What is the term used when a loan has been fully paid in a lien theory state?

In lien theory states, the term used when a loan has been fully paid is "satisfaction of mortgage." This phrase indicates that the borrower has met all obligations of the mortgage contract, successfully paying off the debt. The lender then acknowledges this completion by providing a document that certifies that the loan has been paid in full. This satisfaction removes the lien that the lender held on the property due to the mortgage, allowing the homeowner to have clear title and ownership free of the lender's claim.

Understanding this process is crucial in real estate transactions, as it is necessary for the property owner to obtain a clear title when selling or refinancing. The documentation involved in a satisfaction of mortgage also serves to protect the homeowner's credit and establishes that the lender no longer has any financial claim against the property.

Reinstatement of mortgage refers to bringing a loan back into good standing after a default, whereas a release of lien usually describes situations where specific claims are removed, not necessarily tied to the completion of a loan. The term termination of loan might refer to the end of a loan period but does not specifically address the fulfillment of a payment obligation in the context of mortgages.