If you’ve filed a mechanics lien, and eventually get paid before the enforcement deadline, congratulations! Now that you’ve got your money in hand, you’re ready to move on to the next project. But not so fast! You may still be required to release your lien claim. Just because a lien has expired doesn’t mean it has been removed from the books. In many states, once the claim has been satisfied you may be required to release the lien. A contractor or supplier who fails to release a lien by the deadline may be liable for fines and other penalties.
Learn more: Read the Guide to Lien Releases in Construction
Releasing a mechanics lien claim
A mechanics lien is a contractor’s most effective and powerful tool to ensure payment on a construction project. The thing with mechanics liens is that they are a process – not a one-off solution. Sending a preliminary notice, a notice of intent to lien, and potentially filing a mechanics lien is enough to induce payment.
The process is effective because the threat of filing a lien against an owner’s property is serious enough to have your dispute resolved. Enforcing a mechanics lien is a last resort option. Thankfully, if you follow the steps in the process, it usually doesn’t reach that point.
If you did need to file a lien claim, filing a lien release after payment is just good business practice. The release will help maintain business relationships; and it’s a good indicator of professionalism. Not only that – in some states, a lienholder who fails to release their claim after they’ve been paid can open themselves up to potential liability and penalties. Of course, as with all mechanics lien laws, requirements and timelines will vary depending on the state.
Failure to release a lien claim
The states that require the release of lien claims all provide a certain period of time to file the release. Failing to do so can, in most of these states, result in penalties and liability.
So what are the deadlines? What penalties could you be facing? These questions are answered below, but before we dive in, a crucial question to ask is, “When does the clock begin to tick on the lien release deadlines?”
State lien release deadlines & penalties
There are generally two broad categories:
- States that count from when the claim was satisfied (i.e. paid)
- States where the window opens once the lienholder receives a written demand to release the claim.
A lien release demand letter will typically come from the property owner, but can also come from the GC or any other party with an interest in the property.
Deadline based on payment
Arizona
In Arizona, the lien release deadline is 20 days after full payment has been made. Furthermore, if a prohibited lien has been filed against an owner-occupied, residential project, the release should be filed within 20 days of a written request.
If they don’t release their lien within the specified timeframe, the lienholder will be liable for a $1000 penalty and any actual damages incurred by the property owner. Also, the release should follow the same requirements for any Arizona document to be recorded. These requirements can be found in §11-480.
Arkansas
Once an Arkansas mechanics lien has been paid, the lienholder must file a satisfaction of lien within 10 days.
If the claimant fails to release the lien within the 10-day period, they will be liable for the owner’s actual damages, court costs, and attorney’s fees.
Kentucky
A Kentucky lienholder is required to file a lien release within 30 days from the date of satisfaction. The “date of satisfaction” is defined as the date of receipt of the full amount by certified check, cashier’s check, wire transfer, or some other form of satisfactory payment.
The penalties for failure to do so in Kentucky are steep. If not released within 45 days of satisfaction, the claimant will be penalized $100 per day, starting on the 15th day after the date of satisfaction. This penalty increases to $500 per day after the 30th day. However, the court must determine that the delay in releasing the lien was “without good cause.”
And that’s not all. The lienholder will also be liable for any damages incurred by the owner as well.
Maine
In Maine, a lienholder is required to file a removal of lien within 60 days of the satisfaction of the lien.
If the lienholder fails to release the lien by the deadline, they will be liable for any court costs or attorney’s fees associated with the removal of the claim.
Nevada
In Nevada, a lien claimant should record a discharge or release of notice of lien “as soon as practicable,” but no later than 10 days after satisfaction.
Failure to record a lien release by the deadline can cause the claimant to be liable for any actual damages incurred or $100, whichever is greater. Additionally, the claimant will be on the hook for court costs and reasonable attorney fees for the action to collect on the damages.
A specific form must be used to release a Nevada lien, the language of which can be found in the statute cited below.
Michigan
Under Michigan law, there is no specific statute governing how and when a lien release must be executed. However, there is a statute which states that, when a claim of lien has been paid in full, the claimant shall deliver a certificate to the owner stating that payment has been made and the lien has been discharged. Since lien releases are contemplated by this statute, it stand to reason that the lien should be released upon satisfaction.
There are no statutory penalties provided.
Ohio
After an Ohio mechanics lien has been satisfied, the claimant should file a lien release within 30 days of payment.
If the claimant fails to do so, they will be liable to the owner for all damages incurred, but the damages can’t exceed the amount of the lien claim and costs.
Oklahoma
When an Oklahoma mechanics lien has been fully satisfied, a discharge of lien should be filed immediately upon payment.
If the the claimant doesn’t release the lien, they will be subject to a fine of no less than $25, but no more than $100.
South Carolina
If a South Carolina mechanics lien is fully paid, the claimant, at the expense of the property owner upon satisfaction of the claim.
South Carolina doesn’t have statutory penalties for failing to release a lien. However, if the owner files a suit to have the claim released, the court may award costs and attorney’s fees.
Washington
According to the Washington mechanics lien laws, upon payment and acceptance of the amount of the claim, the claimant is required to immediately prepare and execute a lien release and send a copy of the release to the property owner.
If the owner files suit to compel the release, and the court determines that the delay was unjustified, the claimant will be liable for damages, court costs, and reasonable attorney’s fees.
Wisconsin
When a Wisconsin mechanics lien has been fully paid, the claimant is required to file a lien release within a reasonable time after satisfaction. “Reasonable time” will be determined by the court on a case-by-case basis.
Wisconsin’s penalty for non-compliance is severe. If the claimant fails to release their lien on time, the claimant will be liable to the property owner for half of the amount claimed in the lien.
Wyoming
According to Wyoming’s mechanics lien laws, when the debt securing the lien has been paid and satisfied, the claimant should file a notice of satisfaction and send the owner a copy of the filing within 30 days. The notice of satisfaction must be in the format outlined in §29-10-106.
Failure to release a lien within the 30-day timeframe, and after receiving a request to do so, will make the claimant not only liable for actual damages, but also 10% per day of the lien sum from when the demand was received. These damages cannot exceed $100 per day.
*Note: the deadline begins to count from the date of payment (satisfaction), but penalties won’t be incurred until a written demand is sent.
- See: Wyo. Stat. §29-1-313 & §29-1-314
Deadline based on written demand
Alabama
Once the debt underlying an Alabama mechanics lien has been paid off, the lienholder is required to file a satisfaction of lien within 30 days after the receipt a demand to release the claim.
Failure to meet the deadline will make the claimant liable for any actual damages caused, which will be no less than $200.
Colorado
After a Colorado mechanics lien has been satisfied, the claimant must release the lien claim within 10 days of the written demand to do so.
A penalty of $10 per day will be imposed for failing to release the lien within that time period.
Illinois
Illinois lien claimants must file a lien release within 10 days of a written demand for the release of the claim.
If a lienholder misses the 10-day deadline, the party will be liable to the owner for $2,500 and any costs or attorney fees incurred for pursuing that amount. In order for the release to be valid, it should contain the following notice in bold letters at least 1/4 inch height (meaning 18pt font):
“FOR THE PROTECTION OF THE OWNER, THIS RELEASE SHOULD BE FILED WITH THE RECORDED IN WHOSE OFFICE THE CLAIM FOR LIEN WAS FILED.”
Iowa
When an Iowa mechanics lien has been paid and satisfied, the claimant is required to file the acknowledgment of satisfaction of claim within 30 days after the receipt of a written demand to release.
If a lienholder doesn’t release the lien on time, they’ll have to pay $25 to the owner, and any actual damages caused by the remaining lien claim. An owner, after the 30 days have passed, may petition the court with a copy of the demand to have the claim removed.
Louisiana
If a Louisiana mechanics lien has been improperly filed or satisfied, the claimant should file a request for cancellation within 10 days after receiving a written demand.
If the claimant fails to submit the lien release within 10 days, they will be liable to the property owner for any actual damages suffered, along with reasonable attorney fees incurred in pursuing the claim to be canceled.
Mississippi
Under Mississippi law, once a lien has been fully satisfied, the claimant is required to file a lien cancellation within 15 days after receiving a written demand for cancellation.
If the lienholder doesn’t release the claim within the 15-day time period, they will be liable for actual damages no less than $500 per day, including any court costs and reasonable attorney’s fees.
Missouri
If a Missouri mechanics lien has been fully paid, the claimant is required to file an acknowledgment of satisfaction within 10 days after a request is received. Failure to do so will make the claimant liable for any actual damages, including the costs of the lawsuit.
Montana
A Montana mechanics lien claimant that has been paid in full, is required to file a release within 5 business days of the owner’s request for the release.
If the release isn’t filed on time, the claimant will be liable for any actual damages incurred and the costs of the action to collect. The release form should at least include (1) the clerk & recorder’s file number of the claim, (2) the date the claim was filed, and (3) the name of the lien claimant.
- See: Mont. Code §71-3-537 & §71-3-538
Oregon
Under Oregon mechanics lien law, if a lien claim has been fully satisfied, a lien release must be filed by the claimant within 10 days from when the claimant received a written request for the lien to be canceled. If the claimant fails or refuses to release the lien within the 10-day deadline, they will be liable for any actual damages incurred by the owner, or $500; whichever is greater.
South Dakota
In the state of South Dakota, once a mechanics lien has been satisfied by payment, the claimant is required to file a lien satisfaction within 10 days after written demand from the property owner. The lien release document must be executed in front of 2 witnesses and notarized.
If they fail to comply, the claimant will be liable for $100, plus all damages, costs, and expenses (including attorney fees).
Tennessee
Once a Tennessee mechanics lien claim has been fully satisfied, the lien claimant is required to file a lien release within 30 days after service of a written demand for the release.
If the claim isn’t released within those 30 days, the claimant will be liable for all actual damages, including court costs and reasonable attorney’s fees.
Texas
When a Texas mechanics lien has been paid and satisfied, the claimant must file a release of lien within 10 days after receiving a request for the release of the claim.
However, there is no penalty provided by the statute. That doesn’t mean that there are no consequences for failing to release it on time. The claimant may be liable to a general damages claim, which could be far worse than a statutorily limited penalty.
Utah
In the state of Utah, if a mechanics lien has been fully satisfied, the claimant must file a lien cancellation within 10 days of receipt of a written request from any party with an interest in the property.
If the claimant fails to submit the lien cancellation within those 10 days, they will be liable for $100 per day, or the owner’s actual damages; whichever is greater.
West Virginia
When the debt secured by a West Virginia mechanics lien has been fully paid, and the claimant receives a written demand to release the lien, the claimant is required to file a lien release upon receipt of the demand.
If the claimant fails or refuses to release the claim, the owner can motion the court to discharge it. The costs and attorney fees of the proceeding will be at the cost of the lien claimant.
- See: W. Va. §38-2-36 & §38-2-37
Deadline based on payment or demand
New Jersey
Upon satisfaction of a New Jersey mechanics lien claim, the claimant must file a satisfaction of lien claim within either; 30 days of payment, or 7 days from written demand by any party with an interest in the property. The lien release must contain the (1) filing date of the lien, (2) the book and page number, (3) the owner’s name, (4) the property location, and (5) the name of the claimant.
If the claimant fails to file the release in a timely manner, they will be liable for actual damages, court costs, and reasonable attorney’s fees.
States with no lien release requirement
These states don’t have a statute requiring that liens be released:
Alaska, California, Connecticut, Florida, Georgia, Hawaii, Idaho, Indiana, Kansas, Maryland*, Massachusetts, Minnesota, Nebraska, New Hampshire*, New Mexico, New York, North Carolina, North Dakota, Pennsylvania, Rhode Island, Vermont, Virginia, and Washington DC.
*In New Hampshire & Maryland, mechanics liens are court actions. The judge will direct the release of the claim.
Best Practice: Release your lien after payment
Even in states that don’t require one, or don’t have a strict lien release deadline, it’s a good idea to release your lien claim after being paid.
In fact, most final payments will be made in exchange for the release of the lien. Additionally, a property owner may still have a cause of action for any damages associated with the failure to remove the claim.
Moral of the story? Always release your lien claim as soon as you are paid.
