When a mortgage or judgment gets paid off, the creditor has to release its lien. It’s not only common sense, but it’s a duty imposed by Tennessee statute (see Tenn. Code Ann. § 66-25-101).
It’s an easy process to prepare a Release of Lien and record it with the register of deeds. Also, it’s not particularly expensive. Depending on how many pages the release is, the fee can be as little as $12.00.
Not too onerous for a lender who just got paid in full, right?
Well, not so fast. Ask any of my creditor clients, and they’ll tell you that “paid in full” means “fully paid, including that release fee.” When I get a payoff request on a deed of trust or judgment lien, I generally include a line for the $12.00 release costs.
Not anymore, in light of a December 2022 Tennessee Court of Appeals opinion, Eudaley v. U.S. Bank Nat’l Ass’n, No. M202100344COAR3CV, 2022 WL 17751378 (Tenn. Ct. App. Dec. 19, 2022). In that case, the mortgage lender got paid in full, recorded the release, and sent a bill to the borrower for $12.00. In response, the borrower filed a class action lawsuit in Davidson County Circuit Court, arguing that, per Tenn. Code Ann. § 66-25-106, “[a]ll costs … for registering a formal release[ ] shall be paid by the holder of the debt secured by the … deed of trust.”
Despite the very clear statutory text, the trial court dismissed the case after finding that federal law allows such fees and preempts the state law. The Court of Appeals affirmed, but not before providing some useful guidance to other lienholders (who may not have a federal banking regulation to hide behind).
Specifically, the Court wrote that “§ 66-25-106 prohibits holders of debt from seeking reimbursement of costs associated with recording a release of a deed of trust” because “[t]he debt holder’s obligation to record a release only arises if the debt has been paid in full or satisfied, indicating that nothing further is owed to the debt holder.” In affirming the trial court’s dismissal, the opinion makes clear that the lienholder bears those costs and can’t seek reimbursement, but, nevertheless, “that prohibition is preempted by federal law when the debt holder seeking reimbursement is a national bank.”
So, what if you’re not a national bank? Tenn. Code Ann. § 66-25-106 applies, and the creditor must chalk up $12.00 as the cost of getting paid.
What about other sorts of liens, like judgment liens or mechanic’s liens? § 66-25-106 seems to apply to any lienholder, but the judgment creditor may nevertheless have an argument that the release fees are “costs of collection” or allowed court costs/discretionary costs.
Either way, this December 2022 opinion provides pretty compelling authority to support a lender’s decision to simply record the release and write off the $12.00. In a very creditor-friendly state like Tennessee, Tenn. Code Ann. § 66-25-106 is an outlier, but this case is a very good reminder that it exists.
Creditors Rights 101 
I’m in terrible need of help I have spoken to at least 60 attorneys since I was swarmed into ligation. As an uneducated person with dyslexia I have been forced into a pool full of sharks and one orca while I’ve been trying to learn how to swim. Reading has been a detriment for me all my life but in these waters it’s not an option. Basically I have a case of lender liability that is based on an overreaching control taken by the servicer who was also the originator and then controlling agent and the notary witness of signing capacity. This is a TRID construction project for the house and shop that was securing the noted lien inside a Deed of Trust. It happens that every aspect of the process has been manipulated from the loan application admittedly being altered to show a higher price of land, the loan structure changed, dates on signatures lowered loan amount. The loan estimate expired before the closing disclosure was sent the day of the closing consummation was made without a request for the initial draw that was made that same day and the witness of signing capacity notarized the signing without being there in the crowded lobby of the bank to explain what was going on. This was day one it gets much much worse. This is a quick run down of admissable facts. The controlling agent refused to allow me to purchase fuel for my equipment to prepare the site for the construction. Nothing could be done with out the fuel that was needed and I had been asked to pay for the land out of pocket so I had to be reimbursed for my expenses. The agent notified me that I have to get the materials for the project before I could have more for the site work. So I did everything I had to do to get the materials for the project at the lowered loan amount . 18% LTV WAS THE amount of a $333,000 loan value. I have to put it all in two separate locations because the property is overgrown and nothing could be placed on site. I was just about done with staging the materials and I was contacted by the agent saying that she wanted my address to come look at the materials that I had given the receipts for. I gave her my address and the neighbor who had let me store the most important stuff and the next day I was told that I was shut down until I got the Land cleared and had a permit. I still don’t think she understands that the fuel was necessary but anyway I was dumb enough to not catch on. To the offer that was made to give me a second loan that was a commercial line of credit that I could use for the fuel and anything else I need to do the shop for the construction business I HAD . I gave my business assets as collateral and they only gave me 70,000 but I was confident that I was going to be able to get the project done soon. I purchased a backhoe to prevent the rental and I was going to use it for my business too. But when I went to get funds for the fuel I was told that I had spent all of both loans. The back hoe was $8,000 and I am better at math than reading. I did everything that I could to get alternative financing and no matter what I did I was not able to get funds. I ended up watching most of the materials waist in the weather. Even though I tried to keep it dry it just didn’t matter that steel and other metal is all that remains. The bank was going to give me a refinance to cover the amount that I had spent and couldn’t put to use but I was kicked out of the bank for asking for my lawyer at the time to review the loan documents. Yes kicked out. Shorty after I was standing there in court with no way to pay for a retainer and my lawyer removed himself from the case. The 330,000 home and my livelihood was taken away and sold for scrap. I was denied the request for discovery and objected to the opening statements before I got up and raised the wrong right hand.. from there I have gotten all the things that I have said admitted on the trial audio and I have now been given the retained information by the order of the court after they took everything that was the least they could do. So I have found that the original loan was paid off in full with the commercial loan and the satisfaction was not recorded. It just so happens that it was done the day after the title insurance commitment expired. The obligations that were in the original loan were extinguished and I was never given agency that arose to reconvey the account. Instead it was assigned to the successor just before the sale date. Now I have found that the loan was not paid off and the loan is shown in good standing no late payment in a ten year account. Hidden from the world and it is not going to be swept under the rug. I was only allowed to withdraw $56, 000 of the $133,000 that was promised. The Deed of Trust was replaced with a fake that has the wrong address and the same book and page number is on it as the original and it has no date on it. They had planned it out for sure but it was crazy how they waited for the title insurance commitment to expire to do it. I’m pretty sure it’s a torte claim for agency arising in duty to reconvey the title that was kept within and it was in the Banks name when assigned. But I am pretty sure I have not one chance of being able to get any relief though. In fact that 56,000 has been been multiplied by two almost. After they sold the house and equipment and the wages I have missed I have lost $516,000 . And I have $ 100, 000 money judgement staring down the barrel of my Appeal to circuit Court if you have made it to here I have to ask you if you can help or know anyone who would be interested in sueing people with a lot of money? If so I will be forever thankful and I still feel like I have a torte claim if. Someone is able to get me to the right Court. Thanks for reading this if you did. As I have to say this also it takes a leap of faith to win the case of a life time. Even the judge was pleading for me to get a lawyer. I’m simply not able to save up for the retainer with my alternative employment. Someone who has your skills can make this be a significant impact on the tortfeasors that have treated a twenty year loyal depositor like
Thanks again