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.

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.

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.

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!

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