A discharge of a mortgage is sufficient, notwithstanding error in dates, amounts, volume and page or record, property descriptions, names of parties and other information, if, considering all circumstances of record, sufficient data are given to identify, with reasonable certainty, the mortgage sought to be discharged.
Comment 1. Regardless of the number or type of errors in a discharge, if the searcher can determine from the instrument that a particular mortgage was intended to be discharged, the discharge should be deemed sufficient.
Comment 2. This standard presumes that the person executing the discharge of mortgage is the holder of that mortgage at the time that the discharge is given. It often occurs, however, that the discharging party is not the mortgagee of record. The usual reason for this situation is the absence of a recorded assignment, or assignments, of the mortgage. This Standard does not eliminate the necessity for a good chain of title to the mortgage. While it is true that Standard 28.1 relaxes this requirement in the very special circumstances surrounding discharges of mortgages held by assignees of a receiver of a failed financial institution, the rule of that Standard cannot properly be expanded to eliminate the need for a proper recorded assignment of mortgage vesting title in the releasor.
Comment 3. The inadvertent reference in a discharge of mortgage to a mortgage modification agreement, rather than to the mortgage itself, falls within the purview of this standard, provided that the record discloses an adequate chain to permit the searcher to connect the modification to the mortgage sought to be discharged.
Comment 4. See 27 V.S.A. §470 for curative provisions for defective discharges.
Comment 5. Searchers may occasionally encounter a document purporting to be a “discharge of assignment of mortgage.” The significance to be ascribed to such an instrument is a function of its true nature; the searcher must examine the underlying assignment to determine whether it is an absolute assignment of the mortgage, or merely a collateral assignment of that mortgage, i.e., an assignment given by the mortgagee to secure his own debt to a third person.
An absolute assignment of a mortgage is in reality a deed, transferring to the assignee the legal title to the mortgaged premises, subject to the mortgagor’s equity of redemption. The assignee’s purported discharge of such an assignment is no more effective than would be a grantee’s discharge of a deed; in both instances, the “releasor” is ineffectively attempting to accomplish by a discharge a transfer that can only occur by means of a present conveyance. Similarly, an attempted discharge of an absolute assignment by the assignor is void. The occasionally encountered scenario involves an assignment of a mortgage by A to B. A then discovers that the mortgage should have been assigned to C, not B, and attempts to correct the problem by executing and recording a discharge of the assignment to B, followed by an assignment from A to C. Clearly, both the discharge and the subsequent assignment to C are of no effect, and title to the mortgage remains in B, who is the only party properly able to discharge the underlying mortgage.
A discharge of a collateral assignment of mortgage, although appropriate in most instances, presents an entirely different set of concerns. A collateral assignment of a mortgage is, in essence, a mortgage of a mortgage. For example, if A has given a mortgage to B to secure A’s debt, B may assign A’s mortgage to C to secure B’s indebtedness to C. If B satisfies its debt to C, then C should reassign A’s mortgage back to B, who again may foreclose if A defaults. If C, rather than reassigning A’s mortgage to B, purports to discharge B’s assignment to C, this will be deemed to be a reassignment. The searcher must take care to recognize, however, that such a discharge has no effect on the underlying mortgage, which still remains in effect. If, instead, the underlying mortgage is the instrument sought to be discharged, a discharge executed only by the mortgagee is inadequate; the collateral assignee must join in the discharge if the mortgage is to be fully discharged unless the collateral assignee has reassigned the mortgage to the mortgagee.
September 26, 2008: This standard was added.