My client / Homeowner is trying to refinance. We only recorded a notice of commencement for the project and never filed a lien. She works for an underwriter and is stating that the re-fi processor is insisting that the lien release must be recorded with the county clerk. All payments have been received in full and the contract is finished. Please advise
https://tinyl.io/4IFl
The owner is looking to file and record
a notice of termination of the notice of commencement
The owner must file it and reference the specific info, ie: recording office document book and page reference numbers and date of the notice of commencement
If no mechanics lien has been filed, then no mechanics lien release should be necessary. After all, there's no lien to be released anyway.
That being said, a recorded Notice of Commencement could pose an issue for a lender, refinance company, etc. who will take an interest against the property. With a Notice of Commencement on file, that lender won't have priority over a potential lien filed based on the filed Notice of Commencement. Thus, if a lien were filed for work done under that Notice of Commencement, the lender's investment would be put in jeopardy. For a detailed discussion on lien priority and why it matters: Lien Priority – What Happens When Everybody Is Trying to Grab a Piece from the Same Pie?
Still, filing a lien release for a Notice of Commencement doesn't make much sense. Instead, filing a Notice of Termination/Release of Notice of Commencement would seem much more practical. That document is specifically designed to clear a Notice of Commencement from the property record.
But, if the customer is absolutely insistent on receiving a lien release, and if you're inclined to help them out, filing a lien release shouldn't really be risky if full payment has already been received and if the job has been totally closed out.