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Kielty v. Arena

2006 WL 695469 (N.J. Super. Ch. Div. 2006) (Unpublished)

MORTGAGES; DISCHARGES—A court will order a mortgage discharged if the borrower can prove that the debt was paid or can present special circumstances so as to satisfy the court that the mortgagee and its successors have no further interest in the mortgage or the debt secured thereby.

The administrator of his mother’s estate sought to have a mortgage discharged and filed a suit to cause that discharge. He was unable to locate the mortgagee and therefore properly obtained an order approving service by publication. The mortgagee never appeared.

The mortgage was granted in 1987 and the administrator’s mother died in 2000. According to the administrator, in 1996, his mother told him that “she paid off the mortgage over the years. However, the mortgage was never discharged.” The administrator’s attorney contacted the attorney who had closed the original mortgage transaction and eventually identified a number of possible relatives of the mortgagee. All of his attempts to contact those relatives, however, were unsuccessful. A private investigator determined that the mortgagee’s niece had died in 1998 at the age of 88.

A certification from the administrator stated that after his mother’s divorce, he, as her son, became his mother’s confidant. He didn’t know the mortgagee personally, but he did know that the mortgagee “was an elderly gentlemen when [his mother] purchased the property.” The certification also stated that, over the years, his mother told him almost monthly that she was paying the mortgage, and then, in 1996, she took him “aside and informed [him] in a discussion in either July or August that she finally completed all of the payments to [the mortgagee] and the mortgage was paid in full.” The administrator had no financial records or canceled checks.

By relevant New Jersey statute, a court can direct the discharge of a mortgage when a claimant presents satisfactory proof that the principal and interest due on the mortgage have been fully paid or presents “such special circumstances as to satisfy the court that the mortgagee and his successors, if any, in right, title and interest have no further interest in the mortgage or the debt secured thereby.” In this case, the Court found, as compelling, that in the eight years since when the administrator claimed his mother paid off the mortgage, the mortgagee never requested payment on the mortgage and never filed a foreclosure complaint. Further, the mortgagee never responded to the service by publication. To the Court, that was “a clear indication that either [the] mortgage was paid in full or [the mortgagee did] not seek repayment on the loan.” Further, the administrator persuaded the Court that the mortgagee was probably deceased since his niece had died in 1998 at the age of 88. According to the Court, if the mortgagee were still alive “and the mortgage was not paid in full, then he should have contacted [the administrator] seeking repayment. If [the mortgagee was] deceased, then his heirs should have made an inquiry. Even though the statute of limitations to institute a foreclosure action is twenty years, under the circumstances, the Court thought that the mortgagee or his heirs would likely be barred from seeking repayment of the mortgage ... pursuant to the doctrine of laches.” Consequently, the Court ordered that the mortgage be discharged of record.

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