Sarah is a Maryland salesperson explaining financing to a first-time buyer. The buyer asks what happens to the deed of trust if the seller had an existing loan that was paid off at settlement from the sale proceeds. Which document must be recorded in the county land records to show the lien has been released?
Correct Answer
A) A deed of reconveyance executed by the trustee and recorded in the county land records
When an existing deed of trust is paid off (such as when a seller pays off their loan at settlement), the trustee must execute a deed of reconveyance. This document transfers legal title back from the trustee to the borrower (seller in this case) and must be recorded in the county land records where the property is located. Recording the deed of reconveyance is essential to clear the title and remove the deed of trust lien from the public record.
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