Having a lien on a property is problematic.
Having a lien that won't be released by the creditor is an even greater problem.
When a debt has been paid, (this is normally a tax debt) the creditor who owns that debt is supposed to release the lien.
If this doesn't happen and the lien remains, a second debt payment may be requested upon the sale of the home.
That's why knowing how to get a lien release is so important.
The first thing you must do is save all payment records regarding the lien and when it was completely eliminated.
Without records of payment, it may be impossible to prove that the lien was ever cleared.
Always send payments through a certified channel and use a method of payment that leaves a paper trail to further protect yourself.
Then you'll be able to follow these additional steps.
1. Ask the Creditor to Send the Release.
Most of the time a lien release will happen with a simple phone call.
Just contact the creditor, explain that you paid the debt and have the records to prove it, and that you'd appreciate the documentation that proves the lien has been released.
Most will be happy to oblige the oversight.
Some contractors or mechanics who have placed the lien may not even know that they had to file the release. Be persistent in this.
For the first 3 weeks, call 2x per week and request updates to the status.
2. Request the Lien Release in Writing.
If you have gone through the 3 weeks of effort with a creditor and this work has not resulted in a lien release, then it is time to officially request one in writing.
State in the letter that you are requesting the lien release, that you have already submitted payment to clear the lien, and include proof.
Send this request via certified mail or through a method that allows for delivery tracking.
You may need to wait up to 15 business days for this process to begin.
3. Speak to the Federal Deposit Insurance Corporation (FDIC).
The FDIC has the ability to issue a lien release for homes, vehicles, and boats that have a cleared lien that is still on the record.
To qualify for an FDIC lien release, your property must meet the following conditions.
- The creditor must be either a bank or a savings and loan institution that is currently held in FDIC receivership.
- The lien must have been paid off before the institution failed and the FDIC took over. Proof of payment will be required.
- The lien was paid directly to the institution after FDIC receivership and the lien release was not issued.
A request for an FDIC lien release must occur in writing and the process may take up to 20 business days to complete.
Requests can either be faxed or emailed to the FDIC through their customer services and support center.
4. Some Federal Liens Don't Always Disappear.
If you have a US federal tax responsibility that has remained unpaid, then a lien may appear on any of your property to help clear this obligation.
Even if the tax burden has been cleared, the lien is not always discharged in 30 days like it should be.
The US judicial system has ruled that the IRS may keep their lien status on tax delinquent homes as a proactive measure and still retain primary monetary rights.
National level tax liens do have some additional options that may not be available to other lien types.
They may even offer a withdrawal if the amount owed is less than $25,000 and there is an instantly debited installment plan in place that will clear the lien in 60 days or less.
Subordination is also an option, which allows a tax lien to be dropped below other debt responsibilities.
A discharge of property may also be available.
5. Beware of the Dreaded “Copy.”
Many financial institutions will be happy to send you a copy of a lien release letter that is generated to satisfy the debt.
The only problem with this is that it may not satisfy a future lender or clear the actual lien off of the property.
A letter is only good if it has been filed with the appropriate authorities and it meets their needs.
If someone needs an original letter to clear the lien, then get it.
Don't be satisfied by the copy.
Knowing how to get a lien release may take several weeks of sweat equity on your part, but eventually it can be completed.
Follow these steps to get your lien cleared so that the sale you are planning can go through without a hitch.
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