Guide · November 9, 2026
Your mortgage payoff and liens at closing: what comes out of the price
Before you receive a dollar, every loan and lien on the house is paid from the price. Federal rules and Florida and Arizona law set deadlines for payoff letters, escrow refunds and releases. Knowing them helps you close on the day you picked.
Key points
- A mortgage servicer must send an accurate payoff statement within 7 business days of a written request (Regulation Z, 12 CFR 1026.36(c)(3)). Florida law also gives a lender 10 days (section 701.04).
- The payoff is more than the balance on your last statement. It includes interest up to the payoff date and any fees the lender is owed.
- After payoff, the servicer must return any escrow balance within 20 days, not counting weekends and federal holidays (12 CFR 1024.34(b)).
- Liens and judgments are paid from the price too. Florida judgment liens last 10 years from recording and Arizona judgment liens generally 10 years from the judgment.
- If the payoffs add up to more than the price, the sale cannot close unless the lenders agree or you bring the difference. Talk to your lender and a lawyer early.
What comes out of the price, and in what order
At closing the title company collects the price from the buyer and pays every debt on the house before it pays you. Those debts are the first mortgage, any second mortgage or home equity line, liens, court judgments recorded against an owner, and unpaid property tax. They stay with the house until they are paid, so the title company pays each one before it pays you.
These amounts are separate from closing costs. A closing cost is a charge for the sale itself, and the contract decides who pays it. A payoff is a debt you already owe, and it comes out of your price in every kind of sale, to BIMINIO or to anyone else.
Each debt needs a written figure from the person owed. For a loan that figure is a payoff statement, which some lenders call a payoff letter. For a lien it may be a payoff letter from the lien holder or a demand from its lawyer. The title company orders them, puts each one on the closing statement, and sends each payment on closing day.
How a payoff statement works
A payoff statement gives the amount needed to pay the loan in full on a stated date. It differs from the balance on your monthly statement in three ways. It adds the interest from your last payment up to the payoff date. It adds any fees the lender says are owed, such as late fees. And it is good only up to its date, so a closing that moves needs a new figure.
Federal law sets a deadline. Under Regulation Z, 12 CFR 1026.36(c)(3), the servicer of a loan secured by a home must send an accurate payoff statement within a reasonable time, and in no case more than 7 business days after it receives a written request from you or someone acting for you. The deadline is a reasonable time only, with no fixed number of days, when the loan is in bankruptcy or foreclosure, is a reverse mortgage, or is hit by a natural disaster.
Florida adds its own rule. Section 701.04 of the Florida Statutes requires the lender or servicer to send a payoff letter within 10 days after it receives the borrower's written request.
So send the request in writing, with your loan number, and give the title company permission to ask for you. A title company can send the request for you once you sign an authorization.
Prepayment penalties
A prepayment penalty is a charge for paying a loan off early. Federal rules limit it on the home loans they cover.
Under 12 CFR 1026.43(g), a covered home loan may carry a prepayment penalty only if it has a rate that cannot rise, is a qualified mortgage, and is not a higher-priced loan. Even then the penalty must end three years after the loan was made. It may be at most 2 percent of the amount paid off early in the first two years, and at most 1 percent in the third year.
Your loan papers say whether a penalty applies. If one does, it shows on the payoff statement and comes out of the price.
Your escrow account after payoff
If your lender collected money each month for property tax and insurance, that money sits in an escrow account. Under Regulation X, 12 CFR 1024.34(b), once your loan is paid in full the servicer must return what is left in that account within 20 days, not counting legal public holidays, Saturdays and Sundays.
The one exception is a new loan. If you agree, and the new loan comes from the same lender or uses the same servicer, the balance can move into the new loan's escrow account instead.
The refund arrives after closing, from the servicer, separate from the money the title company sends you. Watch for it in the weeks after closing.
Read the guide: property taxes when you sell →
When the release of your mortgage is recorded
After the loan is paid, the lender must also record a release, so the public records show the house is free of the loan.
In Florida the lender has 60 days after the loan is paid in full to record or send the satisfaction of the mortgage (section 701.04). The same 60 days apply to a paid lien or judgment. A person who wins a court case to enforce this is entitled to reasonable attorney fees.
In Arizona the lender must record a release or deliver one (section 33-707). A lender that has not recorded it within 30 days is liable for the owner's actual damages, and one that still fails more than 30 days after a written request sent by certified mail owes $1,000 more (section 33-712). After 60 days a title insurer may prepare and record the release itself (section 33-707).
Liens that are paid at closing
A lien is a legal claim on the house for a debt. Each kind follows its own rules for how it starts and how long it lasts.
| Kind of lien | Florida | Arizona |
|---|---|---|
| Contractor's lien | Recorded within 90 days after the last work or materials (section 713.08). Ends 1 year after recording unless a court case is filed (section 713.22). | Recorded within 120 days after the work is finished, or 60 days after a notice of completion is recorded (section 33-993). |
| Court judgment | A lien once a certified copy is recorded with the holder's address. Lasts 10 years, and can be extended once by 10 more (section 55.10). | A lien once recorded. Generally lasts 10 years from the judgment (section 33-964). |
| Federal tax lien | Paid from the price, or the IRS issues a certificate of discharge (Publication 783). | Same federal rule. |
| HOA dues owed | Shown on the estoppel certificate and paid from the price (section 720.30851). | Shown on the HOA resale papers and paid from the price (section 33-1806). |
Contractor's liens
A contractor who was not paid for work on the house can record a lien against it. In Florida the claim of lien must be recorded within 90 days after the contractor's last day of work or materials (section 713.08). It lasts one year after it is recorded unless the contractor files a court case to enforce it. An owner can shorten that year by recording a notice of contest, which gives the contractor 60 days from service of the notice to file the case or lose the lien (section 713.22).
In Arizona the notice and claim of lien must be recorded within 120 days after the work is finished. If the owner records a notice of completion, the deadline is 60 days after that notice is recorded (section 33-993).
If you had work done in the last few months and there is a dispute about payment, tell the title company.
Court judgments
A court judgment against an owner can become a lien on the house. In Florida that happens when a certified copy of the judgment is recorded in the county, and the judgment or a recorded affidavit gives the address of the person owed. The lien lasts 10 years from recording and can be extended by 10 more by recording it again before it expires (section 55.10).
In Arizona a judgment becomes a lien once it is recorded, and it generally lasts 10 years from the date of the judgment. Liens won by the state in civil cases and support judgment liens last until they are paid or lifted (section 33-964). For a home with a homestead, the same section says that when the house is sold, the judgment creditor is paid only after the owner receives the homestead exemption amount and any senior liens are paid.
Homestead rules are detailed and differ between the two states. Ask a lawyer how they apply to your judgment.
Federal tax liens
An IRS lien can be paid from the price at closing. If the price will not cover it, the IRS can issue a certificate of discharge, which removes its lien from the house named in the certificate. IRS Publication 783 (revised December 2022) explains the application, Form 14135, and asks that it be sent at least 45 days before the sale.
The application asks for the proposed sale price, the amount the IRS can expect from the sale, and the name of the title or escrow company handling the closing. Start early, and tell the title company about the lien on the first day.
When the debts are more than the price
Add up every payoff and lien and compare the total with the price. If the debts are larger, the sale cannot close as it stands, because the title company cannot clear the title. Either the lenders and lien holders agree in writing to take less, or you bring the difference to closing.
A lender's agreement takes time and paperwork, and the lender decides. If you are behind on payments, speak with your lender and with a lawyer or a housing counselor as early as you can.
Facing foreclosure? See how a cash sale works →
Payoffs in a sale to BIMINIO
In a sale to BIMINIO we pay the closing costs. Your mortgage, liens and any back taxes are paid from the price, as in any sale, and the closing statement lists each one before you sign. A licensed title company orders the payoff statements and pays each holder on closing day.
A BIMINIO cash offer is below full market value. Compare what you keep after every payoff and every cost before you decide.
Want a number for your house? BIMINIO buys in Florida and Arizona, as is, and pays the closing costs. A written offer comes within 24 hours.