South Carolina’s mortgage satisfaction law changed last year, mostly for the better, but with a few snags. Effective June 2, 2014, Section 29-3-330 of the South Carolina Code was amended to remove the requirement for a “lost mortgage affidavit”, a document that mostly mystified out-of-state lenders and practitioners.

While most states allow a mortgage to be satisfied by a simple document stating, in effect, that the loan is paid in full and the mortgage is satisfied, our statute required either satisfaction by writing on the face of the original mortgage, satisfaction by affidavit of a closing attorney who paid off the mortgage, or satisfaction by a document accompanied by an affidavit from the lender stating that the mortgage was lost.

In most commercial closings, the lender being paid off did not want to deface the original mortgage for fear that the new transaction might fall apart. The attorney handling the closing did not want to sign an affidavit. And nobody wanted to swear that a mortgage in hand was lost.  Closing attorneys and title companies were asked to take mortgage satisfaction documents that clearly did not comply with our statute, but clearly made more sense than our law.

After the amendment, mortgages in South Carolina can be satisfied by four methods:

1. On the face of the original mortgage in the  presence of the ROD. This is one of the snags. Mortgagees are finding it cumbersome to actually appear before the ROD to satisfy their mortgages.
2. On the face of the original mortgage in the presence of two witnesses. This is another snag. The number of witnesses has been increased from one to two, a requirement that some are finding difficult;
3. By a document in “substantially” the form set out in the statute (that does not require an affidavit that the mortgage is lost); or
4. By affidavit of a South Carolina licensed attorney who can provide proof of payment and (under penalty of perjury) certifies that he or she was given written payoff information, made the payoff and is in possession of the canceled check or wire confirmation.

Another concern is the mention of the term “deed of trust” in the statute, despite the fact that South Carolina is clearly a mortgage state.

Palmetto Land Title Association is working on some technical amendments. But, generally, the fact that a lost mortgage affidavit is no longer required has made transactions across state lines easier.