What is a Lien Waiver?

What is a Lien Waiver?

What is a lien waiver? Why are they so important?

Contractors, subcontractors, laborers, and material suppliers are all entitled to file a mechanic’s lien for non-payment of any construction work and/or material supplied by them on a construction project involving private property. Accordingly, a prudent homeowner and its contractor(s) should make sure they obtain what are commonly referred to as lien waivers, both during the course of construction and once construction is completed. As the name implies, a lien waiver memorializes that the signatory thereto is waiving all future lien claims against the subject property, typically in exchange for payment for services rendered.

The following four types of lien waiver forms are utilized in California:

  1. Conditional Waiver and Release Upon Progress Payment;
  2. Unconditional Waiver and Release Upon Progress Payment;
  3. Conditional Waiver and Release Upon Final Payment; and
  4. Unconditional Waiver and Release Upon Final Payment

A conditional waiver and release upon progress payment is typically utilized when a forthcoming progress payment is to be made to a claimant. It is only effective once payment is actually made.

An unconditional waiver and release upon progress payment is typically exchanged at the same time a progress payment is being made to a claimant or after payment clears normal banking channels. It is effective as soon as the claimant signs it.

A conditional waiver and release upon final payment should be utilized when a forthcoming final payment is to be made to a claimant. It is only effective once payment is actually made.

An unconditional waiver and release upon final payment is typically exchanged at the same time a final payment is being made to a claimant or after payment clears normal banking channels. It is effective as soon as the claimant signs it.

Finally, you should not rely on custom tailored lien waiver forms as the State of California requires each waiver contain very specific language, the absence of which could invalidate the waiver. Code compliant lien waiver forms are available on the Contractors State License Board website.

For any construction related matter, please contact Schorr Law today to schedule a consultation with one of our attorneys. You can call us, send us an email, or send a message to us through our contact form!

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