A lien is a type of legal document that gives a creditor the right to claim a debtor’s property in the event that they default on their loan or debt payments. The lien ensures that the borrower will eventually pay off their debt or they will risk losing that property to the creditor.
For example, when a person takes out a loan against their home, the lender may file a lien on that property. If they default on their loan payments, then the lender can claim the home as a form of payment to make up for the missing money that is still owed.
A lien also serves as a notice to any potential buyers that the property has not yet been paid off and thus can be taken away by the creditor. This can make it very difficult for the borrower to sell their property. In fact, it is usually the case that the property cannot be sold if there is a lien on it.
A lien release, however, is when the lien holder relinquishes or removes the lien from the property, which essentially extinguishes their right to claim it. Aside from no longer having to make payments, the borrower will also be permitted to sell that property.
How Do I Obtain a Lien Release?
Many property liens are included in the terms of the loan contract. It is usually presented as one of the conditions that the borrower must agree to in order to obtain the loan. However, this is not the only way in which a borrower can have their lien released or discharged.
Some other ways to have a lien released include the following:
- Request a Lien Release Directly from the Lender: In some instances, the lender may agree to lift the lien at some point in the future when certain circumstances are present. This will basically be considered a form of debt forgiveness.
- Pay Off the Loan: A lien will typically be released automatically once the loan or debt is fully paid off.
- Request the Court to Intervene: There are some situations where the borrower may have to take legal action or file a lawsuit against the lender in order to have their lien released. The court can issue an order instructing the lender to release the lien.
- Request a Lien Waiver: A release is granted after there is already a lien in place. In contrast, a lien waiver can be contracted for during the signing of the loan. A lien waiver is essentially an agreement that states that the lender will not place a lien on the property as a means to collect payment from the debtor.
Lastly, it is important to keep in mind that most liens will expire automatically after 10 years. As such, a borrower should check the property records to see how many years the lien has been attached to the property in question.
In cases where the lien has already expired, the borrower might not need to request a release at all. Instead, they will be able to show proof that the lien is no longer enforceable due to the time lapse.
What If the Lender Will Not Release the Lien?
In most of these types of cases, the lender will need to take some steps to indicate that they are releasing a debtor’s lien. This might involve certain paperwork or documents that can serve as a statement demonstrating that they are in fact releasing the lien.
One common scenario is where a lender forgets or fails to officially remove the lien from the property title. When this occurs, the debtor’s title may reflect that there is still a lien on the property when in fact there is none. This is problematic because it can cause different issues to arise during future transactions that involve the property, such as not being able to sell it.
In general, lenders usually have 30 days to issue the lien release once the debt has been fully paid off. If the lender forgets to or refuses to release the lien and the document confirms that they must, then the borrower may need to take legal action and file a lawsuit against the lender. A lawsuit will then enable the court to issue an order that requires the lender to lift the lien.
Do I Need to Hire a Lawyer for Help with a Lien Release?
The process for obtaining a lien release can present certain challenges. This is especially true if the lender is not willing to cooperate. Thus, if you need assistance with any issues involving the lien release process, then you may need to contact a local foreclosure lawyer for help.
An experienced foreclosure lawyer will be able to review your lien release document, draft and edit one that has not been signed yet, and can perform various other legal tasks, such as negotiating with your lender in order to help you succeed on your claim.
Additionally, if you need to file a lawsuit or appear in court, then a lawyer will be able to guide you through those procedures as well.