Waiving lien rights or releasing a lien… it can be easy to mix up these concepts. But when it comes to lien rights, it is extremely important to understand the distinctions. However, lien waivers and lien releases are completely different. Let’s repeat that just so there’s no confusion:
Lien Waivers and Lien Releases are 2 completely different documents!
What follows is a super-simple breakdown of the 2 document types.
A lien waiver is used to waive lien rights – before any lien is filed. A lien waiver happens before a lien is actually filed. The party submitting a lien waiver is stating that they waive the right to lien against the project.
Generally, the party making payment will request that a subcontractor, supplier, or another party they have hired, sign a lien waiver in exchange for payment.
Lien waivers work a lot like receipts, and lien rights are waived for the amount of money set forth in the waiver. For example, a party receives $1000 in payment, and then they waive $1000 of lien rights.
Essential Reading – The 4 Waiver Types
Lien Release (aka Lien Cancellation)
A lien release is used to cancel a lien that has already been filed. If the claimant receives payment and wishes to cancel a previously filed lien, generally he or she will file a lien release (also known as a release of lien or cancellation of lien). This action releases the claim of lien from the property in question.
When to File a Lien Release
Most states strictly require that the lien claimant formally release the lien after payment has been received. Even if it is not required by your state, it is best practice to release the lien if you don’t intend to enforce your claim as soon as payment clears.
The deadlines for releasing a lien vary by state. Most states require that liens are released within 10-30 days of satisfaction or the date written request for release was received. Of course, there are exceptions. Maine provides a longer acceptable timeframe (60 days from satisfaction), while Washington’s statute says that a lien release is due immediately upon satisfaction or written request.