Legal Question in Real Estate Law in Texas

When you state you are "holder of note and lien" I assume you mean you hold a note and a duly recorded instrument such as a deed of trust. The effect of releasing the lien in lieu of a separate agreement is to turn your courrently secured note (collateralized by the Texas home against which it is recorded) into an unsecured debt backed only by the debtor's credit. This typically means you are giving up something of substantial value. Among other things, in the event of insolvency or bankruptcy you will have to stand in line with the unsecured creditors and may end up with a few cents on the dollar, instead of being paid off directly from the proceeds of the sale of the Texas home you mention.

Not knowing the specific facts of your particular situation, it is difficult to assess the wisdom of your willingness to "accept less than the lien amount" but, assuming that your decision is sound from a business standpoint, there still is no apparent necessity to weaken your position by releasing the lien prior to the sale of the home in question. Typically, you can simply submit a demand to the closing agent for whatever amount you are willing to settle along with a release of the lien to be held in trust until closing. Then, at closing, the closing agent would simultaneously release the lien and pay off your loan. That way, your loan remains collateralized in the event the sale of the home falls through for any reason.