Statutory Construction Releases - California Webinar

In this blog, presented by SunRay Construction Solutions and William L. Porter, Founder & President, Porter Law Group Inc., construction professionals in California can learn in detail about the statutory release forms used in California, key items to bear in mind while filling these forms, and more.  

Using the Construction Release Forms

In California, there are four types of construction release forms, and it is mandatory to use only these forms and no other forms. You also cannot change or modify these forms. The four types of release forms are:

• Progress payment release form

• Final payment release form

• Conditional release form

• Unconditional release form

You can find these forms by visiting www.leginfo.legislature.ca.gov and look up the statutes Civil Code sections 8132-8138. Let’s take a look at each of these forms in detail.

What are the Four Release Forms in California?

1. If a Progress Payment is Only Promised or Has Not Yet Cleared the Bank

The first form is related to a progress payment which means there is a succession of payment, but the party wants to make sure that you are releasing your rights to have a lien, stop payment notice or payment bond claim. If you are required to give a release in exchange for a progress payment, but the money has only been promised or it hasn’t been cleared by the bank yet, then you should use the form titled ‘Conditional Waiver and Release on Progress Payment.’  

When you use this form, it means that the release is conditioned upon you actually receiving the payment. The release becomes effective once you receive the amount which means you have waived your claims to a mechanics lien, stop payment notice and a payment bond claim.

2. If a Progress Payment Has Been Paid in Full (and the check has cleared the bank)

If you have received a progress payment and the check has been cleared by the bank or received the actual money in hand, then you may be asked to sign a release form titled ‘Unconditional Waiver and Release on Progress Payment.’  

What this release form means is that the check has now cleared, and your waiver and release of your lien rights and stop payment notice rights and payment bond rights are waived to the extent of what you have put on the form.

3. If Final Payment Has Only Been Promised or Has Not Yet Cleared the Bank

Final payments typically are the payments that you receive at the end of the project. Again, you will be asked to sign a release form in exchange for the final payment; however, if the money has only been promised to you or if the check has not yet cleared the bank, then you should use the form titled ‘Conditional Waiver and Release on Final Payment.’

Like how you provide a conditional release form for progress payments, this release form is also conditioned upon you receiving the actual final payment.

4. If a Claimant Has Been Paid in Full (and the check has cleared the bank)

If you have finished your work and have been paid in full for the same, then you may be asked to provide a release form titled ‘Unconditional Waiver and Release on Final Payment.’ By signing this release form, you are agreeing that all your dues have been cleared and hence you are waiving your lien rights, stop payment notice rights, and payment bond rights.  

One thing to bear in mind is that if there is any unresolved dispute, then you have the option to mention that exception in the release form. So, you can release everything except for that unresolved issue, even with the unconditional waiver and release on final payment.  

As mentioned earlier, it is mandatory that you use only these four statutory forms, and you are not allowed to make any changes or modifications to these forms. Often, construction professionals from other states use other releases, but you need to make it clear that in California, only these four statutory release forms are considered as valid.

Other Release Form

There is also another type of release, but it is different from these four statutory releases. If you have an actual lawsuit and you must have a settlement agreement, then you are going to have a release that is part of the settlement agreement, but that's when you settle a whole lawsuit or a major dispute.

Below are samples of all the four statutory release forms.

Statutory Waivers and Releases – 1

Conditional Waiver & Release on Progress Payment

This is the Conditional Waiver & Release on Progress Payment form. Although these forms do not require to be notarized by law, some people may ask you to get it notarized. As you can see, there are various details to put in, such as, name of the claimant, name of the customer, job location, date, through date, etc.

• The through date is important because what it indicates is that you are going to release all your claims for mechanics liens, stop notices, and payment bond claims for all the work you performed through that date or materials you supplied through that date.

• Then you have some mandatory language and blow that you have details about who made the check, amount of the check payable, etc. Then there is an Exceptions section wherein you can put in all the exceptions like retentions, extras for which you haven’t received payment, disputed issues, etc.  

• You also have a section to put in information about any previous conditional waivers and releases that you may have already provided. For example, you gave a conditional waiver and release for $20,000 last month but you haven’t received that amount yet and this time you are providing another conditional release for $30,000. So, you have blanks to put in both the amounts which will let the party making the payment know that the total amount due is $50,000.  

• The next exception is related to your contract rights. So, even if you totally mess up your conditional waiver and release form by putting in the wrong date or incorrect amount, it doesn’t mean that you lose your contract. You can always go back to your contract and sue for contract rights that you have.

Finally, you put in your signature, title, and date of signature.

Statutory Waivers and Releases – 2

Unconditional Waiver & Release on Progress Payment

This is the Unconditional Waiver & Release on Progress Payment form. This form is similar to the previous form with one key difference. It says that the check has been cleared by the bank. So, when you sign this release form, you are basically saying that the check has gone through the bank and the condition has been satisfied, so you are waiving your rights to make claims on lien rights, stop payment notices, or payment bond claims.  

Statutory Waivers and Releases – 3

Conditional Waiver & Release on Final Payment

This is the Conditional Waiver & Release on Final Payment form. This form is used in exchange for a check or a promise for a check for final payments. So, you need to put in all the basic information, such as the name of the claimant, name of the customer, job location, etc. Since this is a release form for the final payment, there will be no through date.

• Next, you have the mandatory language and then details about the maker of the check, amount due, etc.

• The next section is a bit different and important. Under the Exceptions section, you only have space to put in information about any disputed claims for which you haven’t been paid yet.  

• So, if you have performed some work but you don’t have a signed change order or the issue is in a dispute, then you can put in the dollar amount and state something like for disputed change order number three, or on the issue discussed in email of 10-24-2024.

• Finally, you need to put in your signature, title, and date of signature.  

Statutory Waivers and Releases – 4

Unconditional Waiver & Release on Final Payment

Finally, we have the Unconditional Waiver & Release on Final Payment form which is probably the one release form that everybody wants. Because this means that the project is complete, and everything has hopefully worked out.  

• Similar to all the other forms, you have the initial section for identification details and then the mandatory language which shouldn’t be changed or modified.

• In this form also you have a section for Exceptions wherein you can put in information about any disputed claims for extras.

• Ideally, everybody would like to see the blank filled as zero because it means that everything is resolved and there are no more payments due on the project.  

• Finish the form by putting in your signature, title, and date of signature.

As you can see, all these forms are straightforward and all you need to do is fill in the details correctly and make sure that you are using the appropriate forms. Remember the basic rule that if you haven’t received the money yet, then you should always use a conditional release form. Only if you have received the actual money, then you can sign an unconditional release form.

Common Questions Contractors Ask

1. Why are statutory release forms important in California?

California law mandates the use of specific statutory construction release forms. These forms ensure clarity and legal compliance, protecting your rights to mechanics liens, stop payment notices, and payment bond claims when used correctly.

2. What are the four statutory release forms in California?

The four forms are:

1. Conditional Waiver and Release on Progress Payment

2. Unconditional Waiver and Release on Progress Payment

3. Conditional Waiver and Release on Final Payment

4. Unconditional Waiver and Release on Final Payment

3. Can I modify the statutory release forms?

No, California law prohibits any changes or modifications to the statutory release forms. You must use them as they are outlined in the Civil Code sections 8132-8138.

4. What is the difference between "conditional" and "unconditional" release forms?

• Conditional Release: Used when payment is promised or the check hasn’t cleared. The release is only effective once payment is received.

• Unconditional Release: Used when payment has been received and the check has cleared. It waives rights to claims immediately.

5. When should I use the "Conditional Waiver and Release on Progress Payment" form?

Use this form if you are receiving a progress payment that has been promised or if the check has not yet cleared the bank.

6. When should I use the "Unconditional Waiver and Release on Progress Payment" form?

Use this form if you have received a progress payment and the check has cleared the bank, confirming the funds are available.

7. What should I do if there are disputes or unpaid amounts?

You can list unresolved disputes or exceptions in the "Exceptions" section of the form. This ensures that specific claims are not waived even if you sign a release.