Real Estate

Protect Your Home, Always Ask for a Lien Release

Protecting your home is your responsibility. You lock the doors at night, take care of minor repairs right away and choose professionals who are trustworthy. But did you know that one of the best ways to secure your home is to always ask for a lien release? Sure, it seems like an extra step when dealing with contractors or any other projects involving work on your property – but in the long run, guarding yourself against potential liens could save you lots of money and heartache.  According to the Lifetime Exteriors website, here’s what you need to know about a lien release:

What is a Lien Release                                         

A lien release is a legal document that serves as proof of payment for a service or goods. When someone contracts a job or purchases items, they must provide payment before they can take ownership of the product. Once payment has been made, the lien holder, typically the provider of the services rendered, will then provide a release form known as a lien release which states that all payments for services or goods provided have been received.

Types of Liens

Liens come in two main types- voluntary and involuntary. Voluntary liens require an agreement signed between the borrower and any lender holding a stake in the property, such as your first mortgage note, home equity loans, or home equity lines of credit. These liens are secured until they are paid off when the loan is satisfied or with the sale of a home.

On the other hand, involuntary liens can be something like a judicial decision against an individual, a mechanic’s lien, or even an IRS tax lien. Here- even though it is not willingly entered into–the homeowner’s asset serves as collateral for the right of debt payment to lenders. For example, if somebody owes you money for breach of contract and can’t pay off the entire amount, then having them sign off a voluntary lien to guarantee your rate of return might be your best option.

How a Lien Release Can Help Secure Homeowners

Still not sure how a lien release helps protect your home? Here are a few insights;

  • Protection against Unpaid Debts

If you’re purchasing a property where the previous owner had an outstanding obligation that has not yet been paid, the payment must be made before a clear title can be conveyed to the buyer. A lien release does this- it legally transfers debt from current holders to the individual released from such obligations, thus allowing for debt-free ownership of said property.

Protection against Fraudulent Claims

A lien release can be a pivotal factor in securing homeownership. It serves as a safeguard against potentially fraudulent claims, protecting the property that you worked hard to obtain and ensuring that your home remains yours and only yours.  It clears the right path for you to obtain full ownership of your home after paying off any debts you owe. Afterward, you won’t have to worry about another claimant laying claim to your most valued asset.

Avoid Litigation and Court Costs

Securing a lien release can make all the difference if you’re hoping to avoid the time-consuming, expensive process of litigation and costly court appearances. This document provides welcome relief by verifying that liens are no longer owed to creditors, meaning you are free to move forward with plans previously overshadowed by lien-related concerns. With a lien release granted, purchasers and banks will gain the confidence that an unresolved debt is out of the picture, allowing transactions to go through without delay.

Keeps Ownership Obligations Clear

A lien release can help you secure ownership by keeping the expectations and responsibilities regarding the property clearly in sight. Such a document provides an invaluable safeguard for you by ensuring that all the necessary paperwork has been handled and that there won’t be any surprises down the line. It’s almost like an insurance policy against legal obligations.

Preservation of Credit Rating

You can work with an experienced professional to secure the necessary paperwork that will officially clear you of any past debt obligations associated with your property. A lien accrues when a creditor believes a debt is due to them and secures legal claims on the home as security. However, by obtaining a lien release, you can eliminate this potentially burdensome encumbrance and safeguard your credit rating in the long term. A lien release helps you relieve existing debts so you don’t have to worry about future liens being placed on the same property.

Lien releases are essential documents that provide important protection for homeowners. Always ask for a lien release if you’re embarking on any work involving your property, and make sure you get it in writing. Doing so will assure you that your home is safe from unpaid debts, fraudulent claims, or litigation.

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