Getting a lien release from a defunct lender or a lender no longer in business can be difficult. With no lender to contact, you may be unsure how to get a lien release or what steps to take.
Joshua Denbeaux is a New Jersey attorney with experience working with various lenders. Contact us today to learn more about how we may be able to help you explore your legal options for getting a lien release from a defunct lender.
What Is a Lien?
A lien is a legal claim against an asset. When you take out a mortgage for a home, your lender has a lien. A lender uses a lien as collateral if you default on your mortgage.
When a mortgage is involved, the lien holder can foreclose on the house if the homeowner fails to pay the mortgage. Liens can also be used for lots of other things, like unpaid HOA and POA fees, unpaid home service invoices, or even construction and renovation project debts.
What Is a Lien Release?
A mortgage lien release is a document that removes the lien because the mortgage was paid off. A lien release is part of the process in a mortgage pay off where your mortgage lender sends you the title to home because you now own it free and clear.
Any lien can have a lien release once the debt is paid off too.
Lien Release Process
A lien release starts when the borrower repays the loan in full. After the loan is repaid, the lender is responsible for releasing the lien.
The lender files release documents in the real property records where the property is located. Once the lien release documents are filed, the property is cleared of any obstruction to the borrower’s full ownership rights.
What Can Stop You From Getting a Lien Release?
There are a few different ways you could face issues getting a lien release from a lender. A few reasons you may struggle to get a lien release could be a defunct lender, the lender was an individual who passed away, the lender was bankrupt, or the lender was acquired by another lender.
Selling a House Without a Lien Release
It can be difficult to sell a house without a lien release. If a property still has a lien attached to it, buyers have to trust the seller that the loan has been paid off, and no lender will be coming after the property as collateral.
A new buyer most likely won’t be able to get title insurance when purchasing a house with a lien still attached. Title insurance companies will likely be reluctant or unwilling to provide coverage because they are uncertain whether another lender may try to foreclose on the home.
How to Get a Lien Release When a Lender No Longer Exists
Depending on the specific circumstances surrounding your lien and your lender, different steps may be required to get a lien released.
Defunct Lender
If your lender was a commercial entity, there is likely a successor who should be able to release the lien. Getting a lien release in this situation should be simple once you are able to track down the successor.
Individual Who Passed Away
In most cases, if your lender was an individual who has passed away, the executor of their estate should be able to release a lien on the deceased’s behalf.
If no one has the legal authority to release a lien, it must be remedied through the courts. With this process, you have to file a lawsuit.The Federal Deposit Insurance Corporation (FDIC) may be able to help homeowners get a lien released if they have the authority to assist.
Contact an Attorney Today
Having issues with a lender or a lien release can be difficult to navigate. It’s understandable that it may be confusing or difficult to figure out what steps you need to take to get your lien released.
An attorney can help you with the lien release process and determine who should have the legal authority to release your lien and how to contact them.
Contact Denbeaux Law today to learn more about how we may be able to help you get a lien release from a defunct lender.
