A lien waiver form is a legal agreement that waives claimant rights to file a lien on goods or property in dispute. Lien waivers are typically issued by contractors, subcontractors, or suppliers for construction jobs when the provider receives payment for products or services rendered.
A lien waiver can be a receipt for full or partial payment, depending on the terms of the agreement.
What Is a Lien Waiver?
A lien waiver is a legal document between a service or product provider and the recipient that waives the provider’s right to file a lien on the property. Construction companies often use it to manage payment for services and supplies. Other organizations that use lien waiver forms include construction businesses, equipment rental companies, and construction lenders.
A lien can help an unpaid contractor or subcontractor secure faster payment, as property owners cannot sell or refinance their property until the lien is lifted. A lien also provides protection for workers, contractors, suppliers, and subcontractors.
What Is It Used For?
Lien waivers are common in construction often employed at various project phases. Typically, the involved parties exchange a lien waiver upon service completion and payment receipt.
General contractors often require construction lien waivers for large construction projects. They are commonly used to guarantee that the builders, suppliers, contractors, and other workers receive timely payment.
A lien waiver protects the property owner from having a lien placed on their property if they have paid partial or full for the services or products rendered. The party requesting payment must use the appropriate type of lien waiver so they don’t lose the right to receive payments or waive future lien rights, especially if the project is ongoing.
Types of Lien Waivers
Lien waivers may be conditional or unconditional. Progress waivers discharge lien rights for payments up to a certain date. Final payment waivers require payment in full to discharge lien rights.
1. Conditional Lien Waiver
The claimant provides a conditional lien waiver before receiving payment, giving up their right to file a lien once they get paid as agreed.
Conditional liens may require full payment for the entire project or partial payments applied to certain dates. Once the claimant has received the agreed payment on a conditional waiver, they waive their right to file a lien on the property.
2. Unconditional Lien Waiver
This type of lien waiver is issued after receiving payment and doesn’t require any additional conditions for that specific payment.
In the construction industry, a general contractor will often collect lien waivers from the subcontractors and suppliers before beginning the project. Advance conditional releases make lien waivers and payment processes easier to navigate with multiple parties.
Lien Waiver vs. Lien Release: What’s the Difference?
The primary difference between a lien waiver and a release is whether a lien has already been filed. Lien waivers typically apply before a lien is placed on a property. Generally, if the client adheres to the agreed payment process, the claimant will not file a lien.
A lien release, or lien cancellation, occurs after a lien has already been filed. If a claimant has filed a lien on the property for nonpayment, the client will usually have to pay them for their products or services to have the lien released. The client may have the option to pay a debt using:
- Money order
- Cashier’s check
- Pay applications
- Personal check
The lien is typically not released until the claimant receives full payment. If a property owner is trying to sell the disputed property, using a pay app can ensure the debt is paid faster. The time and effort involved in releasing a lien makes lien waivers especially useful for contractors and their clients.
Statutory Lien Waivers: By State
States regulate lien waivers differently. The following 12 states provide lien waiver forms and guidelines to ensure fair use:
- Arizona: A.R.S. § 33-1008
- California: Cal. Civ. Code §§ 8132, 8134, 8136, 8138
- Florida: Fla. Stat. § 713.20
- Georgia: GA Code § 44-14-366
- Massachusetts: Mass. Gen. Laws Ch. 254 § 32
- Michigan: MCL § 570.1115
- Mississippi: Miss. Code § 85-7-433
- Missouri: RSMo § 429.016
- Nevada: NRS § 108.2457
- Texas: PROP § 53.284
- Utah: U.C.A. § 38-1a-802
- Wyoming: Wyo. Stats. § 29-10-101
Waivers provided by the states will cover certain legal requirements, but you should include details for your specific project. Be sure to thoroughly review the agreement terms before signing.
Lien Waiver Sample
Managing lien waivers can be complicated. Download this fillable Word or PDF lien waiver form to streamline the lien waiver process:
How to Write a Lien Waiver
Before you sign a waiver, ensure that the document clearly outlines the terms of the waiver, including amounts owed for services and products provided. Careful review can ensure your right to future payments, even after a client’s bankruptcy or liquidation.
To write an effective lien waiver for your project, include the following :
Step 1—Enter Claimant Details
The claimant may be a contractor, subcontractor, or supplier. Include the name, phone number, and address of the company or individual providing services or products under this contract.
Step 2—Enter Property Owner’s Details
The property owner may be an individual homeowner, landlord, or commercial property owner. Include the property owner’s name, address, and phone number and their representative.
Step 3—Identify the Property
Indicate the property’s address or parcel number. Describe the property in detail and include the location of the project on the property. For example, if the lien waiver is for a house bathroom remodel, indicate the floor, the side of the house, and adjacent rooms.
Step 4—Add the Project Details
State the project’s starting date and property address, and outline the full scope of work. Include the work to be performed, hours, supplies, number of workers, subcontracted work, equipment, and other project information.
Step 5—Denote the Payment Information
Ensure you include the full price of the contract and the number of payments expected. If the contract is for a progressive waiver, indicate the amount and dates of any payments received to date and note their associated invoice numbers. Include a list of all submitted invoices, whether or not they have been paid.
Step 6—Indicate Whether the Waiver Is Conditional or Unconditional
Specify whether the waiver is a conditional or unconditional lien waiver. State whether the waiver is a partial waiver for payment up to the date indicated or a final lien waiver for payment in full.
Step 7—Sign and Date the Lien Waiver
By signing the document, the claimant personally attests that the information in the waiver is true and accurate. For an unconditional waiver, the claimant’s signature makes the waiver effective immediately. For conditional waivers, the contractor’s right to file a lien is waived upon receipt of payment as agreed.
If your state requires notarization (Mississippi and Wyoming), do not sign the waiver until you are before a notary. The claimant must sign and date the lien waiver document before a notary for it to be valid.
Frequently Asked Questions
Read on to learn the answers to commonly asked questions about lien waivers.
What’s the Difference Between Conditional and Unconditional Waivers?
Unconditional waivers are signed upon receipt of payment for products and services rendered. Conditional waivers are signed before payment is received, but the waiver is conditional upon receiving payment.
What Is the Difference Between Progress Payment and Final Payment?
A progress payment is a partial payment that assigns a certain amount to be paid by a specific date. Progress payments may be part of a set payment plan or apply to costs incurred within the indicated time frame.
A final payment may be a lump sum payment for the full project or the final payment on a progressive payment plan. A conditional or unconditional final lien waiver discharges the claimant’s rights to file a lien on the property once the final payment is received.
Who Benefits From Lien Waivers?
Lien waivers benefit the paying party by preventing the claimant from seeking additional payments beyond the agreed amount. The lien waiver is essentially a receipt for payment that prevents the claimant from filing a lien on the property.