What is Deed of Reconveyance used for?

A deed of reconveyance is used to move the title from

  1. The mortgagor to the mortgagee.
  2. The beneficiary to the trustor.
  3. The trustee to the trustor.
  4. The trustor to the trustee.

The answer is B.

A deed of reconveyance is used to show that a money encumbrance (a lien) has been paid off and that the title is transferred from the beneficiary (lender) to the trustor (the borrower). Also, a deed of reconveyance must be recorded in the public records of the county in which the property is located.

The deed of reconveyance is a very important document – if it is lost, then it creates a cloud on the title (a very serious issue) because there is no proof that the loan has been paid off.

You may have been tempted to choose answer C. Although the trustee holds title to the property on behalf of the beneficiary (also called the lender), the title still belongs to the beneficiary. So, title is really transferred from the beneficiary to the trustor.