A release of lien form removes the lien claim from the property in question, whether it's real estate, a vehicle, or something else. In the case of subcontractors, once they've received all payments for work completed, they must file a release of lien with an appropriate governmental office, depending on the jurisdiction and the type of lien. In most cases, liens eventually expire on their own at a date set either by law or by the terms of the lien itself, but it's required in some states to file a release of lien within a specific time frame following the last payment related to the property in question.
Liens are commonly used legal contracts to ensure payment in a variety of industries and situations. Individuals often use liens to purchase high-cost items like homes or vehicles. For example, the dealership from which the driver purchased their car holds a lien on the vehicle until the driver makes all payments. This way, if the driver stops making payments, the dealership has legal recourse and can repossess the vehicle.
Other industries use liens as well. For example, large construction projects that employ contractors and subcontractors often use special lien waivers and release of liens to ensure all workers get paid appropriately. In this situation, the subcontractor would file a lien waiver, or a claim against the real property, which uses the property as a security. Should the contractor not pay the subcontractors what they're owed, the subcontractors have a claim on the property, and they can go to court to seek foreclosure in order to collect their missing wages.
You must file a lien with your county's record office or courthouse for the lien to be official and legally binding.
Some people use the terms "lien waiver" and "lien release" interchangeably, but they're very different documents. Particularly if you're a contractor or subcontractor, it's vital to understand the difference between these two items and use them appropriately.
A lien waiver is a document that the contractor gives to the subcontractor along with payment. It's essentially a lien receipt, tracking the amount of money paid to the subcontractor, which they should then discount from the total of the lien. Depending on the length of the job and payment structure, some contractors present a lien waiver with each paycheck, which the subcontractor signs and returns. Others provide a single lien waiver with the last paycheck, indicating they have paid the subcontractor in full.
A lien release, by contrast, is the legal document described above, which the subcontractor files with the county, stating they have received their full payment and no longer lay a claim to the property.