Lien waivers are critical components of construction payment. Property owners and GCs rely on waivers to make sure the they able to appropriately manage the risk of double payment and to protect against mechanics lien claims. On the flip side, parties requesting and receiving payment routinely sign and deliver these documents to the paying parties (even before they are requested to) to streamline payment in an attempt to increase cash-flow and speed up payment.
The lien waiver document is crucial to making construction payment run smoothly. And, in an industry as fraught with potential problems as construction, this is of paramount importance.
More than just a document to be rubber-stamped to facilitate payment, however, a lien waiver is a document that has significant effects on legal rights. A lien wavier document gives away a company’s rights to secure the money owed to them on a project through an interest in the property itself. This means that the lien waiver moves a company from being a secured (or potentially secured) creditor to an unsecured creditor. This is a big change.
Since the legal ramifications of lien waivers are immense, who is allowed to sign them?
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It’s Likely More Parties Are Able to Sign Than One Might Think
Despite the significant impact on legal rights, lien waivers can be signed by a large number of people. It’s not the case that lien waivers must always be signed by an officer or director of the company. Lien waivers are generally required to be signed by the claimant or the claimant’s agent. In the case of an individual lien claimant or project participant, it is clear that the individual can sign his/her own lien waiver, or could appoint an agent (like an attorney) to sign for him/her.
When the claimant is a corporation, LLC, or some other business entity, the question becomes “who is the ‘claimant’ for signing purposes?” In all cases, the party that signed the contract pursuant to which the labor or material was furnished would be able to sign the lien waiver. But who else? An accounting or accounts receivable clerk? Probably. A manager? Probably. A mail room clerk? Who knows…
Parties with the authority to sign contracts (whether as set out by the articles of organization, or bylaws) definitely have the authority to sign lien waivers. But, practically speaking, since the lien waiver statutes generally do not set forth the identity of the parties that are allowed to sign, that power is likely far more broad than parties allowed to execute general corporate contracts. If the party processing accounts receivable or otherwise handling invoices, pay-apps, and payment issues signs the lien waiver, that party at the very least has the apparent authority to do so, meaning that the paying party that sent the lien waiver could rely on that signature to be valid, and that lien waiver binding.
Practically speaking – if lien waivers are used appropriately and as intended – it doesn’t really make much difference who signed them. The lien waiver acts as a receipt for payment and nobody needs to lien anything if payment has been received.
In a dispute, the identity of the party that signed the lien waiver is unlikely to be the definitive factor in judging its validity as long as the signer is associated with the claimant, and especially if the signer is associated with any portion of the processing of payments.
