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Releasing lien before payment?

PennsylvaniaLien ReleasesMechanics Lien

A client for who we completed a full house renovation ended up losing money on the property and subsequently didn’t pay our final payment. We gave them over three months, during that time they completely ignored all correspondence. Once they received an offer on the property and the lien was found by the closing company they were forced to communicate with us. They gave a sob story about losing money and asked if we could negotiate from $7,232.00 to $4,000.00. I said absolutely not, but finally agreed to $6,500.00 to just be done with the situation. I sent an invoice and she responded with this email: Hi Diana, Sorry for the delay, I am just checking with our escrow company and waiting to hear. We would like to pay you part on card toward the invoice and then leave the rest until you submit the release of lien doc's to escrow. Does that sound ok? They will confirm they have the funds from us and will release them to you once she receives those. Does that sound ok? I just want both parties to feel ensured of getting as per agreement. Thanks! Stacey I have never had to file before so I’m a little uneducated on the subject, but this sounds strange to me. They already showed their intentions when they ignored us for three months until they received an offer and were forced to communicate. Should I stand firm with total payment before releasing? Thanks!

1 reply

Jun 15, 2018
That's an interesting situation. When a lien is filed, there's always an interesting tug of war regarding the timing of release and payment. As a lien claimant, it's healthy to be skeptical, too. Payment wasn't made on time in the first place, and without the lien claim, payment might never be made. So to release that leverage before acceptable payment has been made is risky business. A lien claimant may never have better leverage than when their lien is holding up a property sale, so it may make sense to withhold any release until after full payment (or at least an acceptable payment) has been received. On the other hand, if there's a satisfactory assurance that payment will be made upon release, that may be enough for some claimants. Ultimately, the timing of a lien release in conjunction with payment made is up to the lien claimant. But that decision will likely depend on the relationship with the party making payment and the willingness to pursue other remedies if final payment isn't made as promised.
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