Most construction companies deal with lien waivers in some form. General contractors must request, collect, and track lien waivers from everyone below them on the project – not just the subcontractors, everyone. Subcontractors must figure out which type of lien waiver is the correct one to send (see Lien Waiver Guide download, below). Not surprisingly, managing lien waivers is an almost universal pain point for the entire construction industry.
Technology can improve the lien waiver process for every participant on a project by making it less manual and reducing the paper required (the actual “hard copies of documents) in the process. A more efficient process results in quicker payments, the reduction of payment risk, and a better-run project for everyone that only helps to make sure all of the project deadlines are met.
For Subcontractors and Other Lower-Tiered Project Participants
Send Conditional Waivers Proactively With Every Invoice
A conditional lien waiver is only valid once the specific condition has been met. This “condition” is almost always that the payment has actually been made. Subcontractors should not fear that they can muck up things for themselves by sending a conditional waiver. If you send a signed conditional waiver and then the payment is never made, then the terms of the waiver do not apply. Therefore, there’s no reason why subcontractors and other lower-tiered project participants should not send a conditional waiver with every invoice. It can only help to speed up the time it takes to get paid.
For General Contractors
Track Lien Waiver Statuses
General contractors have to keep track of the lien waivers associated with each invoice from all of the participants on a construction project. That can be a huge task. Office managers in a general contractor’s office should utilize technology to track the lien waiver statuses (requested, received, not received, etc) for all of the lower-tiered project participants. Since most of them are probably not sending conditional lien waivers proactively (as described above), it will be up to the general contractor to send out lien waiver requests. By having a technology-enabled system, office managers can take the guesswork out of the lien waiver process and can more easily track the status of the waivers associated with each progress payment.
For Everyone in the Construction Business
Kill the Paper and Go Digital
If ever there was a situation in the construction industry that was crying out for some technological help, it’s the lien waiver process. The lien process involves too much paper to be managed by a purely manual process, especially on larger projects with many different participants spread across many layers. And the potential consequences of mismanaging the process – double payments for GCs; going unpaid for everyone else – are significant.
Of course, the fact that very few folks in the industry are using technology to help manage the lien waiver process isn’t anyone’s fault, really. It’s just that the technology hadn’t yet caught up to the problem.