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What is a Waiver and Release of Lien?

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  • Written By: M. Lupica
  • Edited By: John Allen
  • Last Modified Date: 19 November 2016
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A lien is a security interest that is levied by a creditor on a debtor’s property in order to secure a debt. The creditor seeks the imposition of a lien on his or her debtor’s property for the amount the debtor owes. In the event the debtor sells whatever property to which the lien is attached, the creditor has a right to a portion of the payment to the extent of the amount of the lien. Liens are placed on such property to induce payment, and if such payment is made without selling the item then the debt is typically paid in conjunction with an execution of a waiver and release of lien. A waiver and release of lien completely releases the debtor’s property from the creditor’s security interest.

The imposition of a lien can arise out of various situations where a debtor owes a creditor money. Most commonly, the amount owed stems from a monetary award that has been granted in court for some reason, such as a personal injury action. As soon as the judgment is rendered, the court will impose a judgment lien on personal property owned by the defendant-debtor, which grants the plaintiff-creditor a security interest in that property in the amount of the judgment. Upon payment by the defendant-debtor in full satisfaction of the judgment, the plaintiff-creditor may sign a waiver and release of lien, fully releasing the property from the judgment lien.

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Depending on the situation, the waiver and release of lien may be conditional or unconditional. Typically a conditional waiver and release is signed prior to the creditor receiving payment and states that the lien is to be released immediately upon payment of some amount by the debtor to the creditor. An unconditional waiver and release is a type of agreement that does not include a provision for payment. Generally, this type of release is signed after payment has been made.

Further, there may be a different kind of waiver and release of lien based upon the portion of payments to be made that effects a release. In order to induce payment, the creditor may agree to remove the lien upon payment of a portion of the debt, rather than upon full satisfaction. He or she will perceive the payment as an expression of good faith that the debtor will make full and complete efforts to eventually satisfy the debt, and feel comfortable with removing the lien from the debtor’s property, which exists solely to compel payment.

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