Q: For the past five years, I have been paying off a $5,700 second trust "balloon" note on my residence. The balance of the note, now $2,500, is due in March of this year. The noteholder lives in Potomac and the trustees of that note are a local law firm that handles real estate matters. The property is located in the District. I understand that I must retrieve the note and deed of trust and have it cancelled, but I'm not certain how to do this. I am especially concerned that the lender may be uncooperative. Is it necessary for me to retain an attorney for this transaction? Should I request the lender to come to the law office of the trustee to receive final payment and mark the note paid?

A: This is one of the thorniest areas in real estate. Often, when you buy a house, the seller takes back a small second mortgage (deed of trust) and it is secured against the property. When the note is finally paid off, you must do more than merely "burn" the mortgage.

When you borrow money secured by real estate, generally you deed your house in trust to a trustee selected by your lender. The trustee has a legal, fiduciary obligation to both the buyer (the borrower) and the lender. If the note is paid off in full at any time within the due date, the trustees must release their interest and have this release properly recorded among the land records in the jurisdiction where the property is located. If, on the other hand, the note is delinquent, the trustees may be asked by the noteholder to begin foreclosure proceedings. An auction is usually arranged after proper and appropriate notice (depending on state law) and the trustees have the authority to sell the property at the auction sale.

Thus, it is quite important to make sure that this trust is released when you finally pay off the note. Until it is properly released, it remains a cloud on your title. The trustees should be shown the note, marked "paid in full and canceled" and given a form deed of trust release to sign. In Maryland and Virginia the procedures are not as archaic as in the District of Columbia, but the same general principles apply.

If your lender is reluctant or uncooperative, it might make sense for you to arrange the final payment in the office of the trustee. You can give this final payment to the trustee, who will be authorized not to release the monies until the note is marked "paid."

You asked whether an attorney is necessary: Not really, but for the rather nominal fee that most attorneys will charge for the arragement and preparation of this release, it might be worth your while.

Here's a note of caution if you sign a second deed of trust. Make absolutely sure that you have a copy of the note you signed, that you know where the trustees are located, and that you also have made arrangements to pay the note to a bank -- rather than to the individual.