STANDARD NO. 608

PROBLEM:

When, if ever, may an undischarged mortgage (other than an undischarged mortgage covered by Title Standard No. 308) appearing on the record be considered as not encumbering the premises?

RECOMMENDATION:

A. Mortgage That Includes Maturity Date: 20 years after the time limited for performance therein, a mortgage should not be considered an encumbrance on the subject premises unless an instrument of record recognizes the continuing validity of the mortgage or the title examiner has knowledge of payment thereon or other indication of claim within such 20-year period and to date. If such an instrument appears of record or the title examiner has such knowledge, then the mortgage should not be considered an encumbrance on the subject premises 20 years after the date of such instrument or payment.

B. Mortgage That does Not Include Maturity Date: If there is no time limited for performance set forth in the mortgage, then 50 years (60 years for railroad mortgages) after the date of execution of the mortgage, a mortgage should not be considered an encumbrance on the subject premises unless an instrument of record recognizes the continuing validity of the mortgage or the title examiner has knowledge of payment thereon or other indication of claim within such 50-year period (60 years for railroad mortgages) and to date. If such an instrument appears or record or the title examiner has such knowledge, then the mortgage should not be considered an encumbrance on the subject premises 20 years after the date of such instrument or payment.

DISCUSSION:

Recommendation A is based on the judicial remedy in 14 M.R.S. § 6104 et seq. to eliminate undischarged mortgages as encumbrances on title. Where 20 years have elapsed after the expiration of the time limited for performance in the mortgage and the mortgagor, and any successors in interest have had uninterrupted possession of the real estate during that time, the mortgagor or successor may apply to the Superior Court for a decree terminating the enforceability of the mortgage. The statute requires the mortgagee to offer evidence of payment or other acts within the 20-year period that would recognize the continuing validity of the mortgage. The period of time after the maturity date of the mortgage coupled with the availability of this statutory remedy with its burden of proof on the mortgagee make the enforcement of the mortgage remote and provide the examiner with a reasonable basis for relying upon the registry record.

Recommendation B is made in recognition of the 30-year term for most mortgages and 60-year term for some mortgages by railroad entities.

First adopted August 25, 1960; amended June 19, 1975, December 7, 1983 and May 17, 2011. Formerly Title Standard No. 19.

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