California Lien Waivers Guide and FAQs

Yes!  Everyone on a California construction project must exchange the same lien waiver forms. These forms are set forth by California law, and the laws explicitly state that you must use these forms, and not mess around with them. In other words, you can’t slip in some other provisions to help protect you against such-and-such. The forms are what they are, and everyone must use them. We explored this in detail here: Can I Add Language to the Lien Waiver Form?

Here is an excerpt on this question:

In [our] opinion, adding anything to the standard language carries significant risk, not the least of which is finding yourself in litigation arguing about what changes amount to anything “substantial,” and which do not.  It’s probably a pretty good rule of thumb that if something is worth adding to the form, or if you desire to have something additional in the form, then the thing so worth the risk of non-conformance is going to be “substantial” enough to trigger invalidity under the statute.  And accordingly, you should just leave the thing alone.

While this may be frustrating to some job stakeholders, this is a great thing for California contractors and suppliers. It makes the lien waiver exchange process easier and settles lien waiver language disputes that could delay payments in other states. And as everyone in the industry knows…payments are already quite slow.

It’s also important to point out that if someone just asks a contractor or supplier to use a non-required type of lien waiver form, it could land them in real trouble. The California licensing statutes warn that contractors can be penalized if they ask for non-statutory lien waiver forms!  Check out a more detailed discussion of this here: Request the Correct California Lien Waivers to Reduce Stress and Avoid Violations 

In sum, California provides statutory lien waiver forms which must be used in order to be considered valid and enforceable.

When it comes to releasing a mechanics lien that has already been filed, California’s lien laws are a bit confusing in this regard. The term “lien release” is often used to mean two different things. See Lien Waiver or Lien Release: What’s the Difference?

Lien Waiver: The statutory lien waiver form is called a Lien Waiver and Release, because it effectively releases a contractor’s ability to claim a lien for the amount in the form. However, it is only used as a receipt of payment. It is not used to release, cancel, or discharge a lien after it has been attached to a property.

Lien Release: After a lien has been filed, the California claimant can release or cancel the lien by filing a Mechanics Lien Release form with the county recorder’s office where the lien was originally recorded. If the owner makes a payment that partially satisfies the outstanding balance, the claimant can also file a Partial Discharge of Mechanics Lien form. This effectively reduces the amount of the lien claim, but does not remove it entirely.

After the lien enforcement deadline has expired, a property owner can also release a lien claim from their property by petitioning the court for a release order, which will expunge the lien.

No. In California, contractors and suppliers cannot waive their lien rights in their contract before work begins.

California is one of many states that specifically prohibits this, although even more states indirectly prohibit this.

The right to file a mechanics lien is something established very early on in American law — in fact, it was first invented by Thomas Jefferson. The right to file a mechanics lien is actually a type of labor & laborer protection law. Anyone who has danced with the Department of Labor knows how hard it is to circumvent a labor law.

It’s part of the fabric of American law that you cannot ask someone to waive certain rights that are established for public policy reasons. In the case of California, the lien right is even written into the state constitution!

California isn’t going to let developers and lenders just force contractors and suppliers into waiving this right with a contractual provision. And in fact, the state has explicitly invalidated this.

The answer to this question is maybe, but it will be difficult.

It’s crystal clear that contractors and suppliers cannot waive their lien rights in a contract before work begins. It’s also clear that contractors and suppliers can waive rights after they are paid for the work completed. But, can contractors and suppliers waive their lien rights after work began but before payment is actually made?

Practically speaking, this comes up frequently. When contractors and suppliers are asked to sign an unconditional lien waiver before being paid, there is a question about the validity of that “unconditional lien waiver.”  We’ve written about this timing catch-22 here: Unconditional Lien Waivers vs Conditional Lien Waivers and the Construction Payment Catch 22.

California has clear rules regarding this, but it’s possible to sign a valid unconditional lien waiver even if you haven’t received payment.

Unconditional lien waivers are valid, even if payment is not received, but only if the lien waiver strictly follows the form provided by California statutes. The form contains bold warning language stating:

“THIS DOCUMENT WAIVES AND RELEASES LIEN, STOP PAYMENT NOTICE, AND PAYMENT BOND RIGHTS UNCONDITIONALLY AND STATES THAT YOU HAVE BEEN PAID FOR GIVING UP THOSE RIGHTS. THIS DOCUMENT IS ENFORCEABLE AGAINST YOU IF YOU SIGN IT, EVEN IF YOU HAVE NOT BEEN PAID. IF YOU HAVE NOT BEEN PAID, USE A CONDITIONAL WAIVER AND RELEASE FORM.”

Though the state has a ton of protections for contractors and suppliers and strictly regulates lien waivers, if a contractor or supplier signs an unconditional lien waiver before payment, and ignores this bold and obvious language…then, there’s only so much California can do.  The lien rights are likely waived.

No, California lien waivers do not need to be notarized, even though it’s common for businesses to ask that waivers be notarized.

In fact, it’s possible that notarizing a California lien waiver could invalidate it, since it would change the statutory form. Accordingly, it’s best practice NOT to notarize a California lien waiver.

If you use the wrong lien waiver form in California, there could be bad consequences.  For example:

• If you don’t use the statutory forms:  The lien waiver will likely be void and unenforceable. Further, licensed contractors who require waivers in violation of the statutory requirements may also be penalized by the CA Contractors State License Board anywhere from $100-$1,000!  Yikes.
• If you use a statutory form, but the wrong one:  This could cause the parties to agree to stuff (or not agree to stuff) unintentionally. While it may result in a windfall for one side, it’s never a good practice to do something unintended.

Using the wrong lien waiver form is a very common occurrence. It’s one of the most common California lien waiver mistakes.

That depends. Under the progress payment form, it states “This document does not affect any of the following: (1) Retentions, (2) Extras for which the claimant had not received payment, (3) Contract rights including, (a) rights based on rescission, abandonment or breach of contract, and (b) the right to recover compensation for work not compensated by payment.”

The final payment forms simply include a section where the claimant can fill out the exceptions and add a dollar amount for disputed claims.