A Title defect can take many forms, for this entry we will focus on an improper discharge. When a mortgage is paid off, the lender issues a discharge which then has to be put on record to let the world know the loan on that particular property has been satisfied and no further payments are being sought. Sounds easy and it should be…what could go wrong you ask?
1) The discharge is not recorded in the county the property resides in
2) The discharge goes to the mortgagor after payoff but never is recorded
3) The lender (bank) is purchased, is then folded in to a new bank and when they receive the payoff balance of the loan they issue an improper discharge.
Lets talk more about case #3… big banks are gobbling up smaller banks as of late and one of the casualties is an improper discharge that is recorded at the registry of deeds. How does that happen? The next buyer / owner hires a title company (or real estate attorney) and read more here