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Things you need to know about Cancellation of Real Estate Mortgage.


1. What is a Cancellation of Real Estate Mortgage?

A Cancellation of Real Estate Mortgage is a creditor’s (the “mortgagee”) declaration cancelling the real estate mortgage executed in his favor by the debtor (the “mortgagor”) over the property. Once the mortgage is cancelled the property is no longer considered as security for the debt and the mortgagee cannot foreclose the property.


2. When do you need a Cancellation of Real Estate Mortgage?

A Cancellation of Real Estate Mortgage is used when the parties agree to cancel the mortgage over the property. It is often used when the obligation secured by the mortgage has been fulfilled, cancelled or is no longer existing for any reason.  

A Cancellation of Real Estate Mortgage may also be used when the parties agree to replace the current property with another property. This will involve cancelling the mortgage over the existing property and executing another mortgage over the new property. In any event the parties are free to cancel the mortgage for any reason.


3. How can a Cancellation of Real Estate Mortgage protect you?

A Cancellation of Real Estate Mortgage protects the mortgagor by putting in writing the fact that the mortgage over his property has been cancelled and the property can no longer be foreclosed. Otherwise, there is a continuing risk that the property will be foreclosed despite the fact there is no valid reason for the foreclosure anymore.

Further, an existing mortgage adversely affects the property’s value and how third persons treat the property in business transactions. For example, a potential buyer will be more apprehensive about buying the property if there’s an existing mortgage over the same. This is especially true if the mortgage is annotated on the Certificate of Title of the property.  

In certain cases, the Register of Deeds will require the mortgagor to present a document signed by the mortgagee cancelling the mortgage before removing the mortgage’s annotation on the Certificate of Title. A Cancellation of Real Estate Mortgage can serve this purpose.


4. What information do you need to create a Cancellation of Real Estate Mortgage?

To create your Cancellation of Real Estate Mortgage you’ll need the following minimum information:

  1. The type of mortgagee (e.g. individual or business) as well as name and details (e.g. nationality and address);
  2. The mortgagor’s name; and
  3. Brief description of the property mortgaged (e.g. type of property, address).

5. How much is the document?

The document costs PHP 400 for a one-time purchase. Once purchased you have unlimited use and revisions of this type of document.

You can also avail of Premium subscription at PHP 1,000 and get (a) unlimited use of our growing library of documents (from affidavits to contracts); and (b) unlimited use of our “Ask an Attorney” service, which lets you consult an expert lawyer anytime for any legal concern you have.

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