Updated August 28, 2023
A Partial Release of Lien is a document that works as a receipt for a partial payment on a project, usually for construction or labor, for the release of any type of lien that may currently exist or will in the future. The form is to be completed by the Lienor and after it has been completed it should be signed in the county where the property is located with a notary public present. Afterward, the owner of the property may hold the release for documentation purposes in the chance that a Mechanics Lien is filed by the Lienor in the future.
Why Use a Partial Release of Lien?
While a traditional lien release completely releases a Mechanic’s Lien claim entirely, a lien holder would utilize a Partial Release of Lien to reduce a portion of the original amount owed to the direct contractor, subcontractor or materials supplier.
How to Use a Partial Release of Lien (4 steps)
- Notify the Mechanic
- Make a Partial Payment
- Download, Sign, and Notarize
- File with County Recorder’s Office
1. Notify the Mechanic
Contact the appropriate Mechanic to ensure they can begin the process of creating a bill or invoice. Invoice should include details of the work completed during that time period, what materials were used and total cost being billed. A Partial Release of Lien can then be drafted, to be inclusive of:
- Details of the remaining payments.
- Acknowledgment that the waiver of claims is contingent on the receipt of the funds.
- The future rights the currently Lien Holder Retains for future materials, labor or supplies.
- Remaining rights and responsibilities of the direct contractor, subcontractor or materials supplier.
- Remaining rights and responsibilities of the owner or responsible party.
- Indemnity clause advising that owner is held harmless against any potential third parties that may attempt a suit against the owner for any property released in agreement. The direct contractor, subcontractor or materials supplier would adhere to defending the owner financially and legally against filed suits.
2. Make a Partial Payment
The payment should be made by check and clear the financial institution prior to the form being signed, notarized and recorded. If payments are being made to the contractor and subcontractors or materials suppliers, a joint check should be issued to ensure all parties receive payment.
Release vs. Waiver
A Partial Release of Lien, releases an original Mechanic’s Lien claim moderately. The direct contractor, subcontractor or materials supplier would then have the reduced amount adjusted accordingly, while still maintaining the right to the lien until all funds have been received in full. Direct contractors, subcontractors and material suppliers may need to inquire with local legal counsel as a Partial Release of Lien may not be filed in accordance with various state laws. A Lien Waiver differs in that it would waive all rights prior to the Mechanic’s Lien being filed; this is usually done in exchange for payment. The waiver would serve as a receipt of monetary funds and the Lien holder would waive all rights to filing a future lien against the owner.