What is the appropriate action if a seller’s mortgage is paid off at closing?

The appropriate action when a seller’s mortgage is paid off at closing is a discharge of the mortgage. When a mortgage is paid in full, the lender issues a discharge, releasing the borrower from the debt obligation. This discharge serves as legal documentation that the debt has been settled, and it enables the seller to transfer a clear title to the buyer.

The discharge is a critical step in the closing process, ensuring that there are no lingering financial liabilities associated with the property that could affect the buyer's ownership. This avoids any future disputes or claims against the property related to the paid-off mortgage.

Regarding the other actions: transferring title pertains more to the process of taking ownership of the property but does not specifically relate to the mortgage being paid off. Adjusting taxes may be part of the closing process but is not directly related to the mortgage discharge. Similarly, refunding an escrow balance is a separate action, not specifically tied to the pay-off of the mortgage. Therefore, the discharge is clearly the focused action in this context.