A mechanics lien is a very effective leverage tool during payment negotiations. Filing a mechanics lien gives you a very high chance of recovering payment from a non-paying client. The process for filing a mechanics lien may seem daunting, but its results will surely be worth the effort.
When a client finally produces payment, one last thing you have to do is to release or cancel your mechanics lien. This guide answers your basic questions about filing a mechanics lien release in Tennessee.
When to release a Tennessee mechanics lien
In Tennessee, a mechanics lien must be released when a lien has expired or has been forfeited, satisfied, or adjudged against the lienor. These conditions suggest the following scenarios:
- If you received the full payment for your mechanics lien claim
- If the deadline for enforcing the Tennessee mechanics lien has already passed
- If the mechanics lien is forfeited because of possible lapses in your compliance with the statutory rule
- If the mechanics lien is rendered null and void by a judge
If any of the scenarios above applies to you, you will have to file a Tennessee mechanics lien release. Also note that if you are releasing a mechanics lien because it has been satisfied and you have already verified that payment is on hand, you only have 30 days after lien satisfaction to release a mechanics lien.
A good benchmark for the 30-day deadline is the day you receive the written demand from the paying party to release or cancel the mechanics lien. Make sure that you file a Tennessee mechanics lien release before the 30-day period elapses.
Why do you have to release a Tennessee Mechanics Lien?
One of the many reasons why a mechanics lien is very effective in getting property owners to pay up is that a mechanics lien encumbers a property. A mechanics lien puts a burden on the property’s records as it reflects an outstanding debt that most buyers and financiers would not want to deal with.
A Tennessee mechanics lien, therefore, limits a property’s market value. This means that when it is no longer effective or when the debt has already been settled, it is only proper for any lien claimant to cancel the claim.
In states like Tennessee, releasing a mechanics lien is a statutory requirement. There are serious consequences that await you if you do not file a Tennessee mechanics lien release on time.
What happens if you fail to release a Tennessee Mechanics?
Failing to release a Tennessee Mechanics Lien could cost you a lot of money. You may be required to pay penalties and fines, and all other damages incurred by your mechanics lien on the property owner.
It is, therefore, very important for you to release a Tennessee Mechanics lien, especially if you have already been paid and the mechanics lien has been satisfied. Remember that you have 30 days after receiving a written request from a paying party to release a mechanics lien. Keep this deadline in mind to avoid having to spend more money after receiving payment from a client.
How to file a Tennessee mechanics lien release
1. Prepare the Tennessee mechanics lien release form
There is no statutorily prescribed Tennessee mechanics lien release form, but preparing one is fairly straightforward. A Tennessee mechanics lien release is a simple document that includes the following details:
- the clerk and recorder’s file number for the original mechanics lien that you filed
- the date when you filed the mechanics lien
- the name of the person from whom you are claiming payment
- your name and address
- a general statement expressing that you are releasing the mechanics lien
All the information above may be found in your original mechanics lien claim. Make sure that you append your signature in the document.
2. Record the Tennessee mechanics lien release
The Tennessee mechanics lien release must be filed in the same office where the original mechanics lien was recorded. There are costs associated with filing a lien release, so be prepared to shoulder the fees.
Do not forget about the 30-day deadline, especially if you are releasing a Tennessee mechanics lien after receiving a written request from the paying party. If possible, file the mechanics lien release as soon as you verify that you receive the payment. Remember that failing to make the mechanics lien release deadline could possibly cost you more money, so make sure to abide by this rule.
Even if you do not receive a formal written demand, you must still file a Tennessee mechanics lien release to clear a property’s records. You are still required by law to record a mechanics lien release when your claim has been duly satisfied.
Best practices when canceling or releasing a Tennessee mechanics lien
1. Release the mechanics lien as soon as applicable
You must cancel or release a Tennessee mechanics lien when your original claim has expired or has been forfeited or satisfied. As soon as these conditions apply to you, have a mechanics lien release template ready for signing and recording.
Canceling or releasing a mechanics lien as soon as possible allows you to fulfill a statutory requirement right away and move forward from your payment claim. Releasing a mechanics lien is the final step of the process, and you can start working on new projects once you finish this step.
2. Verify that payment has been cleared before releasing the mechanics lien
You must not release or cancel a Tennessee mechanics lien unless you are absolutely certain that payment is on hand. This means that even if you received a check or had a credit card transaction, you must still consider the fact that the check could bounce or the transaction could be rejected.
Filing a mechanics lien release in Tennessee is not easily reversible. Once you record a mechanics lien release, your mechanics lien loses its power and you will no longer have the leverage to get the paying party to complete the transaction. So before you sign a Tennessee mechanics lien release, you must first verify that you have the money.
3. Verify the accuracy of the details in your Tennessee mechanics lien release
Your Tennessee mechanics lien release forms do not require a lot of information, but you must still make sure that the names and the identification numbers are correct. You must cross-check to see if the file numbers of the mechanics lien are accurate, and avoid making simple mistakes such as typographical errors in names and addresses.
It is always a good idea to use a template, but you may need extra pairs of eyes to verify the details that you write on your Tennessee mechanics lien release forms.
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