Real Estate Law

by Randell D. Wallace

for the Business Journal

A recent lawsuit which we were able to successfully handle serves as a timely reminder of the dangers presented by a little-known Missouri statute.

The statute provides for a penalty for failure of a lender to release a deed of trust or mortgage, upon payment, within prescribed time limits. Failure to comply with the strict time limitations can result in the imposition of a penalty on the lender in the amount of 10 percent of the full face amount of the deed of trust.

While the statute has been on the books for many years, a recent amendment in 1996 reduced the time in which the lender must act from 30 to 15 business days, but also added the requirement that the notice be sent to the lender by certified mail, return receipt requested.

The requirements of the statute, V.A.M.S. ¤ 443.130, are as follows:

1. The borrower must tender the full payoff of the note secured by the deed of trust or mortgage;

2. The borrower must also tender the fee for the recording of the lender's release of the deed of trust or mortgage;

3. The request to the lender for the release, along with the above fees, must be sent to the lender by certified mail, return receipt requested; and

4. The lender is required to comply with the request by filing its release in the recorder of deeds' office of the county in which the property is located, within 15 business days not including Saturdays, Sundays or legal holidays of the date of receipt of notice.

The 1996 amendment has added a specific requirement that a plaintiff bringing an action for the 10 percent penalty must specifically prove at trial that the notice was sent by certified mail, return receipt requested.

Financial institutions that routinely receive requests for payoff and release of their security instruments should institute procedures to promptly comply within the time limits prescribed.

Individuals and business owners who may make loans secured by real estate must also familiarize themselves with the terms of this Missouri law in order to avoid the harsh penalties which can result.

(Randell D. Wallace is an attorney with the Law Offices of Hall, Ansley, Rodgers & Condry PC in Springfield.)

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