A lien release is what happens when a party with an interest in a property, such as a bank that holds a mortgage loan on a house, frees the borrower from any further repayment obligation, according to The Law Dictionary. A lien is a form of contract giving a lender collateral rights over a piece of property, explains Investopedia. Most liens are released when a loan or debt of a specific monetary value is repaid, notes The Law Dictionary.
In the case of a mortgage lien, the financial institution holding the loan issues a lien release when the mortgage is paid in full, states The Law Dictionary. The lender retains its collateral rights to the property until it issues the lien release. If the borrower sells the house without a lien release, the lender is entitled to prevent the sale or seize the house from the purchaser.
Other parties with an interest in ensuring eventual payment may impose different types of liens on a debtor's property, such as tax liens or child support liens, according to The Law Dictionary. The Internal Revenue Service releases tax liens within 30 days of the payment of a federal tax debt, states the IRS. A custodial parent releases a child support lien when the noncustodial parent pays the amount of support that is in arrears, explains Nolo.