Marketability of a title derived through foreclosure of a mortgage is not impaired by failure to record a release of the instrument which created the interest foreclosed, or any instrument which created a subsequent lien or interest which was extinguished by the foreclosure.
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Comment 1 Upon the execution and delivery of a mortgage deed, all the mortgagor retains is the equity of redemption. Any subordinate interest attached only to the equity of redemption. When the equity of redemption is terminated by foreclosure, all the subordinate interests are terminated.
(a) Requiring a release of the mortgage foreclosed, or of liens and other interests which were extinguished by the foreclosure judgment, is unnecessary because the foreclosure judgment extinguishes the equity of redemption in the interest foreclosed and in any subordinate interests attached to such equity of redemption.
(b) If a foreclosed mortgage is discharged after the title has transferred, title is not adversely affected because the foreclosure merged the legal and equitable title and the mortgage was no longer in effect.
Comment 2 Any mortgage or lien filed after the issuance of a final judgment order and decree of foreclosure is of no force or effect.
History
September 2018
- This standard was added.