55-66.3 - Release of deed of trust or other lien. - Virginia Statutes

§ 55-66.3. Release of deed of trust or other lien.

A. 1. Except as provided in Article 2.1 of this chapter, after full orpartial payment or satisfaction has been made of a debt secured by a deed oftrust, vendor's lien, or other lien, or any one or more obligationsrepresenting at least 25 percent of the total amount secured by such lien,but less than the total number of the obligations so secured, or the debtsecured is evidenced by two or more separate written obligations sufficientlydescribed in the instrument creating the lien, has been fully paid, the liencreditor shall issue a certificate of satisfaction or certificate of partialsatisfaction in a form sufficient for recordation reflecting such payment andrelease of lien. This requirement shall apply to a credit line deed of trustprepared pursuant to § 55-58.2 only when the obligor or the settlement agenthas paid the debt in full and requested that the instrument be released.

If the lien creditor receives notice from a settlement agent at the addressidentified in its payoff statement requesting that the certificate be sent tosuch settlement agent, the lien creditor shall provide the certificate,within 90 days after receipt of such notice, to the settlement agent at theaddress specified in the notice received from the settlement agent.

If the notice is not received from a settlement agent, the lien creditorshall deliver, within 90 days after such payment, the certificate to theappropriate clerk's office with the necessary fee for recording by certifiedmail, return receipt requested, or when there is written proof of receiptfrom the clerk's office, by hand delivery or by courier hand delivery.

If the lien creditor has already delivered the certificate to the clerk'soffice by the time it receives notice from the settlement agent, the liencreditor shall deliver a copy of the certificate to the settlement agentwithin 90 days of the receipt of the notice at the address for notificationset forth in the payoff statement.

If the lien creditor has not, within 90 days after payment, either providedthe certificate of satisfaction to the settlement agent or delivered it tothe clerk's office with the necessary fee for filing, the lien creditor shallforfeit $500 to the lien obligor. No settlement agent or attorney may take anassignment of the right to the $500 penalty or facilitate such an assignmentto any third party designated by the settlement agent or attorney. Followingthe 90-day period, if the amount forfeited is not paid within 10 businessdays after written demand for payment is sent to the lien creditor bycertified mail at the address for notification set forth in the payoffstatement, the lien creditor shall pay any court costs and reasonableattorney's fees incurred by the obligor in collecting the forfeiture.

2. If the note, bond or other evidence of debt secured by such deed of trust,vendor's lien or other lien referred to in subdivision 1 or any interesttherein, has been assigned or transferred to a party other than the originallien creditor, the subsequent holder shall be subject to the samerequirements as a lien creditor for failure to comply with this subsection,as set forth in subdivision 1.

B. The certificate of satisfaction shall be signed by the creditor or hisduly authorized agent, attorney or attorney-in-fact, or any person to whomthe instrument evidencing the indebtedness has been endorsed or assigned forthe purpose of effecting such release. An affidavit shall be filed orrecorded with the certificate of satisfaction, by the creditor, or his dulyauthorized agent, attorney or attorney-in-fact, with such clerk, stating thatthe debt therein secured and intended to be released or discharged has beenpaid to such creditor, his agent, attorney or attorney-in-fact, who was, whenthe debt was satisfied, entitled and authorized to receive the same.

C. And when so signed and the affidavit hereinbefore required has been dulyfiled or recorded with the certificate of satisfaction with such clerk, thecertificate of satisfaction shall operate as a release of the encumbrance asto which such payment or satisfaction is entered and, if the encumbrance beby deed of trust, as a reconveyance of the legal title as fully andeffectually as if such certificate of satisfaction were a formal deed ofrelease duly executed and recorded.

D. As used in this section:

"CRESPA" means the Consumer Real Estate Settlement Protection Act (§6.1-2.19 et seq.).

"Deed of trust" means any mortgage, deed of trust or vendor's lien.

"Lien creditor" and "creditor" shall be construed as synonymous and meanthe holder, payee or obligee of a note, bond or other evidence of debt andshall embrace the lien creditor or his successor in interest as evidenced byproper endorsement or assignment, general or restrictive, upon the note, bondor other evidence of debt.

"Payoff letter" means a written communication from the lien creditor orservicer stating, at a minimum, the amount outstanding and required to bepaid to satisfy the obligation.

"Satisfactory evidence of the payment of the obligation secured by the deedof trust" means (i) any one of (a) the original canceled check or a copy ofthe canceled check, showing all endorsements, payable to the lien creditor orservicer, as applicable, (b) confirmation in written or electronic form of awire transfer to the bank account of the lien creditor or servicer, asapplicable, or (c) a bank statement in written or electronic form reflectingcompletion of the wire transfer or negotiation of the check, as applicable;and (ii) a payoff letter or other reasonable documentary evidence that thepayment was to effect satisfaction of the obligation secured or evidenced bythe deed of trust.

"Satisfied by payment" includes obtaining written confirmation from thelien creditor that the underlying obligation has a zero balance.

"Servicer" means a person or entity that collects loan payments on behalfof a lien creditor.

"Settlement agent" has the same meaning ascribed thereto in § 6.1-2.20,provided that a person shall not be a settlement agent unless he isregistered pursuant to § 6.1-2.26 and otherwise fully in compliance with theapplicable provisions of Chapter 1.3 (§ 6.1-2.19 et seq.) of Title 6.1.

"Title insurance company" has the same meaning ascribed thereto in §38.2-4601, provided that the title insurance company seeking to release alien by the process described in subsection E issued a policy of titleinsurance, through a title insurance agency or agent as defined in §38.2-4601.1, for a real estate transaction wherein the loan secured by thelien was satisfied by payment made by the title insurance agency or agentalso acting as the settlement agent.

E. Release of lien by settlement agent or title insurance company.

A settlement agent or title insurance company may release a deed of trust inaccordance with the provisions of this subsection (i) if the obligationsecured by the deed of trust has been satisfied by payment made by thesettlement agent and (ii) whether or not the settlement agent or titleinsurance company is named as a trustee under the deed of trust or otherwisehas received the authority to release the lien.

1. Notice to lienholder.

a. After or accompanying payment in full of the obligation secured by a deedof trust, a settlement agent or title insurance company intending to releasea deed of trust pursuant to this subsection shall deliver to the liencreditor by certified mail or guaranteed overnight delivery service a noticeof intent to release the deed of trust with a copy of the payoff letter and acopy of the release to be recorded as provided in this subsection.

b. The notice of intent to release shall contain (i) the name of the liencreditor, the name of the servicer if loan payments on the deed of trust arecollected by a servicer, or both names, (ii) the name of the settlementagent, (iii) the name of the title insurance company if the title insurancecompany intends to release the lien, and (iv) the date of the notice. Thenotice of intent to release shall conform substantially to the following form:

NOTICE OF INTENT TO RELEASE

Notice is hereby given to you concerning the deed of trust described on thecertificate of satisfaction, a copy of which is attached to this notice, asfollows:

1. The settlement agent identified below has paid the obligation secured bythe deed of trust described herein or obtained written confirmation from youthat such obligation has a zero balance.

2. The undersigned will release the deed of trust described in this noticeunless, within 90 days from the date this notice is mailed by certified mailor guaranteed overnight delivery service, the undersigned has received bycertified mail or guaranteed overnight delivery service a notice stating thata release of the deed of trust has been recorded in the clerk's office orthat the obligation secured by the deed of trust described herein has notbeen paid, or the lien creditor or servicer otherwise objects to the releaseof the deed of trust. Notice shall be sent to the address stated on this form.

(Name of settlement agent)

(Signature of settlement agent or title insurance company)

(Address of settlement agent or title insurance company)

(Telephone number of settlement agent or title insurance company)

(Virginia CRESPA registration number of settlement agent at the time theobligation was paid or confirmed to have a zero balance)

2. Certificate of satisfaction and affidavit of settlement agent or titleinsurance company.

a. If, within 90 days following the day on which the settlement agent ortitle insurance company mailed or delivered the notice of intent to releasein accordance with this subsection, the lien creditor or servicer does notsend by certified mail or guaranteed overnight delivery service to thesettlement agent or title insurance company a notice stating that a releaseof the deed of trust has been recorded in the clerk's office or that theobligation secured by the deed of trust has not been paid in full or that thelien creditor or servicer otherwise objects to the release of the deed oftrust, the settlement agent or title insurance company may execute,acknowledge and file with the clerk of court of the jurisdiction wherein thedeed of trust is recorded a certificate of satisfaction, which shall include(i) the affidavit described in subdivision 2 b of this subsection and (ii) acopy of the notice of intent to release that was sent to the lender, theservicer, or both. The certificate of satisfaction shall include thesettlement agent's CRESPA registration number, issued by the Virginia StateBar or the Virginia State Corporation Commission, that was in effect at thetime the settlement agent paid the obligation secured by the deed of trust orobtained written confirmation from the lien creditor that such obligation hasa zero balance. The certificate of satisfaction shall note that theindividual executing the certificate of satisfaction is doing so pursuant tothe authority granted by this subsection. After filing or recording thecertificate of satisfaction, the settlement agent or title insurance companyshall mail a copy of the certificate of satisfaction to the lien creditor orservicer. The validity of a certificate of satisfaction otherwise satisfyingthe requirements of this subsection shall not be affected by the inaccuracyof the CRESPA registration number placed thereon or the failure to mail acopy of the recorded certificate of satisfaction to the lien creditor orservicer and shall nevertheless release the deed of trust described thereinas provided in this subsection.

b. The certificate of satisfaction used by the settlement agent or titleinsurance company shall include an affidavit certifying (i) that thesettlement agent has satisfied the obligation secured by the deed of trustdescribed in the certificate; (ii) that the settlement agent or titleinsurance company possesses satisfactory evidence of payment of theobligation secured by the deed of trust described in the certificate orwritten confirmation from the lien creditor that such obligation has a zerobalance; (iii) that the lien of the deed of trust may be released; (iv) thatthe person executing the certificate is the settlement agent, the titleinsurance company, or is duly authorized to act on behalf of the settlementagent or title insurance company; and (v) that the notice of intent torelease was delivered to the lien creditor or servicer and the settlementagent or title insurance company received evidence of receipt of such noticeby the lien creditor or servicer. The affidavit shall be substantially in thefollowing form:

AFFIDAVIT OF SETTLEMENT AGENT OR TITLE INSURANCE COMPANY

The undersigned hereby certifies that, in accordance with the provisions §55-66.3 of the Code of Virginia of 1950, as amended and in force on the datehereof (the Code) (a) the undersigned is a settlement agent or titleinsurance company as defined in subsection D of § 55-66.3 of the Code or aduly authorized officer, director, member, partner or employee of suchsettlement agent or title insurance company; (b) the settlement agent hassatisfied the obligation secured by the deed of trust; (c) the settlementagent or title insurance company possesses satisfactory evidence of thepayment of the obligation secured by the deed of trust described in thecertificate recorded herewith or written confirmation from the lien creditorthat such obligation has a zero balance; (d) the settlement agent or titleinsurance company delivered to the lien creditor or servicer in the mannerspecified in subdivision E 1 of § 55-66.3 of the Code the notice of intent torelease and possesses evidence of receipt of such notice by the lien creditoror servicer; and (e) the lien of the deed of trust is hereby released.

____________________________________

(Authorized signer)

3. Effect of filing.

When filed or recorded with the clerk's office, a certificate of satisfactionthat is executed and notarized as provided in this subsection, andaccompanied by (i) the affidavit described in subdivision 2 b of thissubsection, and (ii) a copy of the notice of intent to release that was sentto the lender, lien creditor or servicer shall operate as a release of theencumbrance described therein and, if the encumbrance is by deed of trust, asa reconveyance of the legal title as fully and effectively as if suchcertificate of satisfaction were a formal deed of release duly executed andrecorded.

4. Effect of wrongful or erroneous certificate; damages.

a. The execution and filing or recording of a wrongful or erroneouscertificate of satisfaction by a settlement agent or title insurance agentdoes not relieve the party obligated to repay the debt, or anyone succeedingto or assuming the responsibility of the obligated party as to the debt, fromany liability for the debt or other obligations secured by the deed of trustthat is the subject of the wrongful or erroneous certificate of satisfaction.

b. A settlement agent or title insurance agent that wrongfully or erroneouslyexecutes and files or records a certificate of satisfaction is liable to thelien creditor for actual damages sustained due to the recording of a wrongfulor erroneous certificate of satisfaction.

c. The procedure authorized by this subsection for the release of a deed oftrust shall constitute an optional method of accomplishing a release of adeed of trust secured by property in the Commonwealth. The nonuse of theprocedure authorized by this subsection for the release of a deed of trustshall not give rise to any liability or any cause of action whatsoeveragainst a settlement agent or any title insurance company by any obligatedparty or anyone succeeding to or assuming the interest of the obligated party.

5. Applicability.

a. The procedure authorized by this subsection for the release of a deed oftrust may be used to effect the release of a deed of trust after July 1,2002, regardless of when the deed of trust was created, assigned or satisfiedby payment made by the settlement agent.

b. This subsection applies only to transactions involving the purchase of orlending on the security of real estate located in the Commonwealth that iseither (i) unimproved real estate with a lien to be released of $1 million orless or (ii) real estate containing at least one but not more than fourresidential dwelling units.

c. The procedure authorized by this subsection applies only to the full andcomplete release of a deed of trust. Nothing in this subsection shall beconstrued to authorize the partial release of property from a deed of trustor otherwise permit the execution or recordation of a certificate of partialsatisfaction.

(Code 1919, § 6456; 1926, p. 80; 1930, p. 69; 1932, p. 120; 1944, p. 198;1958, c. 14; 1962, c. 39; 1972, c. 280; 1975, c. 469; 1980, c. 116; 1986, c.462; 1987, c. 673; 1988, c. 546; 1991, c. 414; 1996, cc. 895, 949; 1997, c.221; 2000, c. 28; 2001, c. 711; 2002, cc. 845, 862; 2003, c. 745; 2004, c.596; 2006, c. 907; 2009, cc. 254, 421; 2010, c. 236.)