When it’s time to get paid your company will likely be requested to execute a lien waiver. The language of the lien waiver will be confusing, and the consequences for any tiny mistake could be astronomical. What should you do?
First, you’ll need to decide whether the lien waiver should be signed, and if you get a green light on that question it’s the end of your analysis. Sign the waiver, collect the payment, and go on your way. What, however, if you determine that the lien waiver language is not appropriate? Can you just change the language and return the altered waiver? Can you still cash the check? This article guides you through these considerations.
Should You Sign The Lien Waiver?
In an article published this morning on IEC’s ElectricalMatters’ MultiBrief – Should you sign that lien waiver? – I introduced the biggest problem with lien waivers:
When a lien waiver crosses your desk, it’s critical to pay attention to the language of that specific document. Many waivers may look the same, but it’s common for these documents to have subtle differences that can change their meaning.
Unfortunately, lien waivers are legal contracts and are frequently different from one another. It’s important to pay attention to the agreements specific language before you sign it to make sure that it is in conformance with payment being made.
Read the above-linked article to learn a bit more on the topic of whether you should sign any particular lien waiver agreement. The article has three sections:
- Lien Waiver Language: It suggests that “lien waiver language is like a box of chocolates,” because you never know what you’re going to get. It’s important to review it.
- Money first: This section reminds you that you should get the money in hand before you sign your lien waiver. You can’t go to a store and get a receipt for something you haven’t already purchased. The payment comes first, and the receipt second.
- Warning! Mistakes are costly: Think that these documents are no big deal? Think again. This section reviews just how costly a mistake can be.
We’re written a great deal about mechanics lien waivers, and the problems that may arise. If interested about whether you should sign a lien waiver as-is, review those articles under the “Lien Waivers” tab.
Can You Change The Lien Waiver Text And Still Cash The Check?
There are occasions when a payment will be delivered to you with a lien waiver attached to it. Just this week, as a matter of fact, a client contacted me about a lien waiver printed onto the check instrument itself. When money is in hand like this, it is really difficult for any business to turn it away.
As such, if you receive a check and an attached lien waiver, do not simply cash the check and ignore the waiver. Do not think you can cross out any terms on the lien waiver. You have been made an offer. You can only accept it, reject it, or make a counteroffer and await the other party’s response. If money is delivered to you with terms you must think of the entire delivery – the money and the terms – as an offer to you. You can accept that offer, you can reject that offer, or you can make a counteroffer (which must be affirmatively accepted or rejected). Why am I talking about offers and counter-offers?
Well, if you cash the check, the law will likely consider you to have accepted the offer (i.e. the attached terms). You cannot cash the check and ignore the terms that were attached thereto. This is also true whether the terms (i.e. waiver) are written on a separate attached document or on the check itself.
Compare the circumstance to that situation when a paying party writes “payment in full” or “full and final settlement” on a check memo. Can you simply cross out that message and cash the check? Most courts have ruled that you cannot, which is discussed in an article we previously wrote: Beware Checks with Payment In Full In the Memo.
The check was an offer. You can accept it, or reject it. If you want to make a counter offer you can do that as well, but you can’t make the counter offer and accept it on behalf of the other party. The other party must have the chance to review your counter offer and accept it.
As such, if you receive a check and an attached lien waiver, do not simply cash the check and ignore the waiver. Do not think you can cross out any terms on the lien waiver. You have been made an offer. You can only accept it, reject it, or make a counteroffer and await the other party’s response. That’s it.