Deed of Release

Deed of Release

What is an act of release?

A release act is a legal document that cancels a previous claim on property. It provides documentation for the release of a binding agreement. A release can be included when a lender transfers the title of the building to the owner upon satisfaction of the mortgage. An act of release literally releases the parties from their previous obligations.

How an act of release works

Most individuals buy their home using a mortgage provided by a financial institution. The bank that provides the funds for the mortgage does not just lend the money in good faith, it takes a legal guarantee against the house as collateral until the loan is repaid.

A mortgage deed is then created when the borrower fulfills all mortgage payment conditions or makes a full prepayment to satisfy the loan. The lender holds title to the property until then and is officially a lien holder on the property until full and final payment is made. The security provides collateral security for loan payments for the life of the loan, thereby reducing the risk of default for the lender.

The release document is generally created by the legal counsel of the lending institution when the loan is satisfied. He reports that the loan has been paid in full on the required conditions. It also indicates that the lien has been removed and the full title has been transferred to the owner.

The owner owns the asset free of charge and clearly after the title and deed have been provided. It is no longer subject to any conditions or obligations of the lender. The loan account is closed.

Make sure the release deed is registered with the same agency that registered the original mortgage so that you can be absolutely sure that all of the liens are removed.

Types of acts of release

Employment contracts are another scenario where an act of release could be used. The document can release the employer and the employee from all the obligations they had under their employment contract. In some cases, an act of release may give an employee a designated payment. This can happen in the case of severance pay.

The act of release may include the conditions of severance pay, including the payment and duration of payments that will last after release. It can also identify confidential information that cannot be shared by the employee after termination, or restriction clauses that prevent an employee who leaves from forming a similar business or soliciting clients or customers.

Key points to remember

  • An act of release literally releases the parties to an agreement from previous obligations, such as payments under the mortgage because the loan has been repaid.
  • The lender holds the title to real estate until the conditions of the mortgage have been met when a deed of release is generally entered into.
  • An act of release may also release an employer and an employee from all the obligations they had under their employment contract, as in the case of severance pay.

Special considerations

Contact the FDIC if you have not received a release because your lending bank has failed and has been placed in FDIC receivership. The FDIC says it can usually fix the problem for you.

The regulator offers an interactive finder that you can use to find out if your bank was acquired by the government by way of receivership.

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