What is the purpose of a deed of reconveyance?

The purpose of a deed of reconveyance is to return title to a trustor when the debt secured by the property has been fully paid off. This document serves as evidence that the borrower has fulfilled their financial obligation to the lender, typically a bank or other financial institution. Once the loan is paid in full, the lender uses the deed of reconveyance to formally indicate that the lien on the property has been removed, thereby allowing the borrower to regain clear title to the property.

In California, this procedure is often applicable in trust deeds, where the trustor (borrower) conveys the property to a trustee (lender) as security for a loan. Upon satisfying the loan, the lender executes the deed of reconveyance, which is then recorded to show that the property is free of the mortgage obligation. This process is crucial as it provides clear legal standing for the borrower and ensures that their ownership rights are recognized.

Other options presented do not align with the specific function of a deed of reconveyance. For instance, transferring ownership to a new buyer or creating a mortgage agreement involves different legal processes and documentation, while removing a lien from a property can entail various other actions depending on the context of the lien. The reconveyance specifically