A deed of release is a legal document that removes a previous claim on an asset. It provides documentation of release from a binding agreement. A deed of release might be included when a lender transfers the title of real estate to the homeowner upon satisfaction of the mortgage. A deed of release literally releases the parties from previous obligations.
Most individuals purchase their homes with the help of a mortgage provided by a financial institution. The bank providing the funds for the mortgage doesn't just lend the money in good faith it takes a legal claim against the house as collateral until the loan is paid off.
A mortgage deed of release is then created when the borrower meets all mortgage payment terms or makes a full prepayment to satisfy the loan. The lender holds the title to the property until that time and is formally a lienholder of record on the property until full and final payment is made. The title provides secured collateral for the loan payments for the life of the loan, reducing the default risk for the lender.
The deed of release is typically created by the lending institutions legal counsel when the loan has been satisfied. It reports that the loan has been paid in full under the terms required. It also states that the lien has been removed and full title has been transferred to the homeowner.
The homeowner owns the asset free and clear after the title and deed of release are provided to her. She's no longer subject to any terms or obligations of the lender. The lending account is closed.