This isn’t a “what do I do with my money next?” post. This is an important logistical point that is missed by many, and should be done before mentally moving on.

First, what is a lien? A lien is essentially a statement that you don’t own an item in its entirety, you share ownership rights with someone or something else. A mortgage is a common type of lien. As is financing your car.

When a lien is released, in this case through fulfillment of the mortgage pay-off, documentation and a “recording fee” needs to go to your county’s Records office. The Records office will add documentation to that address to state the lien has been released. This is an important paper-trail component you don’t want to miss, because it could cause issues with your ability to sell the property later on.

Now you may be lucky. The mortgage company may have already taken care of this county-level documentation for you. Or you may have to bring the paper down to the county and pay the recording fee yourself. That status is supposed to be documented on that final release paperwork, but you may not remember, may not understand, or it may be in that safe deposit box that’s hard to get to in the middle of COVID-19. Talking to the Olmsted County Property Records office, their estimate on mortgage company vs self-paperwork was it’s split about half-and-half around here.

If you aren’t sure, you can call your local property records office. In Olmsted County, that’s 507-328-7670. If your mortgage payoff happened a while ago, knowing what ballpark date that payoff was will help the office find the appropriate documentation. They’ll also want your address and name.

A side note – in the eyes of the property records office, and the mortgage company, a mortgage refinance is paying off the existing loan. You just happen to simultaneously set up a new lien holder and new payment schedule, so from your perspective as the property owner it doesn’t feel all that different to you. But that’s why this paperwork needs to happen at refinancing. And that’s also why the interest is so heavy a load at the beginning of a mortgage, the average mortgage is paid off (including refinancing as well as ownership free&clear) in 7 years, the mortgage company wants to have made a solid profit by that point with their loan.

This phone call is a really good thing to do for both any pay-off via refinancing (to make sure the prior lien is cleared, even though you’ve traded it for a new one), as well as a final payoff/it’s-yours-forever*.

And don’t forget to keep that amazing piece of paper you received from the mortgage company. File it away proudly in your safe deposit box.

* as long as you keep paying the property taxes!