What is release of lien

Quitclaim deeds are an easy way to convey property to another, but be careful, as there may be unknown title issues that may arise. Learn more about quitclaim deeds and how to use them. When you want to convey, or transfer, real property to someone else, either by sale, gift, or by court order, you must do so by using a written document that satisfies the requirements of the law in your state. This document is either a bargain and sale deed, a warranty deed, or a quitclaim deed.

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Resources Real Estate Property Owners Understanding Your Lien Release Understanding Your Lien Release When the time comes to get a lien released, it's important to be sure that the lien release form is appropriate to the situation, and that it complies with state law.

A lien is a legal way to secure the payment of a debt. What Are Liens, Waivers, and Releases? A lien gives the creditor certain rights over the property of the debtor until the debt is paid. It's important to understand that liens are governed by state law, which varies from one state to another. Some states don't permit lien waivers at all. Get help managing your lien. Contents 3 min read Get help managing your lien. About the Author Edward A. Related Topics. Facebook Twitter.

In all other states, these forms are left up to the parties. Many times the lien waiver process can be abused by including the waiver of additional rights or claims. Need a Lien Waiver? A lien release is used to cancel a lien that has already been filed.

Lien releases are also referred to as a release of lien, cancellation of lien , or a lien cancellation. These are typically used to cancel the filed claim from public records.

True, liens will expire if not enforced within the required timeframe. Anytime a lien claim has been fully paid and satisfied, and lien release should be filed. Although the form varies slightly from state to state, there is some general information that should always be included. Such as:.

These lien release forms are filed in basically the same fashion as the lien claim itself. Once the debt underlying the lien claim has been satisfied, the lienholder is typically required to formally release the claim.

In fact, there are a number of states that explicitly requires the claim to be released within a certain timeframe. The deadlines for releasing a lien vary by state. Most states require that liens are released within days of satisfaction or the date written request for release was received.

Of course, there are exceptions. Failure to do so on time can lead to some steep penalties and additional liability. Besides, you will likely be asked to do so by the property owner anyways. Need to cancel your mechanics lien? Being able to distinguish between these two documents is incredibly important when managing your lien rights. While the ultimate goal for each is the same, taking mechanics liens out of the picture, the difference is crucial.

The homeowner may not even know that the tradesperson did not get paid by the general contractor; however, the property was improved by the efforts of this tradesperson, so the claim is legitimate.

The real problem arises when the tradesperson asks the homeowner to pay the debt. If the homeowner can't, or won't, the subcontractor can go to court and ask the court to foreclose on the property in order to raise the money. In order to protect yourself against this troubling scenario, the best practice is to adopt the use of Lien Waivers also known as release of lien, mechanic's lien release form, or Mechanic's Lien Waiver and use them preemptively, before the problem arises.

How do you do that? We provide a Lien Waiver that you can print and use immediately. Fortunately, it's a simple process. A Lien Waiver is similar to a receipt. It basically states that you've paid the subcontractor what is owed, they accept the payment in full, and they waive the right to put a lien on your property. Simply present this form to the subcontractor with your payment and ask them to sign it.

In most cases, liens eventually expire on their own, but it's required in some states to file a release of lien within a specific time frame following the last payment related to the property in question. Liens are commonly used legal contracts to ensure payment in a variety of industries and situations. Individuals often use liens to purchase high-cost items like homes or vehicles. For example, the dealership from which the driver purchased their car holds a lien on the vehicle until the driver makes all payments.

This way, if the driver stops making payments, the dealership has legal recourse and can repossess the vehicle. Other industries use liens as well. Large construction projects that employ contractors and subcontractors often use special lien waivers and release of liens to ensure all workers get paid appropriately. In this situation, the subcontractor would file a lien waiver, or a claim against the real property, which uses the property as a security.

Should the contractor not pay the subcontractors what they're owed, the subcontractors have a claim on the property, and they can go to court to seek foreclosure in order to collect their missing wages. You must file a lien with your county's record office or courthouse for the lien to be official and legally binding. Some people use the terms "lien waiver" and "lien release" interchangeably, but they're very different documents.

Particularly if you're a contractor or subcontractor, it's vital to understand the difference between these two items and use them appropriately. A lien waiver is a document that the contractor gives to the subcontractor along with payment. It's essentially a lien receipt, tracking the amount of money paid to the subcontractor, which they should then discount from the total of the lien.

Depending on the length of the job and payment structure, some contractors present a lien waiver with each paycheck, which the subcontractor signs and returns. Others provide a single lien waiver with the last paycheck, indicating they have paid the subcontractor in full. A lien release, by contrast, is the legal document described above, which the subcontractor files with the county, stating they have received their full payment and no longer lay a claim to the property. Lien releases might look different and require specific information and supplementary materials depending on the industry and type of property it represents.

Consider these four common types of lien releases:. Most release of lien forms are drafted before the start of the project and then filed once work has finished and payment has been made. Release of lien forms can be either conditional or unconditional, which significantly impacts their value.

Contractors and subcontractors usually agree on one of four standard payment schemes, lien waivers, and lien release forms:. If you're subcontracting on a construction job, ensure your lien appropriately protects you by taking these precautions:. Image via Unsplash by jessedo The process for obtaining a release of lien varies from state to state or county to county. Most record offices, though, follow a similar set of procedures.