When payment has not been made on a project, such as constructing a home or commercial building, a contractor may put a lien on the property. This is known as a mechanics lien. To release this lien, you would use a Partial Release of Lien.
What is a Mechanics Lien
This is used by contractors, suppliers, and construction workers when payments have not been made for improvements or remodeling of a home.
What is a Partial Release of Lien?
This is a document that is like a receipt that you get when you have made a partial payment on a debt owed for labor or construction. It releases any lien that may be on the property currently and in the foreseeable future. The party that the funds are owed to is known as the Lienor and is the one who must complete the Partial Release of Lien, which then gets sent to the party who has paid the funds.
What is the Purpose of a Partial Release of Lien?
A Partial Release of Lien releases any mechanic lien claim on a property by reducing the amount that is claimed to be owed. It is used when a portion of the claim amount has been paid, but not the full amount. It is used by a lienholder to reduce part of the amount originally owed to a supplier, contractor, or subcontractor. It also protects the person being billed from a contractor trying to claim the full amount of the original lien now that it has been reduced.
You can download one of our free templates or samples to get a better idea of what should be on a Partial Release of Lien form.
How to Use a Partial Release of Lien
There are steps you need to take when using a Partial Release of Lien:
Notifying the Mechanic
Your first step is to make contact with the contractor, laborer, supplier, or subcontractor holding the lien to make sure they are able to begin processing an invoice or bill. The invoice needs to detail work that has been completed during the requested time period, the materials used, and the total amount that is being billed.
From here, they can begin creating a Partial Release of Lien, which needs to include:
- All details of any remaining payments
- An acknowledgment that, upon receipt of payment, the claim will be waived
- The rights of the current lien holder may retain for any future supplies, labor, and materials
- The remaining responsibilities and rights of the direct supplier, contractor or subcontractor
- The remaining responsibilities and rights of the responsible person or owner
- An indemnity clause that advises the owner is not held liable by a third party attempting to file a suit against the owner for any agreement of the leased property
- That the contractor, supplier, or subcontractor will adhere to the defense of the owner, both legally and financially, should a suit be filed?
Making Payment and Filing
The next step would be for the partial payment to be made. This should be done by check. It’s important to wait for the funds to clear before signing the document and having it notarized and recorded. All parties must sign the agreement. It must be acknowledged by a notary to become a legally binding document. It should also point out that the document itself is not a lien waiver or a lien modification. Your last step would be to file the document with the County Recorder’s Office.
Lien Release VS. Line Waiver
A lien release and lien waiver are two very different documents.
This document is used to waive the rights of aliens and would be used before the filing of a lien. When a lien waiver is submitted, it states that the party is waiving its rights to place a lien on the project. The person who is making the payment will generally request a lien waiver from the supplier, contractor, or subcontractor.
This document is used to cancel a previously recorded mechanics lien that has been filed in order to release the claim of the lien once payment has been received. For example, a mechanics lien is filed by a contractor for $50,000. The owner of the property pays $20,000. The contractor will then file a release of lien that shows the changed amount of the owed balance. This means that the original mechanics lien is now reduced to $30,000.
When a Lien Release Should be Filed
In most states, it is a strict requirement that the party, claiming the lien, release it formally once payment has been made. Depending on the state you are in, the deadline to release a lien is usually between 10 to 30 days from the date that the request for release was made. Some states, such as Maine, allow for 60 days, and others, like Washington, require an immediate response.
Free Form (Template)
Frequently Asked Questions
This depends on the state you are in.v For example, California requires 90 days from the completion of a project before filing a mechanics lien. Other states require 60 days.
Once you have made a partial payment, the contractor must create and sign a partial lien release that states the amount paid, what is still owed, and must sign the document to send as a formal receipt. This can then be filed to release the mechanic’s lien that was originally placed.
A mechanics lien can cost anywhere between $25 to $50 to file.