Payoff Statements and Discharges When You Sell in MA

When you sell, the payoff of the mortgage you already have comes out of your proceeds, so it goes on your net sheet. Two sections of the Massachusetts mortgage statute put time limits on that payoff and on what follows it.

The payoff statement

M.G.L. c. 183, § 54D lets one or more obligors on a mortgage note, or an authorized person acting for them, ask a mortgagee, mortgage servicer or note holder for a written payoff statement. The request has to be in writing and has to specify a payment date no more than 30 days after the date of the request. The statement has to reach the requester within 5 business days of receipt of the request. It has to specify an amount certain as of the payment date and either a specific amount or a method of calculation, such as a per diem amount, for a payoff that arrives later. It may condition the amount on escrow or other disbursements the holder may make in the following 30 days, and then it has to describe the nature, amount and anticipated date of those disbursements if they’re known or reasonably ascertainable. One payoff statement may be requested without charge in any 6-month period, and a reasonable charge may be included for additional requests in that period.

If the lender is late or wrong

A holder that fails without reasonable cause to provide a timely payoff statement is liable to the mortgagor for the greater of $500 or the mortgagor’s actual damages, plus reasonable attorney’s fees and costs. A holder that provides an inaccurate amount may send a corrected statement, which supersedes the earlier one if the recipient has a reasonable opportunity to act on it before paying. Otherwise the holder can’t deny the accuracy of the amount against a person who reasonably and detrimentally relied on it. For a mortgage securing a line of credit or future advances, that protection depends on the holder having received a written request signed by an obligor to freeze or terminate the line.

The discharge

Under § 55, a mortgagee, mortgage servicer or note holder that receives full payment has 45 days from receipt of payment to do one of two things. It can record a duly executed and acknowledged discharge and give the closing attorney, settlement agent or other person transmitting the payoff a copy with the recording information. Or it can give that person the executed and acknowledged discharge itself. Merely providing a copy and evidence that the discharge was sent to a registry for recording isn’t compliance unless the recording information is on the copy.

What late costs

A holder that accepted payment in accordance with its payoff statement and then misses the 45 days is liable to the mortgagor for the greater of $2,500 or the actual damages sustained, with reasonable attorneys fees and costs, in addition to other remedies at law. The liability is limited to actual damages if, within 30 days of receiving a written demand by certified mail, in-hand delivery or overnight delivery, the holder provides or pays as demanded a discharge in proper form. There’s also a safe harbor for a holder that can show from its records that the discharge, supporting documents and recording fees went to the closing attorney or settlement agent in time, and that provides a confirmatory discharge within 30 days after a written demand.

The closing attorney’s clock

A closing attorney, settlement agent or other person who receives a compliant discharge has 45 days from receipt to record it. The same greater-of-$2,500 damages apply to that person, limited to actual damages if the discharge is recorded or provided to the mortgagor or another closing attorney within 30 days after a written demand.

If you’re planning to sell

I work with owners around Greater Boston who are getting ready to list. If you’d like a net sheet built from a real payoff figure before the first showing, get in touch. I’m Diana Kim, REALTOR with eXp Realty, and I work in English and Korean. This is general information only, and a dispute with a lender or a closing attorney belongs with your own attorney.