Do You Have to Sign a Lien Waiver to Get Paid on a Construction Project?

In this blog, we will learn how a lien waiver impacts your payments when working on a construction project, along with the different types of lien waivers.

ARIELA WAGNER

by

Ariela Wagner

|

WORKER SMILING

Attorney Reviewed

Last updated:

Sep

25

,

2024

Published:

3min

Read

In this blog, we will learn how a lien waiver impacts your payments when working on a construction project, along with the different types of lien waivers.

In this blog, we will learn how a lien waiver impacts your payments when working on a construction project, along with the different types of lien waivers.

Understanding Lien Waivers

A lien waiver is a legal document that relinquishes the right to file a mechanic's lien against a property. In simpler terms, it's a contractual arrangement between parties involved in a construction project, typically the contractor, subcontractors, and suppliers, stating that they waive their right to claim a lien on the property in exchange for payment.

The Connection Between Lien Waivers and Payments

Now, you might wonder, "Do I really need to sign a lien waiver to get paid?" The short answer is often "yes." Lien waivers serve as a protective measure for both the party making the payment and the party receiving it.

For the payer – usually the property owner or the general contractor – a lien waiver ensures that once they've paid for a particular phase of work, they won't face any future claims from subcontractors or suppliers seeking additional payment for the same work.

On the flip side, for subcontractors and suppliers, signing a lien waiver can be a condition for receiving payment. It demonstrates to the payer that, upon payment, they won't assert a claim against the property.

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What are the different types of Lien Waivers?

What are the different types of Lien Waivers?

Conditional Waiver and Release upon Progress Payment

  • Waives lien rights upon receipt of partial payment.
  • Applies to specific work covered by the payment.

Unconditional Waiver and Release upon Progress Payment

  • Waives lien rights immediately after signing, even if payment is not received.
  • Irrevocable once submitted.

Conditional Waiver and Release upon Final Payment

  • Waives lien rights after receiving the final payment.
  • Covers all work performed under the contract.

Unconditional Waiver and Release upon Final Payment

  • Waives lien rights once signed, regardless of payment.
  • Irrevocable and applies to all work upon final payment.

Lien waivers come in different forms, and it's crucial to understand the distinctions:

  • Conditional Waiver and Release upon Progress Payment: This type of waiver is used when a partial payment is being made before the work is completed. It asserts that, upon receiving payment, the claimant waives the right to file a lien for the specific work covered by the payment.
  • Unconditional Waiver and Release upon Progress Payment: Like the conditional waiver, but once signed and submitted, it is irrevocable, even if the payment is not made.
  • Conditional Waiver and Release upon Final Payment: This waiver is used when the final payment is being made, and it asserts that, upon receiving the final payment, the claimant waives the right to file a lien for all work performed.
  • Unconditional Waiver and Release upon Final Payment: Like the conditional waiver upon final payment, but, like the unconditional waiver for progress payments, it is irrevocable once signed.
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Key Takeaways

  • Construction projects are complex, but lien waivers are the well-coordinated steps that guarantee fair compensation without legal troubles.

  • Although signing a lien waiver might seem like paperwork, it's a crucial part of making sure everyone in the construction process is treated fairly.

  • Lien Waivers adds transparency and accountability, making sure payments align with the work done.
  • When you receive a lien waiver, understand it not just a document but a harmonious arrangement ensuring trust and equitable payment in the construction realm.

Not sure about signing your next lien waiver? Reach out to us on 800-403-7660. We are here to help! Stay ahead with SunRay—your trusted partner in construction compliance!

About Author

ARIELA WAGNER

Ariela Wagner

Ariela is the president and founder of SunRay Construction Solutions. She has over 18 years of construction industry experience. Read More>

WORKER SMILING

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