What Is a Release of Lien Grantee?

There are two basic categories of liens, one good and one bad. Good liens include those for mortgages, auto leases and substantial construction/renovation work. These liens usually are required to receive financing and carry no negative connotations. Bad liens are placed against assets for non-payment of debt, like taxes, credit cards and utilities. Bad liens seriously impair your credit rating.

A lien is a legal document that grants the lien holder the right to take possession of an asset if specific conditions, usually financial, are not met. A mortgage is a type of lien; until a mortgage loan is repaid in full, the lender holds a lien on the property and may take possession if the terms of the loan are not met. A car lease also typically has a lien attached to it. Often, though, when we say that a lien has been "placed" on an asset, we are not referring to a mortgage or car lease. We are referring to some other type of debt. An asset with a lien may not be sold until the lien has been settled.

Mortgages and auto leases are standard liens placed on real estate or a vehicle, respectively, as a condition of financing. More typically, though, when we refer to a lien we are describing a legal document placed against an asset because an individual did not pay a debt. Three of the most common debt liens are tax liens, mechanic's liens and judgment liens. Tax liens are placed by the government against assets, usually because of non-payment of taxes. Mechanic's liens are placed by contractors and builders who are doing substantial work on a property. The property itself becomes collateral to ensure payment for work completed. Judgment liens may be imposed by a court if you lose a lawsuit. Typically, judgements are made in the case of unpaid, unsecured debt, like for credit cards or utilities. Tax liens and judgment liens will appear on your credit report.

Every lien has two main parties: a grantor and a grantee. The grantor gives rights and the grantee receives them. In the case of a mechanic's lien, the grantor is the home owner and the grantee is the contractor or builder. In mortgages and car leases, the grantor is the consumer and the grantee is the lender. In judgment and tax liens, the grantor is the debt holder and the grantee is either the government or the victorious plaintiff in a lawsuit.

A grantee must release the lien held on an asset as soon as the obligation defined in the lien document has been met and discharged. A grantee may also release the lien at any point during the course of the lien, but is not required to do so. For instance, a contractor who holds a mechanic's lien on a property may decide for some reason (death of the grantor, for instance) to release the lien he holds on the property rather than go through the process of foreclosure on the property.