Affidavit of Payment
N.J.S.A. 46:18-11.7
Discharge of Mortgage by Affidavit of Payment
Discharging a mortgage of record is an integral part of the post-closing process for clearing a title. After receiving payment in full, an owner or holder of mortgage is legally required by N.J.S.A. 46:18-11.2 and N.J.S.A. 17:11C-34d;-82f(3) to have a mortgage canceled of record within 30 days of satisfaction; however, there are instances when a holder of mortgage does not complete their duty, for reasons unbeknownst to us. When a mortgage remains on record 30 days after satisfaction and the holder of mortgage is unresponsive, there is an alternative method of discharging the mortgage, for a residential mortgage. The NJ legislature enacted N.J.S.A. 46:18-11.7: Conditions for a Discharge, Satisfaction on the Record, to allow an attorney-at-law or licensed title insurance producer who has caused the residential mortgage to be paid, to secure its discharge.
The process to discharge a mortgage by affidavit begins when a mortgage is still on record 30 days after the payoff is received. According to Title 46 Section 46:18-11.2c, if the final payment is made via certified check or cashier’s check, the mortgage will be deemed paid upon receipt of the check by the mortgagee. If the mortgage has not been canceled of record, a notice may be sent to the lender advising them of the intention to cause the mortgage to be discharged by affidavit. The notice must be sent by certified mail with a return receipt. The return receipt informs the day that the lender received the notice. The lender has 30 days from receipt of the notice to discharge the mortgage.
If 15 days elapse after the lender receives the second notice and the mortgage is still on record, an affidavit of payment can be used to discharge the mortgage. The affidavit is a statutory form and must state the following:
- The payment was made to the lender in accordance with a current, written payoff letter
- The affiant knows the lender received the payment
- A notice was sent to the lender by certified mail, at least 30 days after the payment was received
- A second notice was sent to the lender by certified mail at least 30 days after the first notice was received
- At least 15 days have elapsed since the lender received the second notice; and
- The affiant directs the county recording officer to discharge the mortgage of record and put a marginal notation on the original record of the mortgage
The affidavit must be accompanied by a discharge prepared by the affiant. Section 46:18-11.7.3a of the act appoints the affiant as the agent or attorney-in-fact for the owner or holder of the mortgage, for the purpose of executing the discharge. Once the discharge and affidavit are notarized, they can be sent to the county recording office with a recording cover sheet and appropriate recording fees for recording.
While the discharge by affidavit of payment statute is a supplement to the existing statutory procedure regarding mortgage cancellations, it has been effective in discharging mortgages when lenders have, for whatever reason, forgotten to cancel a residential mortgage of record.
- Paula Zwiren