Executing a Mortgage Satisfaction in NY

A mortgage satisfaction is a document that certifies the full repayment of a mortgage loan and releases the lien on the real property. It is essential to ensure that the proper party executes this instrument to guarantee the validity and enforceability of the satisfaction.

In New York, the relevant statutes governing the execution of mortgage satisfactions are found in the New York Real Property Law (RPL) and the New York Real Property Actions and Proceedings Law (RPAPL).

Section 275 of the RPL provides for the discharge of a mortgage when it has been paid in full. Under section 275(1), when the debt secured by a mortgage is paid, the holder of the mortgage is required to give a certificate of discharge, also called a satisfaction, to the borrower, and arrange for it to be recorded. Except for certain persons and entities that make less than five mortgage loans in any calendar year, or certain agencies or instrumentalities of the state, 275(1) also requires the person executing the satisfaction to present same to the appropriate recording office within 30 days or be subject to monetary penalties.

As to who has authority to execute the satisfaction and what it should contain, see RPL Section 321 (to be discussed in more detail below).

Section 1921 of the RPAPL establishes an alternate remedy to the borrower for obtaining a satisfaction after full payment has been made, and requires a showing of willful, unjustifiable refusal on the part of the mortgagee to satisfy the mortgage.

RPL § 321 is a good read for real estate practitioners. At a minimum, the satisfaction must be signed, properly acknowledged, and state that the mortgage has been paid or otherwise satisfied and may be discharged of record. All instruments relating to the original mortgage must be recited within the satisfaction piece with full party names and recording details, and the satisfaction must state that the mortgage has not been [further] assigned of record.

Questions often arise when the mortgage is held by a non-institutional lender having multiple holders or trustees, and one party is deceased or incapacitated. RPL § 321 details how to proceed, but it is very much dependent on how the loan documents are drafted.

Of particular focus are subsections 1(c), 1(f), and 5 of RPL § 321:

• When a mortgage or its assignment names two or more persons as mortgagees, the satisfaction must be signed by the person or persons designated in the mortgage or assignment to receive payment or give full acquittance and discharge. See, RPL § 321(1)(c)
• When there is no such designation, the satisfaction must be signed by all the named persons, or their personal representatives, if: (1) their respective interests are specified in sums of money, or by fractions or percentages; or (2) their respective shares are stated as being equal; or (3) they are described or referred to as tenants in common. See, RPL § 321(1)(c)
• When the record discloses the mortgage or assignment is held by trustees, all of them, or the survivors, must sign the satisfaction unless the trust instrument specifies otherwise. See, RPL § 321(1)(c)
• If the mortgagees are described as holding jointly, as joint tenants, or as tenants by the entirety, or if the mortgage or assignment expressly creates a right of survivorship, it may be signed by anyone, or by the personal representative of the last surviving, even though their respective interests are stated or a specification is made of their respective shares and interests. See, RPL § 321(1)(c)
• “Personal representative” as used within RPL § 321(5) is defined as:
  (a) An executor, administrator or voluntary administrator or one of two or more executors, administrators, or voluntary administrators, whether domestic or foreign, including the public administrator, and an ancillary administrator appointed in NY. The satisfaction must recite the fiduciary’s authority including court, venue, date of issuance of letters, etc.
  (B) All of the distributees of a person dying intestate with no appointed administrator only after two (2) years have passed since the intestate’s date of death. The satisfaction must include the mortgagee’s:
  • date of death, and
  • place of residence at the time of death (county and state), and
  • the fact that s/he died intestate, and
  • that no administrator has been appointed; and
  • that the persons signing the satisfaction constitute all the distributees of the intestate decedent. Note, additional information will likely be required to establish “all distributees” of the intestate mortgagee, especially if the satisfaction is being relied upon by a title insurance company.
• An agent may execute a satisfaction on behalf of a mortgagee pursuant to a power of attorney (POA), so long as the power is of record in the county where the mortgage is recorded. The power of attorney should clearly grant the agent the authority to demand or receive payment and/or issue a satisfaction. Any satisfaction signed by POA should recite the recording details of that recorded POA. See, RPL § 321(1)(f)(i)
• A satisfaction may also be signed by the court ordered fiduciary of a mortgagee, including, but not limited to, the guardian of a minor, the committee of an incompetent person, or the conservator of a conservatee, whether domestic or foreign, and a receiver in bankruptcy or trustee in bankruptcy. The satisfaction must recite the court, venue, and order vesting such title or authority. See, RPL § 321(1)(f)(ii)

The within is a general overview of the legal requirements in New York and should not be construed as legal advice. It is recommended to consult with a qualified attorney to address specific circumstances and to ensure compliance with statute, insurability, and recording.