What is a lien payoff letter mean

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A lien payoff letter is a letter between a lender and a borrower that states that upon the satisfaction of certain conditions by the borrower (usually payment of a specified amount on a specified date), the lender will release its liens on all collateral securing the loan and all obligations of the borrower.

If this involves a closing on your home sale, it is used to ensure a proper payoff of your mortgage for closing. Sellers or closing agents must contact the lien holder or their attorney for an official payoff statement. This statement outlines the final payoff amount and includes details on principal balances, accrued interest, attorney's fees, and administrative costs.