What is a Release of Lien?
A release of lien , or simply called a lien release, is a legal document that lifts a previously filed lien on a property, vehicle, or another asset.
Liens are filed as a form of collateral when one party owes another party a debt. If the debt isn't paid, the party who filed the lien has the legal right to seize and sell the debtor's property to satisfy the debt.
When a debtor pays their debt in full, the party who filed the lien is required to release the lien. It is essential that the debtor receives the proper lien release to ensure they are the rightful owners of their property.
If the party who filed the lien fails or refuses to release the lien, the property owner can take legal action and file a lawsuit to compel the removal of the lien.
How to Get a Release of Lien?
The simplest way to get a release of lien is to pay off the debt owed to the lienholder. Depending on the type of lien and the property or asset that the lien involves, the process for a lien release differs. Your local laws will also govern how lien releases are obtained, so it is best to consult with a knowledgeable lien lawyer familiar with local laws regarding liens.
Step 1: Prepare the correct forms. Depending on the type of lien and type of property, the forms to release your lien will differ. In the case of a contractors or mechanics lien , the form is usually prepared when the contract is made.
If you are seeking to remove a lien from a vehicle, the lender will typically send the release of lien once the loan is paid in full. It can take up to thirty days to receive the title and the lien release after the final payment. If you do not receive the lien release from your lender, your local DMV will most likely have specific forms to fill out.
Step 2: Signatures. A release of lien will need to be signed and dated by all parties to be valid. Most states require that this form be notarized as well.
Step 3: File the release of lien. Just like a lien, a release of lien also needs to be filed. For property, this will be filed with the county recorder, and for vehicles, you may only need to file the document with the DMV.
It is essential that your release of lien document is accurate, filled out correctly, signed, notarized, and filed with the correct entity. We recommend hiring a contract or property lawyer to ensure there are no mistakes.
What Information is Included in a Release of Lien
The information that must be included in a release of lien will vary depending on the type of lien, who filed it, and what type of property is in question. Although these forms will vary, the same basic information will be required, including:
- Names and information of both parties
- Description of the property subject to the lien
- Total amount paid
- Date of payoff
The lien release document should also include the filing information from the original, like the date the lien was filed, the county it was filed in, and all identifying and recording numbers assigned to the original lien.
It is important to note that the lien release must be filed in the same county as the original lien.
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Types of Liens
The type of lien release you will get depends on what kind of property is in question and who filed the original lien. The four most common types of lien releases are a mechanic's lien release, an IRS lien release, a mortgage lien release, and a partial release of lien.
Mechanic's lien release . A mechanics lien release, also called a contractor's lien release, is filed when a contractor is waiting for payment on a project. This lien is often filed on real estate, and the lien release document is usually drafted and agreed upon when the contract is formed.
IRS lien release. IRS lien releases are used when the IRS files a lien on a party's assets. The release will not be issued until the debt is settled.
Mortgage lien release . When a person secures financing for a home, the lender owns the house until the mortgage is paid off. Once the payments are complete, the homeowner can file for a release of lien on their property.
Partial release of lien. A partial release of lien is filed after small payments towards the total loan balance have been paid. This type of release is more often used between a contractor and a subcontractor. The lien will remain on the property, but it will be for a reduced amount to reflect the payments that have been made.
Conditional vs. Unconditional Release of Lien
When a debtor is down to their last payment on a loan, they often want the security of knowing that their property will be released after their last payment is made. On the other hand, the lien holder often doesn't want to release the lien until the final payment is made. A conditional release of lien solves this issue.
A conditional release of lien will state that the lien release is contingent on the final payment clearing successfully. If the final payment isn't made, the lien will be reinstated.
An unconditional release will entirely remove the lien from the property, and it cannot be reinstated once the release is filed.
See Release of Lien Pricing by State
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- District of Columbia
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
- Wisconsin
- Wyoming
Who Provides a Lien Release?
The lienholder generally provides a lien release. Sometimes this is a financial institution, a company, or an individual contractor who completed work and filed the lien.
If the lienholder is a financial institution like a bank, the lien release will often be automatically filed and mailed to the debtor once the final payment towards the loan is paid.
If a contractor is a lienholder, after receiving payment for the completed work, the contractor will be required to file a release of lien with the same government office where the original lien was filed.
Many states have laws requiring lien releases to be filed within a certain amount of time of receiving the final loan payment. In some cases, a lien will expire on its own, requiring no action.
If you are unsure of how to obtain a lien release or who is responsible for providing your release, it is best to consult with an attorney who is familiar with liens and lien releases.
Get Help with a Release of Lien
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