A deed of release is a formal legal document releasing possession of an asset or another kind of claim from one entity or person. The document is both the signal that the transfer has occurred and the documentation that can be used later to prove who owns the asset or that no legal claims can be made. This document is often used for real estate transactions when a mortgage has been paid off.
The deed of release is a valuable document to keep handy since it can be used if you discover any liens or other claims on your property that should have been removed when the mortgage was paid off. Learn how deeds of release work, when you need one, and the different types you may encounter.
Definition and Examples of Deeds of Release
A deed of release legally releases the terms of an agreement, either because it has been fulfilled, such as a mortgage loan that has been paid in full, or because it no longer applies, such as when an employment relationship ends.
- Alternate names: Release deed, release of deed of trust, deed of release of mortgage
For example, a lender usually provides a deed of release after you’ve paid off your mortgage.
How Does a Deed of Release Work?
In a real estate context, let’s say you choose to pay off your 15-year mortgage early in only 10 years. Provided you’ve followed the requirements for pre-payments from your bank or other financial institution, you should be able to request a payoff amount that verifies exactly what is owed to release the entire debt. After this step is completed, you should receive a formal deed of release.
Typically, a deed of release is a document you’ll want to keep in your long-term records. If a wire gets crossed at your mortgage company, for instance, it could keep expecting payments from you. The deed of release removes liens from your property and ends any doubt as to who owns it.
If, for any reason, you don’t receive a deed of release or an explanation of why you haven’t received it, you can contact your bank.
For banks that fail during the time of your mortgage loan, the FDIC has a lien release page that can help you obtain the deed of release you need.
Do I Need a Deed of Release?
In most cases of paying off a mortgage, you’ll want to get a formal deed of release. Obtaining the release should be a standard process handled by your financial institution’s legal department in the case of a mortgage loan. In other cases, such as employment termination or another kind of legal dispute, the need for a deed of release may be less clear. A lawyer can help you determine whether or not a deed of release is necessary or prudent.
Types of Deeds of Release
The term “deed of release” refers to an umbrella category of documents that legally remove previous restrictions on the use of something or other obligations/claims.
Deed of Release of Mortgage
This deed is typically used to fully transfer ownership/obligation to the owner of a piece of real estate and end the relationship with the lending institution that issued the mortgage.
Deeds of Release in Employment
More common overseas than in the United States, an employment deed of release is also known as a “deed of termination.” In an employment context, a deed of release can be a way for a company that is laying off team members to fully end their obligations to you as well as your obligations to the company. The document could stipulate, for instance, the amount of your final paycheck or severance package, and the return of work-related equipment. An employment deed of release may be included in your severance package.
Other Deeds of Release
Deeds of release can be used in non-mortgage and non-employment situations, too. They’re useful in legal disputes as a way of concluding a matter, saying that the matter is settled and any past claims are legally no longer in effect.
- A deed of release legally ends a claim or obligation between two parties, stipulating that a claim is released or an ownership change has occurred.
- This kind of document is most commonly used in real estate transactions that involve a mortgage loan to offer a final legal declaration that the lien on the property is gone.
- It can also be used in other contexts, like the end of an employment agreement, to clarify that employer or employee are released from past agreed-upon obligations.