Lien waivers can be a source of confusion for everybody in the construction industry. GCs, subs, and suppliers are requesting, signing, and delivering lien waivers constantly throughout a project. Since lien waivers are often the last document standing in the way of payment, and because they represent saying ‘goodbye’ to a significant legal right (lien rights, specifically), construction companies often have questions regarding requirements or requests from other parties involved in the waiver exchange process on a project.
These questions aren’t always about the form of the document itself, but many times surround the signing or execution of the waiver. Questions like, “Do lien waivers need to be notarized?” or, “Can a lien waiver have an electronic signature?” are important, but are ultimately easily answered and don’t need to cause worry.
Regarding whether a lien waiver can have an electronic signature, the short answer is Yes. For the longer explanation, please keep reading.
Are Electronic Signatures Valid for Construction in General?
A contract . . . may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation. Generally speaking, the validity of electronic signatures for all manner of documents is pretty straightforward. United States’ law is clear in the acceptance of electronic signatures as signatures as valid as “pen and ink” signatures. Both the Electronic Signatures in Global and International Commerce Act (the “E-Sign Act”) and The Uniform Electronic Transactions Act (UETA) specifically hold that electronic signatures are as valid as pen and ink signatures. The E-Sign Act was made law in 2000 to advance e-commerce and made e-signatures equally valid as handwritten signatures in commercial transactions.
Where state law is silent regarding electronic signatures, or states have made modifications to state law modifying the UETA in a manner that conflicts with the E-Sign Act, the E-Sign Act controls. Additional support comes from UETA, which predates the E-Sign Act by one year. UETA was adopted by the National Conference of Commissioners on Uniform State Laws in order to make state laws regarding electronic signatures consistent. This was accomplished by drafting a model that states could adopt as-is, or generally follow. This framework, adopted by 47 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, makes electronic signatures equivalently valid as handwritten signatures. The three states that have not adopted the specific UETA model framework (Illinois, New York and Washington), have their own laws pertaining to and permitting electronic signatures.
In black and white, 15 U.S.C. § 7001 (a) (1) & (2) states that:
“signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form; and a contract relating to such transaction may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation”
This is clear blank letter law, equivalent provisions to which exist in every state, that electronic signatures are valid – as valid as a pen and ink signature.
What if my Lien Waiver must be Notarized?
In three states, Texas, Wyoming, and Mississippi, lien waivers are either expressly required to be notarized, either directly by statute or because the statutorily required forms have a notary block. Lien waivers in these three states can still be signed electronically but it requires an additional step. In order to create a valid lien waiver in a state that requires notarization of lien waivers, the electronic signature must also be notarized. This can be accomplished either through electronic notarization, or notarization through webcam or other video / audio technology (as applicable). For example, notaries in Virginia can notarize an electronic signature on a document via webcam, without the need to ever move from your computer or other device.
YES, Electronic Signatures are Valid for Lien Waivers
The takeaway here is simple. If you need to provide a lien waiver, or are accepting a lien waiver and want to make sure it’s valid, an electronic signature is perfectly acceptable. Electronic signatures may help to alleviate the industry’s payment problem, since exchanging lien waivers “offline” without the benefit of technology can cause significant delays in the construction payment process. Electronic signatures on lien waivers can streamline the waiver exchange process, paving the way for making electronic exchange of these crucial documents the norm. The construction industry can rest easy knowing that the lien waivers signed electronically are just as valid as those with “wet” signatures.