Certificate of satisfaction

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Once either the defendant (defaulted mortgagor) or another creditor redeems the property from foreclosure, the plaintiff (mortgagee initiating the suit) must execute and deliver to the defendant a certificate of satisfaction. This certificate is signed by the plaintiff and evidences the fact that the debt and costs of foreclosure have been satisfied. It must be filed by the defendant with the court in which the original foreclosure judgment was entered and recorded in the records of the town in which the property is located, as discussed earlier in this chapter[1].

Application in architecture

Many architects are asked to provide what are usually known as 'certificates of satisfaction' or sometimes as 'professional certificates'. These are quite different from the certificates which you issue under the terms of a building contract. Certificates issued under a building contract are issued only for the benefit of the employer (and possibly the contractor). Certificates of satisfaction are additional certificates, sometimes required on a monthly or stage basis and sometimes merely at the end of the contract[2].

Responsibility

Essentially, in such certificates, you confirm that the building has been constructed in accordance with the drawings and specification and you acknowledge that the certificate is issued for the benefit of your client and that funding institutions and future purchasers of the property are entitled to rely upon it. There are several reasons why it is worth considering whether to sign such a document:

  • It is exceedingly dangerous to sign such certificates, because they make you liable for defects to funders and third party purchasers to whom you would normally have no or little liability.
  • By signing such certificates you could be put in a position where a future purchaser, in reliance on the certificate, could take legal action against you for building defects while being unable to found any action against the original contractor.

Of course, if you have agreed to provide the certificate when you agreed your terms of engagement, you have no option but to provide it, otherwise you should decline. If, for whatever reason, you believe that you must provide such a certificate, make a substantial charge for it and get your legal adviser to draft one for you so as to protect you so far as possible in the circumstances[3].

Principle of operation

Upon payment in full of any assessment made by virtue of the act to which this is a supplement, the board of commissioners who shall receive the same shall give to the person paying such assessment a certificate of satisfaction thereof, under the seal of said board of commissioners and signed by their treasurer, which certificate shall be sufficient evidence of the payment of such assessment, and that upon presentation thereof the clerk of the county wherein said improvement is situate shall satisfy such assessment by making a memorandum of such payment and the date of the same on the margin of the record of said assessment in his office, opposite the name of the person and lot so assessed, and file such certificate in his office, by virtue of which satisfaction so made as aforesaid the land so assessed shall thereafter be freed, cleared and discharged of and from the lien of said assessment[4].

Examples of Certificate of satisfaction

  • A Certificate of Satisfaction is a legal document that is used to signify that a debt has been paid in full or that a judgment that has been issued in one jurisdiction has been satisfied in another. For example, a Certificate of Satisfaction is often used when a debtor has paid a debt secured by a mortgage, or when a judgment issued in one jurisdiction has been satisfied in another.
  • In real estate law, a Certificate of Satisfaction is a document that is used to show the satisfaction of a mortgage or deed of trust. In the event of default on a loan, the lender may foreclose on the property. Once the foreclosure is completed and the debt paid in full, the lender will issue a Certificate of Satisfaction to the borrower, which is then filed with the court and recorded in the county records, thus removing the mortgage or deed of trust from the property.
  • In the context of a civil suit, a Certificate of Satisfaction is used to show that a judgment has been satisfied. When a court renders a judgment in favor of one party and against another, the prevailing party may then file a Certificate of Satisfaction with the court, which serves as evidence that the judgment has been paid in full.
  • In bankruptcy proceedings, a Certificate of Satisfaction is a document that is used to show the satisfaction of a debt. Once the bankruptcy court has ordered that a debt be discharged, the creditor will issue a Certificate of Satisfaction to the debtor, indicating that the debt has been paid in full. The Certificate of Satisfaction is then filed with the court and recorded in the county records.

Advantages of Certificate of satisfaction

A Certificate of Satisfaction has several advantages:

  • It eliminates the need to pay additional debt or costs after the foreclosure judgment is satisfied.
  • It serves as proof that all debts and costs have been paid and the foreclosure has been successfully completed.
  • It can be used to transfer the title of the property to a new owner, as the certificate serves as evidence that the prior owner has no further interest in the property.
  • It protects all parties involved in the foreclosure as any subsequent claims against the property can be easily dismissed.
  • It can be used as evidence in a court of law, should any dispute arise regarding the foreclosure proceedings.

Limitations of Certificate of satisfaction

A certificate of satisfaction is not an absolute release of liability. It is important to remember that a certificate of satisfaction is not a warranty or guarantee of any kind, and it does not constitute a release of liability for any future claims that may arise. The following are a few of the limitations of a certificate of satisfaction:

  • The certificate of satisfaction does not bar any future suits or legal actions that may arise from the mortgage transaction.
  • The certificate of satisfaction does not prevent the mortgagee from being able to file a deficiency judgment or other claims against the mortgagor, if the proceeds from the foreclosure sale are not enough to satisfy the debt.
  • The certificate of satisfaction does not extinguish any liens that the mortgagee may have placed on the property, such as a security interest.
  • The certificate of satisfaction does not prevent the mortgagor from being able to challenge the foreclosure in court.
  • The certificate of satisfaction does not prevent the mortgagee from being able to file a claim for legal fees and costs associated with the foreclosure proceeding.
  • The certificate of satisfaction does not automatically remove the property from the mortgagee's records or from public records.
  • The certificate of satisfaction does not necessarily relieve the mortgagor of any outstanding tax or other debt obligations associated with the property.

Other approaches related to Certificate of satisfaction

  • The defendant, or another interest holder, can pay off the debt and costs of foreclosure, without redeeming the property, in which case the mortgagee will provide the defendant with a certificate of satisfaction.
  • The defendant can receive a deed in lieu of foreclosure, in which case the mortgagee will provide the defendant with a certificate of satisfaction.
  • The court may order the plaintiff to accept a certain amount of money in exchange for the mortgage debt, in which case the plaintiff will provide the defendant with a certificate of satisfaction.

In all of these cases, the certificate of satisfaction serves as proof that the mortgage debt and costs of foreclosure have been satisfied. The certificate must be filed with the court in which the original foreclosure judgment was entered and recorded in the records of the town in which the property is located. This ensures that the defendant’s rights to the property are fully recognized and that any competing claims of ownership are resolved. In summary, a certificate of satisfaction is a document that proves that a mortgage debt and costs of foreclosure have been satisfied and that the parties involved are released from any further obligations related to the debt.

Footnotes

  1. ↑ Pancak, K. A., (2004), p. 140
  2. ↑ Chappell, D., (2009), chapter 1
  3. ↑ Chappell, D., (2009), chapter 1
  4. ↑ Vroom G. D. W., Lanning, W. M., (2005 ), p. 2134


Certificate of satisfaction — recommended articles
Satisfaction of mortgage — Absolute assignment — Deed of surrender — Statute barred debt — Equitable lien — Collateral assignment — Consent order — Executory consideration — Executed consideration

References

Author: Michał Augustyński

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