A contractor files a lien for $22,000 but later settles for $18,000. Under NRS 108, what happens to the recorded lien?
Correct Answer
A) It remains at $22,000 until formally released
Under NRS 108, recorded liens remain at their original amount until formally released, regardless of settlement amounts.
Why This Is the Correct Answer
Option A is correct. Under NRS 108, a recorded mechanic's lien remains on title at its original filed amount until it is formally released through a lien release document recorded in the county recorder's office. The settlement of the underlying debt for a lesser amount does not automatically modify or discharge the lien of record.
Why the Other Options Are Wrong
Option B: It automatically reduces to $18,000
The lien does not automatically reduce to $18,000 when a settlement is reached. Liens are instruments recorded against real property; they can only be modified or discharged through formal recorded instruments, not through a private settlement agreement alone.
Option C: It becomes void after settlement
The lien does not become void upon settlement. Settlement resolves the debt between the parties, but the lien encumbering the property remains until a formal lien release is recorded.
Option D: It must be released and re-filed for $18,000
While releasing and re-filing might seem logical, NRS 108 does not require or authorize re-filing the lien for the reduced amount. The original lien remains until it is formally released; a new lien for $18,000 would be an entirely separate filing with its own priority date issues.
Memory Technique
Think of a lien like a lock on a door — settling the argument doesn't unlock the door. You need the formal key (a recorded lien release) to remove it. The amount stays at $22,000 until the release is recorded.
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