When selling a home a buyer’s title search may uncover an old mortgage of the homeowner – or a prior owner, that was not discharged of record. Frequently the mortgage has been paid off, but unfortunately just not discharged of record in the county clerk’s office. There are ways to discharge such old mortgages depending on the particular situation.
The easiest is if the original mortgage was discharged and returned to the homeowner’s possession and the homeowner can locate it. The original mortgage, marked as paid and discharged, can then be sent to the county clerk’s office for recording.
If the discharged mortgage has not been recorded, and cannot be located, the mortgage can be discharged of record by the filing of an affidavit provided the provisions of N.J.S.A. 46:18-11.5 et seq. apply. The New Jersey Legislature enacted this law in 1999 to provide a relatively simple and expeditious means of removing mortgages from the record when a lender has failed to have a mortgage discharged, or canceled of record, in a timely manner.
Pursuant to this law, an attorney-at-law or licensed title insurance producer who has caused a “residential mortgage” to be paid can obtain its discharge by filing a detailed affidavit which sets forth the steps taken to obtain a discharge of the mortgage from the lender. Specifically, the person signing the affidavit (the “affiant”) must attest to the following:
1. Payment was made to the lender in accordance with a current, written pay-off letter, as defined by … the Act;
2. the affiant knows that the lender received the payment;
3. a notice was sent to the lender by registered or certified mail at least 30 days after payment was received, advising it of the affiant’s intention to cause the mortgage to be discharged by affidavit;
4. a second notice was sent to the lender at least 30 days after the first notice was received; and
5. at least 15 days have elapsed since the lender received the second notice.
The affidavit with the above information is then attached to a discharge prepared by the affiant, and recorded.
If the facts surrounding the payoff of an old mortgage do not fit the requirements of N.J.S.A. 46:18-11.5 et seq., then a court action under N.J.S.A. 2A:51-1 et. seq. can also be commenced. This type of action requires the filing of a complaint in Superior Court and thus is a more time consuming and costly endeavor.
Some mortgages are old enough that they are no longer enforceable. Mortgages which have a maturity date at least 20 years last past, are no longer enforceable. The New Jersey court ruled in Security National Partners v. Mahler, 336 N.J. Super. 101 (App. Div. 2000) that the statute of limitations for enforcement of a mortgage is 20 years. Thus, a lender’s right to enforce a mortgage expires 20 years after the last payment is due.