N.C. Gen. Stat. § 45-36.6(b) provides that if a secured party erroneously records a release or satisfaction of a security instrument, then the secured party can file a document of rescission that will effectively rescind the release or satisfaction and reinstate the erroneously released instrument. The Court of Appeals of North Carolina recently issued an opinion outlining which mistakes will permit the filing of a document of rescission.
In 1999, husband and wife borrowers obtained financing to purchase a home in Burlington. The loan was secured by a purchase money deed of trust on their house. In March 2004, the borrowers obtained a home equity line of credit from a predecessor of American National Bank that was secured by a second priority deed of trust on their house. In August 2004, the borrowers refinanced their original purchase loan with a loan from Wells Fargo. This loan was secured by a deed of trust. Wells Fargo subsequently entered into a subordination agreement with American National Bank that provided the Wells Fargo deed of trust had priority over the earlier-filed American National Bank equity line deed of trust. Continue Reading