Reconveyance

Key Takeaways

• Reconveyance is how a deed of trust comes off title: the trustee records a deed of reconveyance returning legal title to the borrower once the secured obligation is satisfied.
• Under RCW 61.24.110 the trustee reconveys on written request of the beneficiary, or upon satisfaction of the obligation secured plus a written request from the beneficiary or the person entitled to the property.
• Paying a loan off does not clear the record by itself. Until the reconveyance is recorded, a title search still shows the lender's lien.
• A deed of trust is released by reconveyance, while a true mortgage is released by an acknowledged satisfaction, which RCW 61.16.030 requires within sixty days of the mortgagor's demand.

What It Means

Reconveyance is the step that ends a deed of trust. When a Washington borrower signs one, legal title to the property passes to a neutral trustee, who holds it purely as security while the borrower keeps possession and equitable title. Once the debt behind that instrument is satisfied, the trustee conveys legal title back. The document that does it is a deed of reconveyance, and recording that document is what clears the lender's lien from the public record.

Three parties each have a job. The Beneficiary, which is the lender, tells the trustee the obligation has been paid. The Trustee, usually a title company or an attorney, prepares and records the reconveyance. The borrower, called the grantor, takes back title free of that encumbrance and can then deliver clear title to a buyer or to a refinancing lender. Timing matters more than students expect. A payoff wire is not a release. Until the reconveyance is recorded with the county auditor, a title search still turns up the old Deed Of Trust, and that stale lien is a routine reason a Washington closing stalls, as our guide to preparing for a first closing explains.

How It Works in Washington

RCW 61.24.110 supplies the mechanics. The trustee of record shall reconvey all or any part of the property encumbered by the deed of trust to the person entitled thereto on written request of the beneficiary, or upon satisfaction of the obligation secured and written request for reconveyance made by the beneficiary or the person entitled thereto. The statute then builds in a backstop for when nobody moves. If the beneficiary has not requested reconveyance within sixty days after receiving payment, the title company, escrow agent, or attorney who paid the demand in full may submit proof of satisfaction and request the reconveyance directly.

If the trustee still cannot or will not reconvey within one hundred twenty days after payment, that same title company, escrow agent, or attorney may record a notarized declaration of payment with the county auditor identifying the deed of trust, stating the amount and date of payment, and declaring that the payment satisfied the beneficiary's demand with no written objection received. The declaration must be sent by certified mail to the beneficiary and trustee within two business days, and the beneficiary or trustee of record then has sixty days from the date of Recording to record an objection. If none is recorded, the lien ceases to exist. The mortgage side works differently: under RCW 61.16.030 a mortgagee who fails to acknowledge satisfaction within sixty days of the mortgagor's request forfeits damages and a reasonable attorneys' fee to the mortgagor. Paying a loan off early raises the same paperwork, which is why our piece on paying off a loan early is worth a read alongside this.

Example

Devon Whitcomb bought a house in Olympia with a $312,000 loan secured by a deed of trust naming Cascade Title as trustee and Pacific Rim Bank as beneficiary. Eleven years later he sells for $489,000. At closing the escrow officer orders a payoff, and the demand comes back at $241,860 including interest through the funding date.

Escrow wires $241,860 to Pacific Rim Bank out of the sale proceeds. The bank sends Cascade Title a written request for reconveyance, and Cascade records a deed of reconveyance with the Thurston County Auditor. That recording is the moment the deed of trust leaves Devon's title, and the buyer's title insurer will not issue a clean policy until it appears. Now suppose the bank goes quiet instead. Sixty days after the payoff, the escrow agent who paid the demand in full may submit proof of satisfaction and request the reconveyance itself, and if the trustee has still not acted one hundred twenty days after payment, that escrow agent may record a notarized declaration of payment and start the sixty day objection clock.

Common Mistakes and Exam Traps

• A deed of reconveyance is not a deed of trust. The deed of trust creates the security interest at the beginning of the loan; the reconveyance removes it at the end.
• The trustee signs and records the reconveyance, not the lender. The lender, as beneficiary, only makes the written request once the obligation is satisfied.
• Satisfaction of mortgage and deed of reconveyance are not interchangeable. A mortgage is released by an acknowledged satisfaction under RCW 61.16.030, while a deed of trust is released by reconveyance under RCW 61.24.110.
• Reconveyance and a trustee's sale both run through the trustee but point in opposite directions. Reconveyance follows payment in full, and a trustee's sale follows default.