Expert: liznarr - 12/14/2011

Question
QUESTION: Hi,  I live in PA and have 2 judgements against my home.  If I pay off my mortgage will I be able to get my deed if the judgements still arent paid?  Thanks!

ANSWER: Hi Karen,

If you do not currently have a copy of your deed, you can go to the county courthouse in which your property is located and get a copy anytime.  The fact that you may have an outstanding mortgage and/or unpaid judgments does not affect your ability to get a copy of your deed.

The underlying issue I think you might be alluding to is SELLING your home, or having an unencumbered property (no mortgages or liens against your title).  

When property is sold, an abstractor will check on behalf of a lender and/or purchaser for any outstanding liens against your property (mortgages, judgments, etc.) so a closing agent can make sure any liens are paid in full, or “satisfied.”  Your judgments are entirely separate from your mortgage, but they are also liens against your property.

If you pay off your mortgage, you will be removing one of the liens against your property.  If you pay off your mortgage, BE SURE and record your SATISFACTION OF MORTGAGE after your mortgage is paid off.  

Some mortgage companies will do this for you if they collected funds for this at time of your initial mortgage to record the Satisfaction.  If they do not, after you pay off your mortgage and receive your “satisfied mortgage” papers, take the original copy of this paperwork to the county courthouse in which your property is located.  For a small fee, you can record the Satisfaction yourself, and the public records at the courthouse will then show that you have no mortgage lien against your property.

I hope the above answers your question.  If not, or if you have additional questions, please feel free to write again.

Regards,
Elizabeth


---------- FOLLOW-UP ----------

QUESTION: Thank you, that was very informative.  I think what I am actually trying to find out is... when you have a mortgage the bank essentially owns your home.  When the mortgage is paid off, will my house belong to me even if the judgements are not paid?

Answer
Karen,

I apologize for the extended delay in answering your question.  I was hospitalized unexpectedly and am just now beginning to check my email again.

My original reply is still a “good” reply.  You stated that you live in Pennsylvania, and PA is a lien theory state.  

I will elaborate a bit more for you below on the differences in a lien theory state versus a title theory state.  You can also Google “lien theory versus title theory” to learn more about the differences in these two concepts.  

Your house “technically” belongs to you, but if you were to pay off your mortgage and still have two unpaid judgments of record, the two unpaid judgments are encumbrances which by law automatically law attach to your title/deed on real property (your house in this instance) -- as long as the Judgment is recorded in the County in which your house is located.

Since Pennsylvania is a lien theory state, as long as a bank or any lender is owed money for a mortgage you placed against your house, the bank holds a lien against your house.  You technically “own” your house, but when money is still owed to a bank, the bank holds a mortgage on your home.  The mortgage would have to be paid off before title can be transferred.  Once you pay off the mortgage, your two judgments of record continue to be liens against your property.

There are two different ways in the United States that title is held on real property--lien theory versus title theory.  According to the following link http://title.grabois.com/  Pennsylvania is a LIEN theory state, so my original email answer would still apply, but I will give you more detailed information on this.

In a TITLE theory state (which PA is “not”), a bank holding a mortgage against a property “owns” the home and ALSO holds title through a Deed of Trust.  

In a LIEN theory state (as Pennsylvania is, and as listed in the above link), YOU own your home; the deed remains with you as the borrower; and there is a lien of record against your title/deed.

A major difference between title and lien theory states is the way in which foreclosure occurs:  

In LIEN theory states (again, Pennsylvania being a lien theory state), foreclosure occurs through a judicial/court proceeding.

In TITLE theory states (which Pennsylvania is not), foreclosure can occur through a NON-judicial/court proceeding.

Since you state that you have not only a mortgage, but also two judgments against your property, I would strongly suggest that you contact an attorney for any legal advice/questions you have on this matter.  I am not separately licensed as an attorney, and I am not qualified to give anyone legal advice.

Judgments are recorded in public records along with mortgages and other liens.  If property is sold, most buyers will have an abstractor or title company do a title check.  Regardless of whether you are in a lien theory or title theory state, if a judgment has been recorded against property, an owner would not be able to sell a home without first having cleared all liens – and this includes mortgages AND judgments.

Lien theory versus title theory can be a complicated subject, so please do contact an attorney or title company in your area for additional explanations.

Again, I apologize for the delay in responding to your follow-up question, but it was unavoidable.

Good luck to you.
Regards,
Elizabeth