If you don’t intend to enforce your mechanics lien claim, best practice is to formally remove the lien.
Most mechanics lien claims are paid without the need for foreclosure or enforcement action. When a lien does not result in payment, the claimant has several questions to ask him or herself:
- Should I and can I file a mechanics lien extension?
- Should I file a lawsuit to enforce the mechanics lien?
- Should I give up and let the mechanics lien claim alone?
This blog post focuses on the last option, choosing not to pursue your lien claim further.
Reasons To Let Your Mechanics Lien Claim Go Away
Mechanics lien claims are effective. They usually result in payment, and if they don’t get you paid, there are many reasons to proceed with a foreclosure action and be optimistic about payment. Sometimes, however, you just want to give up on the claim.
Why would you want to give up on your claim?
Maybe the value of the mechanics lien isn’t big enough to support legal action, or to put it more simply, the “juice isn’t worth the squeeze.” Or, maybe you have a great relationship with a contractor who can’t get money from a property owner, and you decide to just not pursue the claim.
Sometimes, its just the right decision to give up on a particular claim or debt and move on to greener pastures. If that’s your decision, you may need to handle your mechanics lien claim.
Removing a Lien Claim After the Lien Expires
In most circumstances, it is highly advisable to formally release a mechanics lien claim if you do not intend to pursue it.
There are some states that absolutely require the formal cancellation. These states have laws on the books that require lien claimants to file a “lien release” document with the recorder’s office after a mechanics lien expires. There is no real enforcement mechanism to these laws, except that a property owner could later file a lawsuit to have the lien removed and cite the claimant’s failure to release it.
The states that do not have a formal cancellation requirement written into its statutes, however, are not much different from those that do.
Visit zlien.com/resources and select your state to see its lien release laws.
After a mechanics lien expires, the claim itself is not automatically stripped from the county’s records. County recorders record. Rarely do they un-record. Even a cancellation (or release) is a recording, not an un-recording.
Therefore, anyone doing a title search will stumble upon the mechanics lien filing, even if it is expired. And even though the lien claim may be expired, the title searcher will likely not feel comfortable with the existence of this document unless a cancellation is lodged. Really, there is good reason for this, as there is no easy way to know if the document was lien enforced or not.
So, the property owner will – at some point or another – need that mechanics lien document off the books. The property owner may ask nicely that you do this, or they may file a lawsuit to have the mechanics lien document formally released…and when they do file this lawsuit, it will be against the lien claimant and allege that since the lien is still of record and formally expired, it is “frivolous” and “slandering title.”
You’ll lose this court battle and you may be responsible for costs, attorney fees, and possibly statutory penalties! It’s a terrible situation to be in and one very, very easily avoided. If you’re giving up on a mechanics lien claim and not pursuing it, release the mechanics lien.