Escrow & Title
A Colorado title company discovers an old unreleased mortgage from 1995 still recorded against the property. The title company will likely:
AIssue a clean title policy and ignore the old mortgage
BRequire proof of payoff or a release of lien before issuing a clean title policy✓ Correct
CContact the original lender automatically without the seller's involvement
DDeduct the old mortgage from the seller's proceeds as a precaution
Explanation
An unreleased mortgage constitutes a cloud on title. The title company will require proof that the mortgage was paid off (a satisfaction or release) before issuing a title insurance policy that insures over this potential defect. The seller must track down and record the release.
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