Removing an Encumbrance from a Land Title (Mortgage Cancellation Guide)

How to Cancel a Mortgage Annotation in the Philippines

Paying off a mortgage is a significant achievement for any property owner. But just because your mortgage loan is fully paid doesn’t mean you’re done—there’s one more important legal step: removing the mortgage annotation on your land title.

If you’re wondering how to cancel a mortgage annotation in the Philippines and legally remove the encumbrance on your title, this guide is for you. Below, we’ll walk you through the process, requirements, and helpful tips to ensure your land title reflects your full ownership—free of liens or mortgages.

What Is a Mortgage Annotation?

A mortgage annotation is an official entry recorded at the back of your Transfer Certificate of Title (TCT) or Original Certificate of Title (OCT) indicating that the property was used as collateral for a loan. This is a form of encumbrance and limits your ability to fully control, sell, or transfer the property until it is cleared.

Even if the loan is fully paid, the annotation remains on the title until formally cancelled through the proper legal process.

Why Remove an Encumbrance on Title?

Removing a mortgage annotation is not just a formality—it’s necessary for:

• Selling or transferring the property

• Using the property as collateral again

• Clearing the title for estate purposes

• Avoiding complications in inheritance or ownership disputes

  
  

Buyers and banks will not accept a title with an active encumbrance unless the issue is resolved. That’s why removing an encumbrance on a land title is a critical legal step.

Step-by-Step Guide to Cancel Mortgage Annotation in the Philippines

To cancel a mortgage annotation or remove a lien on your title, you’ll need to prepare documents and file a petition with the Register of Deeds. Here’s a detailed guide:

Step 1: Secure the Certificate of Full Payment or Mortgage Release

Once your mortgage is fully paid, request the following from your lender or financing institution:

• Certificate of Full Payment – issued by the bank or lending company, stating that the loan has been fully settled.

• Deed of Cancellation of Mortgage – a notarized document formally releasing the mortgage.

• Some banks issue a Notarized Cancellation Form or Release of Real Estate Mortgage (REM) instead.

Tip: Make sure all documents are original, notarized, and match the names and loan details on your title and mortgage contract.

Step 2: Have the Documents Notarized (If Not Yet)

If your lending institution only provides unsigned forms, you’ll need to:

• Bring the authorized signatory of the lender to a notary public

• Secure a notarized release of mortgage, including:

  • Name of lender and borrower

  • Property description

  • Mortgage contract number

  • Date of full payment

  
  

Step 3: Obtain a Certificate Authorizing Registration (CAR) from BIR (If Required)

In some cases, especially if the mortgage was subject to taxes or was part of a sale, you may need to request a Certificate Authorizing Registration (CAR) from the Bureau of Internal Revenue (BIR). This certifies that all taxes related to the property or transaction are fully paid.

Required for CAR:

• Original and photocopy of mortgage documents

• Proof of payment

• BIR forms

• Tax Identification Number (TIN) of both parties

Not all cancellations require a CAR, but it’s best to check with your local Register of Deeds or BIR RDO.

Step 4: Go to the Register of Deeds

Proceed to the Registry of Deeds (RD) where your land title is registered. Submit the following:

Required Documents:

• Owner’s Duplicate Copy of Title

• Certificate of Full Payment

• Notarized Cancellation of Mortgage

• Real Estate Mortgage contract (for reference)

• Valid ID of the registered owner

• CAR (if applicable)

• Processing Fee (varies by location)

Step 5: Title Entry and Update

Once the RD approves the cancellation, they will:

• Annotate the cancellation on the back of the land title

• Remove the mortgage entry from the records

• Return the updated land title (owner’s duplicate) showing that the encumbrance has been cleared

The Registry of Deeds may take 1 to 3 weeks depending on the volume of transactions in your area.

How Long Does It Take to Cancel a Mortgage Annotation?

If your documents are complete, the process of removing the mortgage annotation from the title can take 1 to 4 weeks depending on:

• Registry of Deeds workload

• BIR coordination (if required)

• Documentary deficiencies or inconsistencies

Common Issues and How to Avoid Them

1. Missing or Unnotarized Documents

Always double-check if your release of mortgage is notarized. The RD will not accept unsigned or improperly executed documents.

2. Bank is Uncooperative or Already Closed

If the bank has merged, been bought out, or closed, coordinate with its successor or consult a lawyer to execute a judicial petition for cancellation.

3. Name Mismatch

Make sure all documents match the title details (name, TIN, address). Discrepancies can cause delays or rejection.

4. Title is Lost or Damaged

If the original title is missing or unreadable, you must file a petition for reissuance of title before processing the cancellation.

Frequently Asked Questions (FAQs)

• Is it illegal to sell a property with an active mortgage annotation?

Not illegal, but it’s legally risky for the buyer. Most buyers and banks won’t proceed unless the title is cleared.

• What if the mortgage was paid years ago, but the annotation is still there?

You can still cancel it—just gather proof of payment and initiate the process. Consult a lawyer if documents are missing or the bank no longer exists.

• Who pays for the cancellation?

Usually, the borrower (property owner) shoulders the fees unless otherwise agreed in the loan contract.

Final Thoughts

A mortgage annotation on your land title is not automatically removed upon loan payment. You need to take action to formally cancel the mortgage annotation in the Philippines and remove the encumbrance on your title.

Doing so ensures that your property is clear, marketable, and legally unencumbered—ready for sale, transfer, or further financing.

Need Help Removing a Mortgage Annotation?

At DPASCUAL Law, we help property owners handle the legal removal of encumbrances, title annotations, and registration updates. Whether you’ve fully paid your loan or inherited a property with an old mortgage, we can assist in clearing your title efficiently and legally.

---

Disclaimer: This article is for general informational purposes only and should not be construed as legal advice. While it may include content generated with the assistance of AI tools, all information has been reviewed and fact-checked by a licensed legal professional and/or legal researcher to ensure accuracy and reliability. For advice specific to your situation, please consult a qualified attorney.