Wisconsin Legislative Update

Wisconsin Legislative Update

The Wisconsin legislature recently enacted legislation governing mortgage satisfaction.  The provisions address notifications, payoff statements, affidavits of satisfaction, and documents of rescission that are given or recorded on and after December 14, 2013.

WISCONSIN SENATE BILL 290

 

Definitions

“Address for giving a notification” means, for the purpose for a particular type of notification, the most recent address provided in a document by the intended recipient of the notification to the person giving the notification, unless the person giving the notification knows of a more accurate address, in which case the terms means that address.

 

 

“Day” means calendar day.

 

 

“Document” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

 

 

“Electronic” means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.

 

 

“Entitled person” means any of the following:

  • A person liable for payment or performance of the obligation secured by the real property described in a security instrument.
  • The landowner.
  • The settlement agent.

 

“Good faith” means honesty in fact and the observance of reasonable standards of fair dealing.

 

 

“Landowner” or “owner” means a person that, before foreclosure, has the right of redemption in the real property described in a security instrument.  The term does not include a person that holds only a lien on the real property.

 

 

“Notification” means a document containing information required under the below provisions and signed by the person required to provide the information.

 

 

“Payoff amount” means the sum necessary to satisfy a secured obligation, as set forth in a payment statement by the secured creditor.

 

 

“Payoff statement” means a document containing the information as provided below.

 

 

“Person” means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government, or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity.

 

 

“Recording data” means the date, document number, volume and page number, if any, that indicate where a document is recorded in the office of register of deeds.

 

 

“Residential real property” means real property located in Wisconsin that is used primarily for personal, family, or household purposes, and is improved by 1-to-4 dwelling units.

 

 

“Secured creditor” means a person that holds or is the beneficiary of a security interest or that is authorized both to receive payments on behalf of a person that holds a security interest and to record a satisfaction of the security instrument upon receiving full performance of the secured obligation.  The term does not include a trustee under a security instrument.

 

 

“Secured obligation” means an obligation the payment or performance of which is secured by a security interest.

 

 

“Security instrument” means an agreement, however denominated, that creates or provides for an interest in real property to secure payment or performance of an obligation, whether or not it also creates or provides for a lien on personal property.

 

 

“Security interest” means an interest in real property created by a security instrument.

 

 

“Settlement agent” means the person responsible for the preparation of the settlement statement for the conveyance of real property.

 

 

“Sign” means, with present intent to authenticate or adopt a document, any of the following:

  • To exercise or adopt a tangible symbol.
  • To attach to or logically associate with the document an electronic sound, symbol, or process.

 

“State” means a state of the United States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, or any territory or possession subject to U.S. jurisdiction.

 

 

“Submit for recording” means to deliver, with required fees and taxes, a document sufficient to be recorded to the office of register of deeds.

 

 

“Title insurance company” means an organization authorized to conduct the business of insuring titles to real property located in Wisconsin.

 

 

Notification

A person gives a notification by doing any of the following:

  • Depositing it with the U.S. Postal Service with 1st class postage paid or with a commercially reasonable delivery service with cost of delivery provided, properly addressed to the recipient’s address for giving a notification.
  • Sending it by fax, email, or other electronic transmission to the recipient’s address for giving a notification.
  • Causing it to be received at the address for giving a notification within the time that it would have been received if deposited in the mail.

 

A notification is effective at any of the following times:

  • The day after it is deposited with a commercially reasonable delivery service for overnight delivery.
  • Three days after it is deposited with the U.S. Postal Service, with 1st class mail with postage prepaid, or with a commercially reasonable delivery service other than by overnight delivery.
  • The day it is given, if given by fax, email, or other electronic transmission.
  • The day it is received, if given by a method other than mail or electronic means.

 

If performance is required on or by a certain day and that day is a Saturday, Sunday, or legal holiday under Wisconsin law or U.S. law, the performance is sufficient if performed on the next day that is not a Saturday, Sunday, or legal holiday.

 

 

Payoff Statement

An entitled person, or an agent authorized by an entitled person to request a payoff statement, may give to the secured creditor a notification requesting a payoff statement for a specified payoff date not more than 30 days after the notification is given.  The notification must contain all of the following:

  • The entitled person’s name.
  • If given by a person other than an entitled person, the name of the person giving the notification and a statement that the person is an authorized agent of the entitled person.
  • A direction whether the statement is to be sent to the entitled person or that person’s authorized agent.
  • The address, fax number, or email or other electronic transmission address to which the secured creditor must send the statement.
  • Sufficient information to enable the secured creditor to identify the secured obligation and the real property encumbered by the security interest.

 

If a notification directs the secured creditor to send the payoff statement to a person identified as an authorized agent of the entitled person, the secured creditor must send the statement to the agent, unless the secured creditor knows that the entitled person has not authorized the request.

 

 

Within 7 business days after the effective date of a notification or, if the security interest encumbers real property that is not residential real property, within a reasonable longer time after the effective date of such a notification, the secured creditor must issue a payoff statement and send it as directed above in the manner prescribed for giving a notification.

 

 

If a person to whom the notification is given once held an interest in the secured obligation but has since assigned that interest, the person need not send a payoff statement but must, within 7 business days after the effective date of the notification, give a notification of the assignment to the person to whom the payoff statement otherwise would have been sent, providing the name and address of the assignee.

 

 

A secured creditor that sends a payoff statement to the entitled person or the authorized agent may not claim that the notification did not satisfy the notification requirements.

 

 

A payoff statement must contain all of the following:

  • The date on which it was prepared and the payoff amount as of that date.  If the entitled person or person’s authorized agent specifically requests it, the payment statement must include the amount by type of each fee, charge, or other sum included within the payoff amount.
  • The information reasonably necessary to calculate the payoff amount as of the requested payoff date, including the per diem interest amount, if applicable.
  • The payment cutoff time, if any, the address or place where payment, including payment by electronic transmission, if available, must be made, and any limitation as to the authorized method of payment.

 

A payoff statement may contain the amount of any fees authorized not included in the payoff amount.

 

 

A secured creditor may not qualify a payoff statement or state that the payoff amount is subject to change before the payoff date.

 

 

A secured creditor must provide upon request one payoff statement without charge during any 2-month period.  A secured creditor may charge a fee of $25 for each additional payoff statement requested during that 2-month period.  However, a secured creditor may not charge a fee for providing a corrected payoff statement.

 

 

If a secured creditor to which a notification has been given does not send a timely payoff statement that substantially complies with the payoff statement requirements, the secured creditor is liable to the entitled person for any actual damages caused by the failure plus $500, but not punitive damages.  A secured creditor that does not pay the damages provided in this paragraph within 30 days after receipt of a notification demanding payment may also be liable for reasonable attorney fees and costs.

 

 

Understated Payoff Statement

If a secured creditor determines that the payoff amount it provided in a payoff statement was understated, the secured creditor may send a corrected payoff statement.  If the entitled person or the person’s authorized agent receives and has a reasonable opportunity to act upon a corrected payoff statement before making payment, the corrected statement supersedes an earlier statement.

 

 

A secured creditor that sends a payoff statement containing an understated payoff amount may not deny the accuracy of the payoff amount as against any person that reasonably and detrimentally relies upon the understated payoff amount.

 

The above provisions do not do of any of the following:

  • Affect the right of a secured creditor to recover any sum that it did not include in a payoff amount from any person liable for payment of the secured obligation.
  • Limit any claim or defense that a person liable for payment of a secured obligation may have under law other than the above provisions.

 

Secured Creditor to Submit Satisfaction for Recording

A secured creditor must submit for recording a satisfaction of a security instrument within 30 days after the secured creditor receives full payment or performance of the secured obligation or payment as provided in a payoff statement or a corrected payoff statement, whichever is applicable.  If a security instrument secures a line of credit or future advances, the secured obligation is fully performed only if, in addition to full payment or performance of the secured obligation or payment as provided in a payoff statement, the secured creditor has received a notification requesting the secured creditor to terminate the line of credit or containing a statement sufficient to terminate the effectiveness of the provision for future advances in the security instrument.

 

 

A secured creditor that is required to submit a satisfaction of a security instrument for recording and that does not do so by the end of the 30-day period is liable to the landowner for $500, plus any actual damages caused by the failure, but not punitive damages, and any reasonable attorney fees and court costs incurred.

 

 

The above paragraph applies to a secured creditor that receives full payment or performance of the secured obligation or payment as provided in a payoff statement or a corrected payoff statement on or after December 14, 2013.  The satisfaction of mortgage provisions in Wisconsin Statutes section 706.05 apply to a secured creditor that received a partial or full payment or performance of the secured obligation before December 14, 2013.

 

 

Form and Effect of Satisfaction

A document is a satisfaction of a security instrument if it is a duly recorded certificate signed by or on behalf of the holder of record of any mortgage or other security interest in lands, and authenticated identifying the mortgage or other interest and stating that the same has been paid or satisfied in whole or in part.

 

 

Limitation of Secured Creditor’s Liability

A secured creditor is not liable if all of the following apply:

  • The secured creditor established a reasonable procedure to achieve compliance with its obligations.
  • The secured creditor complied with that procedure in good faith.
  • The secured creditor was unable to comply with its obligations because of circumstances beyond its control.

 

Satisfaction Agent; Notification to Creditor of Affidavit of Satisfaction

Only a title insurance company, acting directly or through an authorized agent, may serve as a satisfaction agent.  An affidavit of satisfaction is valid only for security instruments recorded against residential real property.

 

 

Upon, or at any time after, full payment or performance of the secured obligation or payment as provided in a payoff statement or a corrected payoff statement, a satisfaction agent acting for and with authority from the landowner may give the secured creditor a notification that the satisfaction agent may submit for recording an affidavit of satisfaction of the security instrument against residential real property.  The notification must include all of the following:

  • The identity and mailing address of the satisfaction agent.
  • Identification of the security instrument for which a recorded satisfaction is sought, including the names of the original parties to the security instrument.
  • A statement that the satisfaction agent has reasonable grounds to believe all of the following:
    • That the real property described in the security instrument is residential real property.
    • That the person to which the notification is being given is the secured creditor.
    • That the secured creditor has received full payment or performance of the secured obligation or payment as provided in a payment statement or a corrected payoff statement.
  • A statement that the satisfaction agent may sign and submit for recording an affidavit of satisfaction of the security instrument unless, within 30 days after the effective date of the notification, any of the following occurs:
    • The secured creditor submits a satisfaction of the security instrument for recording.
    • The satisfaction agent receives from the secured creditor a notification stating that the secured obligation remains unsatisfied, except that the satisfaction agent may submit for recording an affidavit of satisfaction even if the satisfaction agent receives a notification that the secured obligation remains unsatisfied if the satisfaction agent has reasonable grounds to believe that the person who paid the payoff amount reasonably and detrimentally relied upon an understated payoff amount.
    • The satisfaction agent receives from the secured creditor a notification stating that the secured creditor has assigned the security instrument and identifying the name and address of the assignee.

 

A notification may be sent by a method authorized by and to the address specified under the notification section; alternatively, a notification may be sent to an electronic or other address provided by the secured creditor on a payoff statement, if different from the address specified in the notification section.

 

 

A notification to submit an affidavit of satisfaction may be sent along with a notification, if any, to terminate a line of credit or future advances.

 

 

The satisfaction agent is presumed to be acting for, and with authority from, the entitled person if the satisfaction agent, directly or through an agent, assisted in completing full payment or performance of the secured obligation or payment as provided in a payoff statement or a corrected payoff statement.

 

 

A person is not required to agree to serve as a satisfaction agent.

 

 

Authorization to Submit Affidavits of Satisfaction for Recording

A satisfaction agent may sign and submit for recording an affidavit of satisfaction of a security instrument against residential real property that complies with the requirements for the content of an affidavit of satisfaction if either of the following applies:

  • The secured creditor has not, to the knowledge of the satisfaction agent, submitted for recording a satisfaction of a security instrument within 30 days after the effective day of a notification.
  • The secured creditor authorizes the satisfaction agent to do so.

 

An affidavit of satisfaction is signed by the satisfaction only if it is signed by 2 persons who are employees of, and who have been authorized by, the title insurance company to sign an affidavit of satisfaction on behalf of the title insurance company acting as satisfaction agent.

 

 

A satisfaction agent may not sign and submit for recording an affidavit of satisfaction of a security instrument if it has received a notification stating that the secured obligation remains unsatisfied, unless the satisfaction agent has reasonable grounds to believe that the person who paid the payoff amount reasonably and detrimentally relied upon an understated payoff amount.

 

 

If a satisfaction agent receives a notification stating that the security instrument has been assigned, the satisfaction agent may not submit for recording an affidavit of satisfaction of the security instrument without doing both of the following:

  • Giving a notification of intent to submit for recording an affidavit of satisfaction to the identified assignee as the identified address.
  • Complying with the requirements with respect to the identified assignee.

 

A satisfaction agent may submit for recording an affidavit of satisfaction that is compliant even if full payment or performance of the secured obligation or payment as provided in a payoff statement or a corrected payoff statement was made before December 14, 2013.

 

 

The satisfaction agent may charge a reasonable, one-time fee per real property transaction for sending the notification and preparing and executing the affidavit of satisfaction.  A fee charged by a satisfaction agent that does not exceed $75 is conclusively presumed to be reasonable.

 

 

Contents of Affidavit of Satisfaction

An affidavit of satisfaction of a security instrument residential real property must do all of the following:

  • Identify the original parties to the security instrument, the secured creditor, the recording data for the security instrument, and, if necessary for proper indexing of the affidavit, a legal description of the real property identified in the security instrument.
  • State the basis upon which the entity on whose behalf the affidavit is signed is a satisfaction agent.
  • State that the persons signing the affidavit have reasonable grounds to believe that the real property described in the security instrument is residential real property.
  • State that the persons signing the affidavit have reasonable grounds to believe that the secured creditor has received either of the following:
    • Full payment or performance of the secured obligation.
    • Payment as provided in a payoff statement or a corrected payoff statement.
  • State that the entity on whose behalf the affidavit is signed, acting with the authority of the owner of the real property described in the security instrument, gave notification to the secured creditor of its authorization to sign and submit for recording an affidavit of satisfaction.
  • State either of the following:
    • That the secured creditor authorized the entity on whose behalf the affidavit is signed to sign and record an affidavit of satisfaction.
    • That more than 30 days have elapsed since the effective date of the notification, and the persons signing the affidavit have no knowledge that the secured creditor has submitted a satisfaction of the security instrument for recording and either of the following apply:
      • The persons signing the affidavit have not received a notification that the secured obligations remains unsatisfied.
      • The persons signing the affidavit have received a notification that the secured obligation remains unsatisfied, but the persons signing the affidavit have reasonable grounds to believe that the person who paid the payoff amount reasonably and detrimentally relied upon an understated payoff amount.
  • Be signed by the satisfaction agent and contain an authorized form of authentication.

 

Effect of Affidavit of Satisfaction

An affidavit of satisfaction of a security instrument against residential real property that complies with the requirements for the content of an affidavit of satisfaction will be entitled to record in the office of the register of the county in which the security instrument is recorded.

 

 

Upon recording, an affidavit substantially complying with the requirements for the content of an affidavit of satisfaction constitutes a satisfaction of the security instrument described in the affidavit.

 

 

The recording of an affidavit of satisfaction of a security instrument does not by itself extinguish any liability of a person for payment or performance of the secured obligation.

 

 

Liability of Satisfaction Agent

A satisfaction agent that records an affidavit of satisfaction of a security instrument erroneously is not liable to the secured creditor if the satisfaction agent properly complied with the above requirements.

 

 

A satisfaction agent that records an affidavit of satisfaction of a security instrument with knowledge that the statements contained in the affidavit are false is liable to the secured creditor for any actual damages caused by the recording and reasonable attorney fees and costs.  The following are permissible:

  • A court awarding punitive damages on account of the conduct.
  • The secured creditor proceeding against the satisfaction agent under Wisconsin law other than the above provisions.
  • The enforcement of any criminal statute prohibiting the conduct.

 

Document Rescission and Liability for Wrongful Recording

“Document rescission” means a document stating that an identified satisfaction or affidavit of satisfaction of a security instrument was recorded erroneously, the secured obligation remains unsatisfied, and the security instrument remains in force.

 

 

If a person records a satisfaction or affidavit of satisfaction of a security instrument in error, the person may execute and record a document of rescission.  Upon recording, the document rescinds an erroneously recorded satisfaction or affidavit.

 

 

A recorded document of rescission has no effect on the rights of any of the following persons:

  • A person that acquired an interest in the real property described in the security instrument after the recording of the satisfaction or affidavit of satisfaction of the security instrument and before the recording of the document of rescission.
  • A person that would otherwise have priority over or take free of the lien created by the security instrument.

 

A person that erroneously or wrongfully records a document of rescission is liable to any person injured thereby for the actual damages caused by the recording and reasonable attorney fees and costs.

 

 

Right of Action Not Affected

The above provisions do not affect a person’s right to bring an action in court to discharge a mortgage.