Interesting dilemma - Title search shows existing mortgage, owner states it was satisfied, but no proof exists. How to purchase?

[Aaron K.]

I want to run this past you guys to see if there's a solution in here somewhere.

A title search of a property I'm looking at purchasing indicates that there is an existing mortgage on record. The lien-holder is the previous owner of the property - she owner financed the property to the current owner. The current owner states that the mortgage was paid off years ago, but has no physical proof other than one copy of a check with a handwritten note stating "final payment". The lein on record is essentially the same amount as the current proposed purchase price.

I have no reason to doubt this individual, however this is clearly not substantial proof of mortgage satisfaction should the prior owner's family decide to recall the mortgage after the purchase. The title company won't accept this either.

The current owner has been trying to get in touch with the prior owner's family to issue a mortgage satisfaction statement, as the prior owner / lien holder passed away some years ago.

My questions are, if we do get a statement from the family, is that sufficient proof of mortgage satisfaction as far as the title company is concerned, and is it enough legal protection in case the family changes their mind down the road at some point? Also, what happens if we CAN'T get that statement - is there any room to get a deal done here?

[Rob Beland]

The discharge of the mortgage needs to be recorded at the Registry of Deeds. The holder of the mortgage (the previous owner or an heir/executor) must first sign the discharge agreeing that it was in fact paid off. Until these two things happen you shouldn't purchase the property. You wont' be able to get a mortgage in the future until the previous mortgage is discharged.