As a member of the construction industry, you deal with lien releases on a regular basis. But have you ever stopped to consider exactly what a lien is or what it does? And if so, what are you doing when you “release” a lien?
What Is A Lien Release? In A Way, It’s Like A Home Mortgage
A lien, simply, is a security interest in real estate like land and buildings on the land. If you properly file a lien, you’ve secured your interest in being paid against that property. The simplest example of this is your home mortgage. You owe the bank money because they lent you the money to buy the house and property. They file this debt owed in the property records to show they have a security interest in your home. This prevents you from selling your home until the bank is repaid. Once you repay the debt, the security interest is release and you receive the title to the property.
In the construction industry, a lien you file is not for money you lent the land owner but for payments you are owed for work you performed or materials you supplied that benefited the land. Much like the mortgage example, once you are paid for the work or materials, you release the lien.
Releasing A Lien Can Have Consequences Beyond What You Intend
It may sound simple but releasing a lien can have consequences beyond what you intend. For example, you may file multiple liens for several payments you are owed as the project has progressed. You receive payment which covers some of the debt owed, but not the entire debt. Should you sign and file a lien release?
Make Sure the Language of the Release Reflects Your Intent
It depends. The lien release should only be limited to release the liens to the extent you have been paid. Many lien releases contain language releasing “any and all claims” and, upon filing, release all liens including those you did not receive payment for. Lien releases come with various titles such as Conditional Waiver and Release, Unconditional Waiver and Release, Progress Payment Release, or Final Payment Release. Regardless of the title, make sure the language of the release reflects your intent.
You will likely be asked to sign lien waivers in exchange for receipt of payments, even when you have not filed a lien. By signing, you are giving up your future right to file a lien against the property in exchange for receiving money you are owed. This is a standard protection owners and contractors use to create proof of payment and prevent the filing of false liens.
Only Sign A Lien Waiver If It Correctly Reflects Your Agreement
With the many types of lien forms and procedures, the simple answer is that you should only sign a lien waiver if it correctly reflects your agreement. At the beginning of a project, you may sign a conditional waiver that only waives your rights to the extent you are paid. You still can later file a lien if you can prove you have not been paid money you are owed. Some lien releases are limited and exclude open claims, such as disputed invoices, and provide a space for those open claims to be listed as excluded from the release. At the end of your work, you may sign a final payment release which prevents you from filing of any liens against the property ever, in exchange for final payment. It’s okay to sign such a final release if, in fact, you are receiving the last of all money you are owed or will be owed in the future for the job.
Whether you should sign a lien release must be made on a case by case basis. Read each release before you sign it to make sure reflects your agreement and you are not giving up any more rights that you must. Avoid language such as “any and all claims” and instead limit it to “lien or payment claims”. If it’s not a final payment release, make sure the release is limited only to the extent you have received the money you are owed. It takes an attention to detail and diligence, but when it comes to being paid, don’t get tricked. And, as always, when in doubt consult a lien attorney or other expert service.
Frequently Asked Questions
What is a mechanics lien release?
A mechanics lien release is a written document, typically recorded with the same county recorder where the original Claim of Lien was filed, that formally discharges the lien from the property's chain of title. The release removes the lien as an encumbrance against the property, allowing the owner to freely sell, refinance, or obtain new construction financing. Releases are typically required at the end of a payment dispute — either when the underlying claim is paid in full, when the lien has expired by statute, or when the parties have settled.
When should I file a lien release?
File a lien release ONLY after: (1) the underlying payment has been received AND has cleared your bank (not just deposited — actually cleared); (2) any settlement agreement has been signed and the settlement payment has cleared; (3) the lien has been bonded off by the property owner under state law; or (4) the lien has expired by statute (e.g., past the foreclosure deadline). Filing a release before payment clears can lose lien rights without securing payment — a particularly painful loss because the lien itself was the leverage that should have produced the payment.
Can I be required to release a mechanics lien before payment clears?
Some settlement agreements require the lien to be released contemporaneously with payment delivery (sometimes through an escrow arrangement). In these scenarios, the release should be held in escrow by your attorney or a neutral third party until the payment has actually cleared. Alternatively, the parties can execute a CONDITIONAL release that takes effect only when payment clears. Never file the unconditional release into the public record before payment has cleared — once filed, the lien is discharged regardless of whether the payment ever arrives.
What is the difference between a lien release and a lien waiver?
LIEN WAIVER: signed BEFORE the lien is recorded — typically as part of progress payment exchanges to prevent the lien from ever being filed. Lien waivers release the underlying right to file a lien for the specific work covered. LIEN RELEASE: signed AFTER the lien has been recorded — formally discharges the recorded lien from the property's chain of title. Lien waivers are exchanged during the project; lien releases are recorded at the end. Both must be carefully timed to avoid losing rights before payment is received.
What contents are required on a mechanics lien release?
A valid mechanics lien release typically requires: (1) identification of the original Claim of Lien being released (recorder's instrument number, date of recording); (2) the property's legal description; (3) the claimant's name and signature; (4) the statement that the lien is fully or partially released; (5) the date of release; (6) notarization or acknowledgment as required by state law. Some states require specific statutory release forms (similar to lien waiver forms). Defective releases may not actually discharge the lien from the property — verify with state-specific counsel.
What happens if I record a lien release but the payment fails?
Once a lien release is recorded with the county, the lien is discharged from the property's chain of title — even if the underlying payment fails. The lien cannot be 're-attached' simply by un-recording the release. Some courts will set aside the release under equitable doctrines (fraud, mutual mistake, failure of consideration) if the release was executed in reliance on payment that didn't clear, but the legal hurdle is high and the litigation cost often exceeds the underlying debt. Practical rule: never record an unconditional release until payment has actually cleared your bank.
How does National Lien & Bond help with lien release timing?
National Lien & Bond reviews lien release timing for unpaid contractors BEFORE the release is signed or recorded to ensure: (1) the underlying payment has actually cleared the bank; (2) the release scope is limited to the amount paid; (3) any settlement contingencies are satisfied; (4) the release form complies with state statutory requirements. For Illinois-based engagements, Hal Emalfarb's firm at Emalfarb Swan and Bain handles direct review. For 50-state coverage, NLB's network attorneys verify state-specific compliance and coordinate escrow arrangements where appropriate. Contact NLB for a free initial consultation.