Clearing Your Title After You Pay Off a Loan

Why You Need to Cancel It

When you borrow against your property, the loan is written on the back of the title at the Registry of Deeds. This note is called an annotation, and the loan secured by the property is a Real Estate Mortgage. That note stays until a release is registered. Paying the loan ends the debt, but anyone who checks the title will still see the mortgage. A buyer, a bank or the BIR will ask for it to be cancelled before they deal with the property.

The same goes for a car bought on loan. The lender's lien (its claim on the car) is noted on the Certificate of Registration (CR), and the LTO will not transfer the car cleanly until it is cancelled.

Do it soon after paying. The longer you wait, the harder it can be to find the right people at the lender, or to get a release if the lender has merged, closed or sold its loans.

Step 1: Get the Release From the Lender

After the final payment, ask the bank, Pag-IBIG Fund, financing company or private lender for:

• a Release of Real Estate Mortgage (some call it a Cancellation of Real Estate Mortgage), signed by an officer the lender has authorized and notarized;
• your Owner's Duplicate Copy of the title (the owner's own copy, as opposed to the Registry's copy), which the lender usually kept while the loan was open;
• a certificate of full payment or statement of account showing a zero balance;
• for a company lender, proof that the officer who signed was allowed to (a Secretary's Certificate or Board Resolution), since the Registry may ask for it.

Check the release before you leave: the names, the title number, the date and amount of the mortgage, and the registration entry should all match what is on the title.

If the lender is a private person, they can sign a release in front of a notary. See the Release of Mortgage template.

Step 2: Register the Release at the Registry of Deeds

Go to the Registry of Deeds for the city or province where the land is. The Land Registration Authority (LRA) says adding or cancelling a note on a title needs the document being registered, the Owner's Duplicate Title and a certified copy of the latest Tax Declaration, plus a Real Property Tax Clearance showing taxes are paid up.

The Registry also asks you to fill in a Mandatory Registration Information (MRI) form for cancellation or release of a Real Estate Mortgage. It asks for the loan amount, the title number, the names of the mortgagor (the borrower) and mortgagee (the lender), and the notary details on the release.

The Registry computes the registration fee, you pay at the cashier, and the Registry records the release. It then writes a new entry on the title showing that the mortgage is cancelled. Check the office's current fee and ask when you can pick up the title. Ask for a Certified True Copy of the title afterwards to confirm the cancellation is on the Registry's copy too.

Where the land is a condominium unit, the process is the same, using the condo title (Condominium Certificate of Title, or CCT).

For a Car: Chattel Mortgage and the LTO

A car loan is usually secured by a Chattel Mortgage (a mortgage on movable property like a car), or, under Republic Act No. 11057 (RA 11057), the Personal Property Security Act, a security interest (the lender's claim on the car) that the lender may register online with the LRA's Personal Property Security Registry (PPSR).

1. When the loan is paid, ask the lender for a notarized release (or cancellation) of Chattel Mortgage, the original Official Receipt (OR) and Certificate of Registration (CR) if they kept them, and proof of full payment.
2. Bring these to the LTO office where the vehicle is registered and ask to have the encumbrance (the loan note) on the CR cancelled. The LTO will tell you what else it needs and the current fee.
3. If the lender registered a notice in the PPSR, ask them to register a termination notice. RA 11057 says that once the loan is fully paid and you ask for it, the lender must register the termination within 15 working days, and may not charge you for it.

Once the CR is clean, you can sell or transfer the car. See transferring car ownership.

Common Problems

• The lender will not issue the release. Send a written request with your proof of full payment. If that fails, see Demand Letters. A court case to cancel the mortgage needs a lawyer. The Public Attorney's Office (PAO) gives free help to people who qualify.
• The lender has closed or merged. Ask the bank that took over its accounts, or for a closed bank, the Philippine Deposit Insurance Corporation (PDIC), which handles closed banks' records.
• The private lender has died. Their heirs, or the person in charge of the property they left (the estate representative), can sign the release, with proof of their authority.
• The Owner's Duplicate Title was lost while with the lender. It must be replaced through a court petition before the release can be noted on the title. This needs a lawyer.
• Old mortgages from decades ago. If no release can be found, ask the Registry of Deeds what it will accept. Some cases need a court order.