What is a Release of Lien?

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A lien release, is a legal document that releases a lien filed against a property, vehicle, or another asset. The filing of liens is a form of collateral for debts owed to another party. The person who filed the lien may seize and sell the debtor’s asset if the debt remains unpaid.

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What is a Release of Lien?

A debtor must receive the proper lien release after paying their debt in full. This ensures that the debtor is the rightful owner of their property upon receiving the lien.

An owner of the property may sue to compel the detachment of a lien if the party who filed it fails or refuses to release it.

 

How to Get a Lien Release?

Paying off the debt owed to the lienholder is the easiest way to get a release of the lien. However, detaching a lien varies depending on the type of lien and the asset involved. If you need help obtaining lien releases, consult a lawyer familiar with local laws about liens.

 

Step 1: Prepare the correct forms.

There are different forms for releasing your lien, depending on the lien and property type. A contractor’s or mechanic’s lien form usually appears during the contracting process.

When the loan has ended, the lender will typically send the liens detached if you want to remove the lien from a vehicle. The title and lien release can take up to thirty days to reach you after the final payment.

The Attorney will most likely have specific forms to fill out if your lender still needs to provide you with the lien release.

 

Step 2: Signatures.

In most states, this form must also have its notarization to be valid. It must need to sign and dated by all parties.

 

Step 3: File the release of the lien.

In the same way, we need to record that lien, and releases of liens must also be filed. For property, we need to file the release with the county recorder; only the DMV has to know for vehicles.

We recommend hiring a contract or property lawyer to ensure the lien document is accurate, complete, signed, notarized, and filed with the right entity.

 

Information about Lien Release

Lien will vary depending on who filed the lien, what property it relates to, and which type of lien it is. However, the same basic information will need, such as:

  • Both parties’ names and contact information
  • Lien-related property description
  • Amount paid in total
  • The date of payoff

Furthermore, the lien document must include all identifying and recording numbers assigned to the original lien and the filing date and county.

You must file the lien in the same county where we filed the original lien.

 

What type of lien release will you get?

The lien type depends on the property involved and who filed the original lien. Four types of lien releases are commonly available:

  • Mechanic’s lien releases,
  • IRS lien releases, mortgage lien releases,
  • And partial lien releases.

 

Mechanic’s lien release.

It is common for contractors to file mechanics liens on real estate when awaiting project payment. Documents containing mechanics liens are drafted and agreed upon when the contract takes shape.

 

IRS lien release.

Lien releases are necessary when the IRS files a lien against a party’s assets.

 

Mortgage lien release

After securing mortgage financing, the lending company owns the property until the mortgage debt is repaid. The homeowner can then request a release of the lien.

 

Partial release of lien.

The partial lien releases occurs when small payments toward the total loan balance have been made. It is more common when contractors and subcontractors work together. Despite the payments made, the lien will remain on the property.

 

Who Files and Executes Lien Release?

 

Who Files and Executes Lien Release?

 

Generally, a lien is a contractor or supplier who places a lien on a property to ensure payment. For example, a lienor is a contractor or supplier who places a lien on a property owner’s property. In a mechanic’s lien context, we call the lienholder the lien claimant. About a mechanic’s lien, a lienor can be any of the following people:

  • The carpenter
  • The general contractor
  • An installer of drywall
  • An electrician
  • The framer
  • The roofer
  • Professional in the HVAC industry
  • The painter
  • The plumber
  • The landscaper

A lien release is generally submitted by the person who filed the original lien on the property after its payment. If the lienor has authorized an agent to submit the lien release, that agent can do so on their behalf.

 

Conditional vs Unconditional Lien Release

Debtors often want to know that their property will be released after they make their final payment on a loan when they are down to their last payment. Alternatively, lien holders may only want to release a lien once we receive the final payment. Conditional releases solve this problem.

A conditional lien states that the release is contingent on successfully clearing the final payment. The lien will remain in place if the final payment fails.

After filing an unconditional release, the lien on the property will be permanently released, and it cannot reappear.

 

Who Provides a Lien Release?

When a lien appears, the lienholder releases it. Sometimes this is a financial institution, a company, or a private contractor. Generally, once a debtor makes the final payment towards a loan to a lienholder, the lien will be automatically filed and mailed to them.

After receiving payment for the completed work, the contractor must file a detach of lien if he is a lienholder.

Sometimes, lien releases do not need filing, as liens may expire independently. The best way to get your lien release or find out who is responsible for providing it is to consult a lawyer familiar with liens and lien releases.

 

Is there any distinction between a lien release and a mechanics lien cancellation?

While many states refer to mechanics lien waivers as a “waiver and release,” there is a crucial distinction between a lien and a mechanics lien cancellation. Unlike a lien waiver, which waives lien rights before a claim occurs, a lien detaches, cancels, or removes a lien claim from the title of the property.

 

When do we need to file a lien release?

But there is a delicate trade between money and detachment. Owners, lenders, or general contractors want the money before the release, and claimants want the money before the release.

No one wants to surrender their leverage. So, what should you do? Make sure you have money before you file a lien release.

 

Is there a difference between the rules and processes for releasing liens based on the project’s location?

It has the same fundamental concept regardless of location, but it is often expressed differently regarding form, timeline, and (in some states) notice requirements.

 

When should we file a lien release?

Payment is usually received before a lien reveals itself, but the deadline can vary in states requiring lien detaches. The clock starts to run when we satisfy the underlying debt or receive a written demand to release the lien.

 

Is there a penalty if we make a mistake?

The consequences of making a mistake when preparing, filing, or sending notice of the lien release can be significant. They include fines, responsibility for damages, court costs, and attorney fees.

 

Can we file a new lien?

In practice, maybe, but probably not. If the mechanic’s lien deadline hasn’t expired yet, you might be able to do so. However, many lien forms include a statement declaring that the lien detachment is final once the payment has been made.

 

Can we need to file a partial lien release?

The partial liens release is only available in a few states, such as California and Oregon. There is a difference between a lien detach and a lien waiver, although many states refer to waivers as “lien waivers and detach.” This can cancel a mechanics lien claim that has already been filed.

 

What is a lien waiver?

Construction lien waivers remove any legal claim to money paid or owed during construction payments. A property owner may request this document before paying any of the contractors.

A lien waiver occurs between the paying party and the party receiving payment. At that point, the receiving party is releasing their claim to the amount they have received, making it impossible for them to file a mechanic’s lien.

An ongoing project requires a subcontractor to submit their first payment application. The subcontractor owes $2,500, and the contract is worth $40,000. In addition to their payment application, the subcontractor will sign a conditional lien waiver worth $2,500.

Once paid, their mechanic’s lien rights will no longer apply to that $2,500. The remaining $37,500 remains in their possession until we receive the next payment.

 

What are the different varieties of lien waivers?

Lien waivers come in two varieties – conditional and unconditional. They differ in their effective date.

If the party receiving payment receives payment, they waive lien rights for the amount owed. We can sign this document and mailed along with the payment application without much risk to the party receiving payment.

They can still file a lien if they don’t receive payment. They’ll no longer have any legal claim to the amount after they receive payment.

An unconditional lien waiver surrenders the claimant’s legal right to the amount immediately upon signing, regardless of whether they receive payment. This document is inherently riskier. We can only file a mechanic’s lien if the contractor signs one of these waivers and gets paid.

When is a conditional lien waiver appropriate? This is another distinction between these two lien waivers. Including one of these waivers with the payment, the application is usually best if applicable.

Before receiving payment, conditional lien waivers are safer to sign. When a subcontractor or supplier receives payment, is receiving payment at that moment, they should only sign an unconditional lien waiver. Again, they sound similar but are different types of liens with different purposes.

 

How do they work?

We cannot file mechanic’s liens with a lien waiver because the general contractor must collect from subcontractors before issuing payment. The general contractor wants to avoid filing a mechanic’s lien at all costs.

This is only effective after a claimant officially files a mechanic’s lien against the property. Mechanic’s liens attach to the property’s public record until a detachment has occurred.

 

When to use them?

It is common for contractors, subcontractors, and suppliers to fill out lien waivers at different points throughout a project until receiving final payment. When subcontractors and suppliers submit payment applications, lien waivers are usually close by.

In terms of lien, there is no specific deadline. They may be necessary during or even after the completion of a project. However, they will only be necessary once we have filed a mechanic’s lien against the property.

 

Lien management tools

The mechanic’s lien waivers and detaches, as well as the other documents involved in the project, are among the most important. These can significantly impact the project, the property, and the people involved.

A lien management software program is often the best option for organizing lien documents.

Contractors who pay subcontractors on time won’t have to worry about liens. We will also need to make payments on time to subcontractors and suppliers. In addition, users can track which payments are at risk of a lien and which ones are free and clear by collecting lien waivers electronically.

In addition to reducing the need to release mechanic liens, this management system can also protect project owners, general contractors, subcontractors, and suppliers from the occurrence of liens in the first place.

 

Conclusion

Understanding lien releases must be balanced, whether you’re a lienholder or a property owner. By completing this guide, you should be able to understand what a lien release is and how to obtain one. If you need help creating a lien detachment, contact the Attorney’s group.

Hedy Ghavidel

HEDY GHAVIDEL Managing Attorney  Roseville Office  1-866-471-6981  info@attorneysre.com Bio...

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