Partial Lien Release: What is it and how does it work?

Partial Lien Release: What is it and how does it work?

What is a partial lien release?

A partial lien release is a legal contract that enables your lender to release their lien on a part of your mortgaged property. Under the typical terms of a partial release, if you pay down a certain amount of your mortgage principal, your lender will agree to release some of your property from the loan contract.

Why would I need a partial lien release?

Maybe someone makes you an attractive offer to buy part of your property. Or maybe a utility company needs to run power or cable lines through your property. To sell just part of your mortgaged property, a land transaction between you and the buyer must take place. That transaction must provide the buyer with a clear title to the piece of land you’re selling, so you’ll need a partial release of a mortgage lien from your lender—which we’ll help you obtain.

A land transaction is basically a legal agreement to make changes to the amount of property that secures your mortgage loan (or to change the property rights). There’s a broad range of land transactions that can require a partial lien release, and we can handle any type of transaction, including:

  • Easements (utility access, private access, public access, etc.)
  • Subdivisions (dividing property into multiple portions for sale or development)
  • Land additions
  • Partitions (dividing estate property among several co-owners)
  • Security substitutions (changing the property held as security for your mortgage)
  • Condemnations/eminent domain (when the government seizes private property for public use)
  • Lease subordinations (such as a lease to install a semi-permanent structure on the property)
  • Oil, gas, or mineral rights lease
  • Living trusts or other revocable trusts
  • Corrections to a legal description.

What are the eligibility requirements for a partial lien release?

To qualify for a partial lien release, your loan, your property, and your land transaction must meet several requirements. The most basic ones are:

  • At least 12 months must have passed since your mortgage was originated.
  • Your loan must be current; that is, your account cannot have been more than 30 days past due within the last 12 months. Exceptions: For an easement, a right of way, eminent domain, or to correct a legal description.
  • No obligated borrower (i.e., someone whose name is listed on the mortgage contract) can be released from their liability on the loan as a part of the transaction.

There are other requirements your loan, your property, and your transaction must meet to be eligible for a partial lien release. For a complete list of requirements, refer to our Land Transaction Request Requirements document. 

This sounds pretty complicated. Who can help me?

Every land transaction is different, and we can’t advise you about the best way to complete your transaction. We also can’t advise you about any tax implications or local zoning regulations. The process of getting a partial lien release can be complex, so we recommend that you work with a reputable real estate attorney or title agent. Your attorney or title agent will guide you through the entire process, which includes reviewing your loan documents, checking your local zoning laws, gathering multiple documents, completing several forms, and more.

Your attorney or title agent will also represent you and work with us on your behalf. To give us permission to work directly with your representative, please complete and submit our Third-Party Authorization Form. Send your completed form to us, along with your other documents, at the address shown below.

How much should I expect to pay to get a partial lien release?

Expect to pay us these amounts to approve your transaction and issue a partial lien release:

  • Processing and approval fee: $250 (non-refundable).
  • Appraisal fee: About $1,200 (non-refundable).
  • Principal reduction: To be determined. Depending on what organization underwrites your mortgage (such as Fannie Mae, VA, USDA, or a non-government lender) you may have to make a principal-reduction payment to maintain a lender-acceptable loan-to-value (LTV) ratio (the amount you owe on the loan divided by the property’s appraised value). After we complete your property’s appraisal, we’ll tell you how much you have to pay (if anything) to reduce your principal. For example, if you have a Fannie Mae loan and your property’s LTV ratio is over 59% after we complete the appraisal, we’ll require you to pay down your mortgage principal enough to reduce your LTV to 59% or less.

Depending on your unique situation, you may need to pay other fees as well (such as a title-search fee). Your real estate attorney or title agent will help you identify all required fees.

Note: We do not charge processing/approval fees for eminent domain requests, or to correct legal-description errors that are our fault.

After I gather all of my required documents and forms, where do I send everything?

Your real estate attorney or title agent will help you gather and complete all of the required documents and forms. After you’ve met all the requirements described in our Land Transaction Request Requirements document, complete the Land Transaction Request Form. Then send your completed Land Transaction Request Form and all supporting documents by email (if they’re scanned digital files) or by regular mail to one of these addresses:

Email: partialrelease@shellpointmtg.com

Regular mail:  

Shellpoint Mortgage Servicing
Attention: Doc Curative—Land Transactions
75 Beattie Place, Suite 700
Greenville, SC  29601