When you are selling a home, you need to give the buyer “a good clear record and marketable title”. What that means is that all previous liens must be paid off or discharged before the buyer takes ownership of the property. Real estate contracts allow you to use the proceeds of the sale to pay off the outstanding liens.
Problems can occur when a seller pays off a mortgage but the discharge (the paperwork from the bank showing that the loan has been paid) is not recorded at the Registry of Deeds. This happens a lot when people refinance. No one thinks any more about the discharge until right before the closing. With bank failures and mergers, it’s quite possible that the bank that held your previous mortgage might not be in business. That makes it even harder to track down and obtain the discharge.
If you’re thinking of selling, you can go online to the Registry of Deeds to see what liens are oustanding on your property.
Most title problems related to discharges of old mortgages can be cleared up in a few days, but there are the odd cases that can take weeks to straighten out. Save yourself a headache down the road. If you refinance, make sure that the release for your old mortgage is recorded at the Registry of Deeds.