2006 Code of Virginia § 55-66.3 - Release of deed of trust or other lien

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 amortgage, deed of trust, vendor's lien, or other lien, or any one or moreobligations representing at least 25 percent of the total amount secured bysuch lien, but less than the total number of the obligations so secured, orthe debt secured is evidenced by two or more separate written obligationssufficiently described in the instrument creating the lien, has been fullypaid, the lien creditor shall issue a certificate of satisfaction orcertificate of partial satisfaction in a form sufficient for recordationreflecting such payment and release of lien. This requirement shall apply toa credit line deed of trust prepared pursuant to 55-58.2 only when theobligor or the settlement agent has paid the debt in full and requested thatthe 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. Following the 90-day period, ifthe amount forfeited is not paid within 10 business days after written demandfor payment is sent to the lien creditor by certified mail at the address fornotification set forth in the payoff statement, the lien creditor shall payany court costs and reasonable attorney's fees incurred by the obligor incollecting the forfeiture.

2. If the note, bond or other evidence of debt secured by such mortgage, deedof trust, vendor's lien or other lien referred to in subdivision 1 or anyinterest therein, has been assigned or transferred to a party other than theoriginal lien 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 or mortgage, as a reconveyance of the legal title as fullyand effectually 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.).

"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.

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

"Obligor's designee" shall include an attorney or other settlement agentclosing a transaction which results in the obligor's loan being paid off.

"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 themortgage" 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 mortgage.

"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.

E. Release of lien by settlement agent.

A settlement agent may release a mortgage in accordance with the provisionsof this subsection (i) if the obligation secured by the mortgage has beensatisfied by payment made by the settlement agent and (ii) whether or not thesettlement agent 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 amortgage, a settlement agent intending to release a mortgage pursuant to thissubsection shall deliver to the lien creditor by certified mail or guaranteedovernight delivery service a notice of intent to release the mortgage with acopy of the payoff letter and a copy of the release to be recorded asprovided in this subsection.

b. The notice of intent to release shall contain the name of the liencreditor and the servicer if loan payments on the mortgage are collected by aservicer, the name of the settlement agent, and 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 (mortgage) described on the(release of mortgage), a copy of which is attached to this notice, as follows:

1. The undersigned has paid the obligation secured by the (mortgage)described above.

2. The undersigned will release the (mortgage) 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 (mortgage) has been recorded in the clerk's office or thatthe obligation secured by the (mortgage) described above has not been paid,or the lien creditor or servicer otherwise objects to the release of themortgage. Notice shall be sent to the address stated on this form.

(Signature of settlement agent)

(Address of settlement agent)

(Telephone number of settlement agent)

(Current Virginia CRESPA registration number of settlement agent)

2. Certificate of satisfaction and affidavit of settlement agent.

a. If, within 90 days following the day on which the settlement agent mailedor delivered the notice of intent to release in accordance with thissubsection, the lien creditor or servicer does not send by certified mail orguaranteed overnight delivery service to the settlement agent a noticestating that a release of the mortgage has been recorded in the clerk'soffice or that the obligation secured by the mortgage has not been paid infull or that the lien creditor or servicer otherwise objects to the releaseof the mortgage, the settlement agent may execute, acknowledge and file withthe clerk of court of the jurisdiction wherein the mortgage is recorded acertificate of satisfaction, which shall include (i) the affidavit describedin subdivision 2 b of this subsection and (ii) a copy of the notice of intentto release that was sent to the lender. The certificate of satisfaction shallinclude the settlement agent's currently active CRESPA registration numberissued by the Virginia State Bar and shall note that the individual executingthe certificate of satisfaction is doing so pursuant to the authority grantedby this subsection. After filing or recording the certificate ofsatisfaction, the settlement agent shall mail a copy of the certificate ofsatisfaction to the lien creditor or servicer. The validity of a certificateof satisfaction otherwise satisfying the requirements of this subsectionshall not be affected by the inaccuracy of the CRESPA registration numberplaced thereon or the failure to mail a copy of the recorded certificate ofsatisfaction to the lien creditor or servicer and shall nevertheless releasethe mortgage described therein as provided in this subsection.

b. The certificate of satisfaction used by the settlement agent shall includean affidavit certifying (i) that the settlement agent has satisfied, andpossesses satisfactory evidence of payment of the obligation secured by themortgage described in the certificate; (ii) that the lien of the mortgage maybe released; (iii) that the person executing the certificate is thesettlement agent or is duly authorized to act on behalf of the settlementagent; and (iv) that the notice of intent to release was delivered to thelien creditor or servicer and the settlement agent received evidence ofreceipt of such notice by the lien creditor or servicer. The affidavit shallbe substantially in the following form:

AFFIDAVIT OF SETTLEMENT AGENT

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 as defined insubsection D of 55-66.3 of the Code or a duly authorized officer, director,member, partner or employee of such settlement agent; (b) the settlementagent has satisfied the obligation secured by the mortgage and possessessatisfactory evidence of the payment of the obligation secured by themortgage described in the certificate recorded herewith; (c) the settlementagent delivered to the lien creditor or servicer in the manner specified insubdivision E 1 of 55-66.3 of the Code the notice of intent to release andpossesses evidence of receipt of such notice by the lien creditor orservicer; and (d) the lien of the mortgage 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 ormortgage, as a reconveyance of the legal title as fully and effectively as ifsuch certificate of satisfaction were a formal deed of release duly executedand recorded.

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 does not relieve the partyobligated to repay the debt, or anyone succeeding to or assuming theresponsibility of the obligated party as to the debt, from any liability forthe debt or other obligations secured by the mortgage that is the subject ofthe wrongful or erroneous certificate of satisfaction.

b. A settlement agent that wrongfully or erroneously executes and files orrecords a certificate of satisfaction is liable to the lien creditor foractual damages sustained due to the recording of a wrongful or erroneouscertificate of satisfaction.

c. The procedure authorized by this subsection for the release of a mortgageshall constitute an optional method of accomplishing a release of a mortgagesecured by property in this Commonwealth. The nonuse of the procedureauthorized by this subsection for the release of a mortgage shall not giverise to any liability or any cause of action whatsoever against a settlementagent or any title insurer by any obligated party or anyone succeeding to orassuming the interest of the obligated party.

5. Applicability.

a. The procedure authorized by this subsection for the release of a mortgagemay be used to effect the release of a mortgage after July 1, 2002,regardless of when the mortgage was created, assigned or satisfied by paymentmade 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 containingnot more than four residential dwelling units.

c. The procedure authorized by this subsection applies only to the full andcomplete release of a mortgage. Nothing in this subsection shall be construedto authorize the partial release of property from a mortgage or otherwisepermit the execution or recordation of a certificate of partial satisfaction.

d. No settlement agent utilizing the process provided in this subsection forrelease of a mortgage may take an assignment from a lien obligor or hisdesignee of the right to collect the $500 penalty established in subsection Aof this section.

(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.)