AB 390

Under current law, the holder of any type of mortgage is required to record a

satisfaction of mortgage within 30 days after the mortgagor completes full

performance of the conditions of the mortgage. However, if the mortgage is fully

performed and the mortgage-holder receives by certified mail a written request from

the mortgagor for a full satisfaction, the mortgage-holder must record a satisfaction

of mortgage within seven days or is liable to the mortgagor for actual damages plus

penalty damages of $100 for each day that the violation remains uncorrected, up to

$2,000 in penalty damages. This bill repeals those provisions and replaces them with

mortgage satisfaction provisions that are similar to the Uniform Residential

Mortgage Satisfaction Act (URMSA), except that, with the exception of affidavits of

satisfaction, the new provisions apply to all mortgages, not just mortgages on

residential property.

Under the bill, a creditor who has a security interest in real property must

record a satisfaction of the security instrument (mortgage) within 30 days after the

secured creditor receives full payment of the secured obligation or payment as

provided in a payoff statement provided by the creditor to the landowner. If the

creditor does not do so within the required time, the creditor is liable to the

landowner for $500, plus any actual damages and reasonable attorney fees and court

costs, but no punitive damages.

The bill provides another mortgage satisfaction option for mortgages on

residential real property: recording an affidavit of satisfaction of a security

instrument. Under this option, if a secured creditor has not recorded a mortgage

satisfaction within 30 days after full performance or payment as provided in a payoff

statement by the residential property owner, a satisfaction agent authorized by the

owner may give the secured creditor notice that the satisfaction agent may record an

affidavit of satisfaction of the security instrument. Under the bill, only a title

insurance company acting directly or through an authorized agent may act as a

satisfaction agent. The bill specifies the information that must be contained in the

notice that is sent to the secured creditor, such as that the satisfaction agent has

reasonable grounds to believe that the property is residential real property and that

the secured creditor has received full payment or payment as provided in a payoff

statement. After providing the notice, the satisfaction agent may submit the

affidavit of satisfaction to the register of deeds for recording if the secured creditor

authorizes the satisfaction agent to do so or if the secured creditor does not, within

30 days after receiving the notice, record a satisfaction. The satisfaction agent may

not record the affidavit of satisfaction, however, if the agent receives notice from the

secured creditor that the secured obligation has not been satisfied or that the

security instrument has been assigned, in which case the satisfaction agent must

provide the notice to record an affidavit of satisfaction to the assignee. An affidavit

of satisfaction that complies with the requirements in the bill is entitled to be