An open mortgage is a common cloud seen on title…but what exactly does that mean and how is it fixed?

A mortgage is considered open if it has not been fully paid off, or if it was paid but not cancelled in the record. This presents as a cloud on title because it represents a claim by the lender on the property. The lender has a legal right to the property until the mortgage is paid off in full. This can cause issues when trying to sell or transfer property without first satisfying the mortgage.

If the open mortgage is due to a mortgage not yet paid off, we reach out for a payoff letter. This shows us how much money is still owed and what must be paid off to successfully transfer ownership. We take this amount from the seller proceeds and record the cancelled mortgage in the record.

To process an open mortgage resulting from a paid-off mortgage that was not recorded as canceled, we contact the previous title company and request a letter verifying that the loan has been paid off. Once we have obtained this letter, we then record the cancellation in the record and can move forward with closing.

This title cloud is a (usually) relatively easy process and can be fixed before closing to ensure no delays.