What is a Partial Release of Lien?
A partial release of lien reduces the amount claimed to be owed with regard to a recorded mechanics lien. Typical lien releases cancel a mechanics lien claim entirely, whereas partial lien releases only apply to a portion of the amount originally claimed to be owed.
Is a Partial Release of Lien a Partial Lien Waiver?
No. While they are often mixed up, lien releases and lien waivers are completely different documents that serve completely different purposes. Consequently, partial lien lien releases and partial lien waivers are distinct from each other. Confusion is not uncommon, however, because a lien waiver is sometimes referred to as “a waiver and release of lien.” Despite the overlap in terminology, waivers and releases are different documents with different functions.
A lien release (sometimes called a lien cancellation or a release of lien) terminates a previously recorded mechanics lien. Typically, a lien claimant will file a lien release to lift their claim in the improved property when the amount claimed in a mechanics lien is paid. Some states actually require claimants to release mechanics liens upon satisfaction.
As the name suggests, a partial release of lien (or partial lien release) partially releases a mechanics lien claim. In other words, it reduces the amount claimed to be owed. A partial release of lien is used when some portion of the sum claimed is paid, but not the entire sum.
For example, consider the following scenario. A contractor files a mechanics lien claiming the property owner owes him $100k. Then the property owner pays him $25k. The contractor files a partial release of lien reflecting the change in the balance owed. The original mechanics lien now claims a $75k stake in the improved property.
Want to download a free lien release (lien cancellation) form? Visit zlien.com/resources, select your state from the dropdown menu, and click “Forms” in the sidebar.
So What is a Partial Lien Waiver?
Unlike lien releases that cancel (or reduce) recorded liens, lien waivers waive lien rights before a mechanics lien is actually filed. Property owners, general contractors, and other top-of-chain parties typically request lien waivers from hired parties in exchange for payment. Lien waivers act as a receipt of funds for the receiving party, and specify that the party waives any future lien rights in the project related to that payment. This helps top-of-chain parties avoid payment disputes and double payment, for example, paying a hired party and also having a lien filed for that amount.
Partial lien waivers waive lien rights for a portion of the total contract value. For example, if a material supplier is expecting to be paid $30k for supplies delivered to a project but is to be paid in three installments of $10k each, they might sign a partial lien waiver for $10k for each payment received. Partial lien waivers are distinct from final lien waivers, which waive lien rights for the entire value of a contract rather than just for a portion of the amount to be paid. Final lien waivers are typically used when the final payment for a project is being exchanged, or when the entire sum is being paid at once.
Visit waiverexchange.com to access free lien waiver pdf forms and exchange lien waivers online for free.
For more on the distinction between lien waivers and lien releases, read “Lien Waiver vs Lien Release: What’s the Difference?”, or to learn even more about lien waivers, check out “The Ultimate Guide to Lien Waivers.”
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