Handling Old Open Loan Deeds
Open loan deeds of record are one of the most prevalent problems raised by the title examination. The following are questions which should be asked, and clearance measures undertaken before calling your Georgia title insurance underwriter:
Still in Business?
Is the lender or last assignee of record still in business?
- Call or access the website of the Secretary of State of the state of incorporation
- Check the Kay Directory. (Both "a" and "b" can provide names of officers, agents for service or payoff departments)
- Access the Federal Financial Institutions Examination Council at: www.ffiec.gov.
Records can show successor by merger corporations.
Owner's Title Insurance Policy
Inquire if the Seller/Borrower is insured by an Owner's Title Insurance Policy
Inquire as to who closed the last transaction. If the owner doesn't recall and no settlement statement is available, does the loan deed reflect who was to receive the deed after recording?
- Do you recognize the names of the witness and/or Notary Public?
How old is the loan deed in question?
- Has 20 years passed since the due date set out in the deed or, if none, 20 years from the date of execution?
Has the title examiner determined that no Quit Claim Deed or Release is indexed of record? It may be on record but not cross-referenced (i.e., grantor the lender and/or grantee the borrower from the date of the loan through the present).
Affidavit of Cancellation
If the lender is out of business but you locate the attorney who closed the transaction which should have addressed the loan deed, and in fact did pay it off, you should obtain an "Affidavit of Cancellation" from the attorney with supporting documentation as proved in O.C.G.A. 44-14-3.
Mortgagee is Person?
If the lender of record is an individual, have you checked the phone book, probate records or Internet locator?
Proof of Payment
What proof of payment does the borrower have to substantiate the assertion that the loan has been paid? E.g., cancelled checks, transmittal letters, not paid or even the original canceled loan deed, as most borrowers do not know how to record canceled, satisfied or released documentation. Usually this applies when the lender was an individual.
Depending on the information gathered by these suggestions, or if none is obtained, then call your underwriter. There may be other measures, which if taken, might allow the closing to occur. It might require a policy exception followed by affirmative assurances or a willingness to insure without exception if adequate indemnities are obtained.