The mortgage and note, the mortgagor's duties, selling mortgaged property, and recording

Debt and security

The note is the borrower's promise to repay, including principal, interest, installments, and maturity. The mortgage secures that debt with real property. The mortgagor gives the mortgage, ordinarily as the borrowing owner; the mortgagee receives it, ordinarily as the lender. New York treats the mortgage as a lien, leaving ownership with the borrower. New York forecloses mortgages by court action.

Duties and default

New York's statutory mortgage form includes covenants to pay the debt, taxes, assessments, and water rates; insure buildings against fire for the mortgagee's benefit; and obtain consent before removing or demolishing a building. Failure to perform a mortgage obligation can be a default even when installments are current. Acceleration makes the remaining debt due after a qualifying default; foreclosure enforces the security interest through the legal process. Particular loan terms and applicable legal protections govern the transaction.

Selling with an existing mortgage

A buyer taking subject to a mortgage acquires property exposed to the lien without personally assuming the seller's debt. A buyer who assumes the debt agrees to pay it. Neither arrangement by itself establishes a release of the original borrower by the lender. A due-on-sale clause can permit acceleration on a covered transfer, subject to applicable limitations; the buyer and seller's private agreement does not eliminate it.

Recording and payoff

Recording gives constructive notice of the mortgage and helps protect priority; it does not transfer ownership or prove repayment. An assignment transfers the lender's interest. A satisfaction or discharge documents the paid mortgage's release. A payoff statement supplies the amount needed to pay the loan. Under New York Real Property Law § 275, when a mortgage is due and fully paid, a certificate of discharge must be given, and its signer must arrange presentation for recording within thirty days thereafter. A transfer or refinancing that preserves a bona fide debt and enforceable lien can involve assignment instead of discharge.