i have files mechanic lien and customer want full release they pay 90 % only , rest 10% still needs to dleiver in 2 months, what my option.

4 months ago

lien release options.

Senior Legal Associate Levelset

I’m sorry to hear that it took a mechanics lien to force payment, but I’m glad that payment is on the way! There’s always a bit of friction when it comes to exactly when a lien should be released, and mechanics lien claims and retainage practices butt heads pretty frequently. Let’s look at (1) the availability of partial lien releases in California, and (2) creative options when a customer wants a lien release in exchange for less than full payment. Often, when a lien claim has been filed and the lien claim is partially paid, the party who made payment will want the lien released in part or in full. At the same time, a mechanics lien is the most powerful tool available to force payment – naturally, a lien claimant won’t want to give up their claim until it’s completely paid. So what gives? One option where a lien claim is partially paid might be to issue a partial unconditional lien waiver which indicates what amounts have been paid and what amounts remain. When a lien waiver is submitted (rather than when a lien release is filed with the county), there’s no official action taken with the lien claim. Rather, the waiver is a showing of good faith – it shows that payment has been made, and it might provide some peace of mind for a customer. If the unpaid amount continues to cause problems and the lien must eventually be enforced, the lien waiver would serve as proof that the lien was partially paid and it’d keep the lien claimant from trying to enforce their lien for the full amount of the lien claim (since partial payment was already made). Another option might be to try and file a partial release of lien which would release the mechanics lien filing in the amount that payment was made. This can be tricky, though – California, like most states, doesn’t specifically provide for the partial release of mechanics liens. So, while a lien claimant might file a document that very clearly indicates they’d like to only partially release their lien claim, there’s always a chance that the recorder or a court would treat the intended partial release as a full mechanics lien release. When a lien claim will be partially paid but the paying party requests a full release, another option might be to enter into an agreement with the paying party that guarantees payment will be made. By executing a written document like a personal guarantee or a promissory note, both sides can put their obligations in writing, and a lien claimant might be able to rest a little easier when releasing their lien since they’ve got a written and signed agreement in place that payment will be made. Obviously, in order to provide peace of mind, there would need to be a something in the agreement that creates a penalty for nonpayment – like a confession of judgment. These ideas are discussed in this article: Options Other Than Liens. Regardless of how it’s done, if some agreement is made to release a lien for less than full payment with some expectation of future payment, it’s crucial to have that agreement put to writing. Finally, if a lien claimant can’t get assurance that their lien will be paid in full, it’s important to remember that the claimant could always decide to leave their lien in place until they’re assured that final payment will be made. Granted, it’s worth remembering that there is a strict deadline to enforce the filed mechanics lien, and if a payment agreement isn’t reached before that time, the lien claim will either need to be enforced or it will expire (unless an extension agreement can be reached and filed prior to the deadline). Of course, it’s also worth mentioning that when a lien is filed and the deadline is approaching, sending a document like a Notice of Intent to Foreclose will threaten to enforce the filed lien if payment isn’t made – and that document can be helpful for payment standoffs that grow closer to the lien enforcement deadline. More on that here: What is a Notice of Intent to Foreclose? In negotiations for payment where a lien has been filed, it’d likely be helpful to consult a local construction attorney before deciding on how to proceed. They will be able to review the situation, look at any proposed documentation or deals, and advise on how best to proceed under the particular circumstances.

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