N.Y. Real Property Actions & Proceedings Law § 1921: Discharge of mortgage

§ 1921. Discharge of mortgage. 1. (a) After payment of authorized

principal, interest and any other amounts due thereunder or otherwise

owed by law has actually been made, and in the case of a credit line

mortgage as defined in section two hundred eighty-one of the real

property law on written request, a mortgagee of real property situate in

this state, unless otherwise requested in writing by the mortgagor or

the assignee of such mortgage, must execute and acknowledge before a

proper officer, in like manner as to entitle a conveyance to be

recorded, a satisfaction of mortgage, and thereupon within thirty days

arrange to have the satisfaction of mortgage: (i) presented for

recording to the recording officer of the county where the mortgage is

recorded, or (ii) if so requested by the mortgagor or the mortgagor's

designee, to the mortgagor or the mortgagor's designee. Failure by a

mortgagee to present a certificate of discharge for recording shall

result in the mortgagee being liable to the mortgagor in the amount of

five hundred dollars if such mortgagee fails to present such certificate

within thirty days, shall result in the mortgagee being liable to the

mortgagor in the amount of one thousand dollars if such mortgagee fails

to present a certificate of discharge for recording within sixty days or

shall result in the mortgagee being liable to the mortgagor in the

amount of one thousand five hundred dollars if such mortgagee fails to

present a certificate of discharge for recording within ninety days. For

the purposes of such liability under this subdivision, the term

"mortgagee" shall not include a person, partnership, association,

corporation or other entity which makes less than five mortgage loans in

any calendar year. The mortgagee shall within forty-five days deliver

the note and the mortgage and where a title is registered under article

twelve of the real property law, the registration copy of the mortgage

and any registration certificates in the mortgagee's possession to the

mortgagor or the mortgagor's designee making such payment and request if

required as aforesaid. Delivery of a satisfaction of mortgage in

accordance with the terms of section two hundred seventy-five of the

real property law shall be deemed to satisfy the requirements of this

section regarding the satisfaction of mortgage.

(b) No mortgagee shall return, destroy, or otherwise refuse to accept

a payment made pursuant to the terms of a payoff letter, including but

not limited to terms regarding the location and the manner of payment

specified by the mortgagee, even if such payment does not cover the full

amount of principal, interest, and any other amounts due and owing under

the mortgage, provided, however, if there is a defect with the payment

that prevents the mortgagee from identifying with reasonable diligence

the mortgage for which such payment is made, the mortgagee may refuse to

accept such payment and return the payment to the remitter. The

mortgagee shall apply such payment to the unpaid principal, interest or

any other amounts due under the mortgage, provided that a payment made

pursuant to a payoff statement shall not result in the execution of a

satisfaction of mortgage pursuant to paragraph (a) of this subdivision

or in the issuance of a certificate of discharge of mortgage pursuant to

subdivision one of section two hundred seventy-five of the real property

law unless the payment covers the full amount of principal, interest,

and any other amounts due and owing under the mortgage.

2. Upon the failure or refusal of any such mortgagee to comply with

the foregoing provisions of this section any person having an interest

in the mortgage or the debt or obligation secured thereby or in the

mortgaged premises may apply to the supreme court or a justice thereof,

or to the county court or a judge thereof, in or of any county in which

the mortgaged premises or any part thereof are situated in whole or in

part, upon a petition, for an order to show cause why an order should

not be made by such court canceling and discharging the mortgage of

record, and directing the register or clerk of any county in whose

office the same may have been recorded to mark the same upon his records

as canceled and discharged, and further ordering and directing that the

debt or other obligation secured by the mortgage be canceled, upon

condition that in the event such mortgage is not paid, the sums tendered

pursuant to the foregoing provisions of this section be paid to the

officer specified by law to hold court funds and moneys deposited in

court in the county wherein the mortgaged premises are situated in whole

or in part. Said petition must be verified in like manner as a verified

pleading in an action in the supreme court and it must set forth the

grounds of the application.

3. In any case where an actual tender, as provided in subdivision one

of this section, cannot with due diligence be made within this state,

any person having an interest in the mortgage or the debt or obligation

secured thereby, or in the mortgaged premises, may apply to the supreme

court or a justice thereof, or to the county court or a judge thereof,

in or of any county in which the mortgaged premises, or any part thereof

are situated in whole or in part, upon petition setting forth the

grounds of the application and verified as aforesaid, for an order to

show cause why an order should not be made by said court canceling and

discharging the mortgage of record, and directing the register or clerk

of any county in whose office the same may have been recorded to mark

the same upon his records as canceled and discharged and further

ordering and directing that the debt or other obligation secured by the

mortgage be canceled, upon condition that the principal sum of the

mortgage or any unpaid balance thereof, with interest up to the date

when said order shall be entered and the aforesaid fees allowed by law,

be paid to the officer specified by law to hold court funds and moneys

deposited in court in the county wherein the mortgaged premises are

situated in whole or in part.

4. In the case of a mortgage secured by property improved by a

one-to-six family, owner occupied, residential structure or residential

condominium unit, if the mortgagee fails within ninety days to deliver

the satisfaction of mortgage and/or fails within ninety days to deliver

the note and the mortgage and any other documents as required by

subdivision one of this section and if the mortgage is not otherwise

satisfied the mortgagee shall be liable to such person in the amount of

five hundred dollars or the economic loss to such person, whichever is

greater. If the mortgagee has delivered such satisfaction of mortgage in

a timely manner and has certified that the note and/or mortgage are not

in its possession as of such date, the mortgagee shall not be liable

under this section if the mortgagee agrees to defend and hold harmless

the mortgagor by reason of the inability or failure of the mortgagee to

furnish the note or mortgage within the time period prescribed in this

subdivision; provided that in connection with mortgage loans purchased

prior to July twenty-seven, nineteen hundred ninety-one by the state of

New York mortgage agency pursuant to section two thousand four hundred

five or two thousand four hundred-five-b of the public authorities law,

the state of New York mortgage agency, its successors or assigns shall

not be liable under this section if it does not defend and hold harmless

the mortgagor by reason of the inability or failure of the state of New

York mortgage agency, its successors or assigns to furnish the note or

mortgage within the time period prescribed in this subdivision. Damages

imposed by this subdivision shall be in addition to the other costs and

fees allowed in this section.

5. (a) In the case of a mortgage secured by property improved by a

one-to-six family, owner occupied, residential structure or residential

condominium unit, if within ninety days of receipt of payment, and

request if required, the mortgagee fails to deliver to the mortgagor or

the mortgagor's designee the satisfaction of mortgage, the note and the

mortgage and any other documents as required by subdivision one of this

section, any attorney-at-law may execute, acknowledge and upon payment

of an additional filing fee of fifty dollars cause to be filed with the

recording officer of the county where the mortgage is recorded, an

affidavit which complies with this section. Unless the mortgagee shall

file a verified objection to such affidavit within thirty-five days of

being filed, as of the date thirty-five days subsequent to its filing,

such affidavit shall be recorded and satisfy the lien of such mortgage

on the mortgaged premises.

(b) The affidavit shall state that:

(i) The affiant is an attorney-at-law and that the affidavit is made

on behalf of and at the request of the mortgagor or any person who has

acquired title to the mortgaged premises;

(ii) The mortgagor made a proper request of the mortgagee for the

execution of the satisfaction of mortgage pursuant to subdivision one of

this section;

(iii) The mortgagor has received a payoff statement for the loan

secured by the mortgage, and shall annex as evidence a copy of the

payoff statement;

(iv) The affiant has ascertained that the mortgagee received payment

of the loan in accordance with the payoff statement, and shall annex as

evidence, copies of the check negotiated by the mortgagee or documentary

evidence of such payment;

(v) The affiant, at least thirty days after the mortgagee received

payment, has given the mortgagee written notice together with a copy of

the proposed affidavit, delivered by certified or registered mail,

return receipt requested, to the attention of the person or department

set forth in the payoff statement, of the affiant's intention to execute

and record an affidavit in accordance with this section; and

(vi) The mortgagee has not responded in writing to such notification

or all requests by the mortgagee for payment have been complied with at

least fifteen days prior to the date of the affidavit.

(c) Such affidavit shall identify the mortgagor and the mortgagee,

state the date of the mortgage, the liber and page of the land records

where the mortgage is recorded and give similar information with respect

to any recorded assignment of the mortgage.

(d) The affiant shall attach to the affidavit photostatic copies of

the documentary evidence that payment has been received by the

mortgagee, including mortgagee's endorsement of any check, and a

photostatic copy of the payoff statement and certify each to be a copy

of the original document.

(e) Within five days of the filing of such affidavit the register or

clerk of every county in whose office said mortgage has been recorded

shall give the mortgagee written notice, delivered by certified or

registered mail, return receipt requested, to the attention of the

person or department set forth in the payoff statement, as annexed to

the affidavit filed hereunder, of the filing of such affidavit, which

notice shall include the following notice in capital letters:

"THIS NOTICE IS MADE UNDER SECTION 1921 OF THE REAL PROPERTY ACTIONS

AND PROCEEDINGS LAW. FAILURE TO FILE WITH THIS OFFICE WITHIN THIRTY DAYS

OF THIS NOTICE A VERIFIED OBJECTION TO THE DISCHARGE OF THE MORTGAGE

DESCRIBED IN THIS NOTICE WILL RESULT IN SUCH MORTGAGE BEING CANCELED AND

DISCHARGED OF RECORD."

Unless the register or clerk of such county shall receive from the

mortgagee, within thirty-five days of the date of filing of such

affidavit, a verified objection by the mortgagee to the discharge of

said mortgage, the register or clerk shall record the affidavit and

supporting documents and mark the mortgage described in the affidavit

canceled and discharged of record and such recorded affidavit shall have

the same force and effect as a duly executed satisfaction of mortgage

recorded in accordance with section three hundred twenty-one of the real

property law. If the register or clerk of such county shall receive from

the mortgagee, within thirty-five days of the date of filing of such

affidavit, a verified objection by the mortgagee to the discharge of

said mortgage, the register or clerk shall return the original affidavit

and the verified objection to the attorney filing such affidavit without

marking the mortgage described in the affidavit canceled or discharged

of record. The clerk or register of such county shall additionally

transmit a copy of the affidavit and the verified objection to its

applicable appellate division of the supreme court, committee on

professional standards, for such further proceedings as determined

appropriate by such committee.

(f) The county clerk or register shall index the affidavit in the same

manner as a satisfaction of mortgage and shall record such instrument

upon payment of the same fees as for a satisfaction of mortgage.

(g) (i) Any attorney who prepares an affidavit and negligently causes

the affidavit to contain false information shall be liable to the

mortgagee for any monetary damages and subject to other applicable

sanctions under law.

(ii) Any person who supplies false information for the affidavit shall

be liable to the mortgagee for any monetary damages and subject to other

applicable sanctions under law.

(h) A banking or other organization having the original or copies

thereof, shall furnish, within sixty days of receiving a written

request, a copy of the front and reverse sides of a check issued to

satisfy the mortgage obligation by such banking or other organization,

needed for completion of an affidavit in accordance with this subdivi-

sion.

6. Eight days' notice of the application for either of the orders

provided for in subdivisions two and three of this section shall be

given to the then mortgagee of record and also, if the petition show

that there is a mortgage not of record, to such mortgagee. Such notice

shall be given in such manner as the court or the judge or justice

thereof to whom the petition is presented may direct, and said court or

judge or justice may require such longer notice to be given as may seem

proper. If sufficient cause be shown the court or judge or justice

thereof may issue such order to show cause returnable in less than eight

days.

7. Upon the return day of such order to show cause, the court, upon

proof of due service thereof and on proof of the identity of the

mortgagee and of the person presenting the petition, shall inquire in

such manner as it may deem advisable, into the truth of the facts set

forth in the petition, and in case it shall appear that said principal

sum or any unpaid balance thereof and interest and the said fees allowed

by law have been duly paid or tendered but not accepted and said

satisfaction of mortgage has been duly presented for execution, or that

such tender and presentation could not have been made within this state

with due diligence, then, in the event such mortgage is not paid, the

court shall make an order directing the sums so tendered, or in a case

where such tender could not have been made as aforesaid, directing the

principal sum or any unpaid balance thereof, with interest thereon to

the date of entry of said order together with all other amounts due

thereunder pursuant to subdivision three of this section and the

aforesaid fees allowed by law, to be paid to the officer specified by

law to hold court funds and moneys deposited in court in the county

wherein the application herein is made, and directing and ordering that

upon such payment the debt or other obligation secured by the mortgage

be canceled and further directing the register or clerk of any and every

county in whose office said mortgage shall have been recorded to mark

said mortgage canceled and discharged of record upon the production and

delivery to such register or clerk of a certified copy of the order and

the receipt of such officer, showing that the amount required by said

order has been deposited with him, which certified copy of said order

and which receipt shall be recorded, filed and indexed by any such

register or clerk in the same manner as a certificate of discharge of a

mortgage. Said receipt need not be acknowledged to entitle it to be

recorded. The court in its discretion, when granting any such order

after application therefor pursuant to subdivision two of this section,

may award costs and reasonable attorney's fees to the person making the

application, in the absence of the showing of a valid reason for the

failure or refusal to execute the satisfaction of mortgage and deliver

the same, the note and mortgage and any other documents required under

subdivision one of this section. The money deposited shall be payable to

the mortgagee, his personal representative or assigns, upon an order of

the supreme court or county court, directing the payment thereof to him

upon such evidence as to his right to receive the same as shall be

satisfactory to the court.

8. Wherever any register or clerk shall record any order and receipt

as hereinbefore specified, he shall mark the record of said mortgage as

follows:

"Canceled and discharged by order of the ..........................

Court, County of ......................., dated .................. and

filed .......................," and thereupon the lien of such mortgage

shall be deemed to be discharged and the debt secured thereby shall be

deemed to be canceled. Said register or clerk shall be permitted to

charge for recording and filing said order and receipt, the same fees to

which he is now entitled for recording and filing a certificate of

satisfaction of a mortgage.

9. When used in this section:

(a) "Mortgagee" means (i) the current holder of the mortgage of record

or the current holder of the mortgage, or (ii) any person to whom

payments are required to be made or (iii) their personal

representatives, agents, successors, or assigns.

(b) "Attorney-at-law" means any person admitted to practice law in

this state and in good standing.

(c) "Payoff statement" means a statement setting forth the unpaid

balance of the mortgage, including principal, interest and other charges

pursuant to the loan documents, together with a per diem rate for

interest accruing after the date to which the unpaid balance has been

calculated. The payoff statement furnished by a banking organization or

corporate mortgagee shall include a name of an individual employed by

such banking organization or corporate mortgagee or department of such

banking organization or corporate mortgagee to whom inquiry concerning

the payoff statements are to be addressed in addition to the address of

the banking organization or corporation for use in connection with the

affidavit under subdivision five of this section.

(d) "Banking organization" shall have the same meaning as provided in

subdivision eleven of section two of the banking law and shall include

any institution chartered or licensed by the United States or any state.

(e) "Note" shall include any written evidence of indebtedness.