What Is a Release of Mechanic’s Lien?
A release of mechanic’s lien is the form that legally records the end of a lien that a contractor or subcontractor placed on a property after not receiving payment for their work.
If the property owner doesn’t pay the correct amounts on the schedule explained in the construction contract, then the contractor has the right to place a lien on their property. Once the owner pays, the contractor will file a release to remove the lien.
How Is a Release of Lien Different From a Lien Waiver?
The difference between a lien waiver and a release of lien lies in when and why each document is used. Generally, lien waivers are preventative, while lien releases cancel an existing lien on property.
For example, a contractor might use a lien waiver with their subcontractors before work begins to ensure they don’t place a lien on the property in case of payment delays. On the other hand, a contractor and owner may sign a lien waiver after the project to legally acknowledge that the work has been completed and paid for.
Contractors and subcontractors only use a release after placing a lien on the property, employing it to get rid of the lien once all payment issues have been resolved.
How to Release a Mechanic’s Lien
If you have not been promptly paid for your work on a house, you can place a lien on the property by filing a notice of intent to lien and then the lien paperwork itself. The legally required time between the notice of intent and the actual lien differs from state to state. Understanding your state’s deadlines is important because failing to file a lien in time means losing your right to do so.
A release is the most common way to remove a lien after it is in place. Follow these four steps to proceed with the release of a lien.
1. Negotiate with the Property Owner
First, reach an agreement with the owner on how they should pay what they owe you. The owner will likely reach out after receiving notice of either your intent to lien or the lien itself. They may offer a settlement amount or ask for a new payment plan, citing factors like financial hardship or the cost of foreclosure to strengthen their argument. You can work off their initial offer to build a counteroffer and eventually reach a settlement.
In the negotiation phase, both parties decide on the terms of the release. Documenting the eventual agreement in writing benefits both parties, ensuring that you receive payment on your clearly agreed-upon terms and they get the release needed to eventually sell their house.
2. Receive Payment
While you and the owner may want to resolve the issue as soon as possible, you want to get paid, and they don’t want a lien on their house — wait for their payment based on the new terms. The owner may give you a lump sum or installments over time.
Make sure you receive all payments before you file the official release. Once you release the property lien, the owners no longer have a legal incentive to pay you back. The release effectively states that the materials and labor have been paid for and that you are giving up your right to file a lien for this project, limiting your legal options if the owner still doesn’t pay.
3. Fill Out the Release
Once the owner pays, complete your release form in the Legal Templates document editor with the following information:
- State and county where the property is located
- Names and addresses for both parties
- Address and legal description of the property
- Details of the lien, such as where and when it was filed, including a reference to the case file number
- Statement confirming payment amount and releasing the lien
- Your full name and signature as the contractor holding the lien
- Notarize the release in order to ensure its validity
Your state determines how long you have to file the release once the owner pays their debt. Look up your state’s regulations in advance to find out the deadlines that apply to your situation.
4. Record the Release
Finish by recording the release, usually at the county clerk’s office where the property is located. You may also need to file a copy of the release at the county courthouse. While most states do not require notarization on lien releases, you will need a signature and statement from a notary in Mississippi (Mississippi Code 1972 Annotated § 85-7-433) or Wyoming (Wyoming Statutes § 29-10-106).
Sample Release of Mechanic’s Lien Form
If you need to learn how to format a mechanic’s lien release form, view our sample below to see what types of information to include. Then, use the Legal Templates document editor to customize and download your form in PDF or Word format.
