Deciphering the 'Ancient Mortgage' Doctrine: What Real Estate Practitioners Need to Know

This week we wanted to take the opportunity to discuss an often-misunderstood topic in the Title Industry - the use of the “Ancient Mortgage” Doctrine to allow a Title Company to insure the transfer of Title over an unsatisfied mortgage of record. 

Attorneys practicing in the Real Estate field for any appreciable period of time have likely been faced with one of the following situations:

                1. a Title Report that disclosed an open Mortgage of Record where their clients either tell them a.) “I’m sure I paid that mortgage off years ago” or b). “I have no idea how that mortgage got recorded against my property.”    or
                2. a Title Report that disclosed an open Mortgage of Record against a prior owner in the chain of title coupled with the fact that the current Owner/Seller is unable to provide any evidence of payment or a valid Owner’s Fee Policy from their acquisition closing.

In those situations, the question we often receive is whether Home can, in reliance on the “Ancient Mortgage” Doctrine, simply “Omit and Insure” over the open Mortgage Record without requiring the Seller to obtain either a duly executed Satisfaction of Mortgage or a Court Order discharging the mortgage.   Unfortunately, the answer is “it will depend on a variety of specific factors surrounding the open Mortgage of Record.” 

Unfortunately, since there is no statutory authority which either specifically defines the requirements of an “Ancient Mortgage” or otherwise directs the automatic satisfaction of an “Ancient Mortgage” of record, Title Companies, and their Underwriters, must make case-by-case determinations as to whether they can Omit and Insure over the mortgage in question as “Ancient” without requiring the Seller to obtain a Satisfaction of Mortgage for recording.
 
Below are certain factors that the Team at Home considers in determining whether a particular open Mortgage of Record will qualify as an “Ancient Mortgage” to allow us to Omit the Mortgage from our Fee Owner and/or Loan Polices without receiving a duly executed Satisfaction of Mortgage.  Please note that each situation is fact specific so the below list is intended solely to give you guidance as to the minimum factors Home considers before we determine whether we can apply the “Ancient Mortgage” Doctrine in a particular situation and not as an assurance that we will be able to Omit the Mortgage of Record from your Policies without further documentation.   Additionally, we cannot represent or guaranty how any other Title Company or Underwriter will analyze and apply the “Ancient Mortgage” Doctrine in their underwriting analysis.
 
                Minimum Factors to be Met for Home to Consider the Application of the “Ancient Mortgage” Doctrine to Insure Title Transfer Over an Open Mortgage of Record:
 
                1. If the mortgage amount is under $50,000.00 and matured more than twelve (12) years ago (NOTE – the maturity date must be able to be established within the stated terms of the recorded mortgage document), we can typically Omit with an Affidavit of No Demand for payment provided the following conditions are also satisfied:
                                i.   Mortgagee cannot be an Institutional Lender (ie. Mortgagee must be either an individual or non-Institutional Lender)
                                ii.  Mortgagor cannot be the present owner of the Premises or an owner via a no ($0.00) consideration Deed(s) transfer from the original mortgagor and
                                iii. There must have been one or more “for value” transfers of the Premises since the date of the mortgage.
               
                2. If the mortgage is under $50,000.00 but there is no maturity date set forth in the Mortgage document, at least thirty (30) years must have passed since the date of the mortgage and there has been no recitation in the chain of title regarding the mortgage within the last twelve (12) years, we can typically Omit with an Affidavit of No Demand for payment provided the following conditions are also satisfied:
                                i.   Mortgagee cannot be an Institutional Lender (ie. Mortgagee must be either an individual or non-Institutional Lender)
                                ii.  Mortgagor cannot be the present owner of the Premises or an owner via a no ($0.00) consideration Deed(s) transfer from the original mortgagor and
                                iii. There must have been one or more “for value” transfers of the Premises since the date of the mortgage.
 
                3.  Formal Underwriter approval for the use and format of the Affidavit on No Demand will be required in all situations.
 
Now, let’s look back to the two scenarios laid out above to answer the question as to whether Home can Omit the particular open Mortgage of Record using the “Ancient Mortgage” Doctrine in those situations. The answer in scenario 1 is “No” since the Mortgagor set forth in the open Mortgage of Record is the Fee Owner.  The answer in scenario # 2 is “Possibly”.  We would have to review the Mortgage of Record in detail to determine whether it meets all of the remaining Minimum Factors set forth in either 1 or 2 above.
 
So – after digesting all of the above, you may now be asking “do I have any other options if the open Mortgage in my deal does not meet the Minimum Factors to qualify as an “Ancient Mortgage” to allow Home to Omit it with the delivery of an Affidavit of No Demand and I am unable to obtain a duly executed Satisfaction of Mortgage from Mortgagee or its assignee?”  In those scenarios, you may wish to consider commencing an action under RPAPL § 1931 to seek the discharge of the Mortgage of Record as an “Ancient Mortgage” with the presumption that the debt has been paid in full.  As mentioned above, New York does not have a statute that specifically defines the requirements for an open Mortgage to be deemed an “Ancient Mortgage.”  That said, settled case law in New York has held that the required lapse in time for a Mortgage to be considered “Ancient” is twenty (20) years past its due date (see Application of Addeso, 69 N.Y.S. 2d 706 (sup C. 1947) and Verderame v. Vanleit. 32 Misc. 3d 1221 (A); 934 N.Y.S 2d. 37 (Civ Ct. 2011).
 
Below is a link to RPAPL § 1931 which will allow you to review the particular statutory requirements to determine whether your particular scenario can support a claim to discharge the Mortgage by Court Order as an “Ancient Mortgage.”
https://law.justia.com/codes/new-york/2022/rpa/article-19/1931/