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Customer requesting final lien from our subs and suppliers

MinnesotaLien Waivers

Our customer is requesting a final lien from our Suppliers on a projected. However, we generally do not pay our vendors until we are paid on the project. Also, these vendor have not yet even met the terms (net 30) in our system. What should I do? I am not sure who to respond to our customer. Becky

1 reply

Dec 9, 2019
It's common for an owner to want final lien waivers prior to releasing final payment. However, as you mention above, final payment will typically be where subs' and suppliers' final payments come from - so timing the lien waiver process can be tricky. Note, though, that conditional mechanics lien waivers may be helpful here. On one hand, they should appease an owner - they're final lien waivers, and they'll be fully effective once payment is made to the parties that submitted them. On the other hand, parties who submit conditional mechanics lien waivers don't risk waiving all of their rights prior to receiving payment. As discussed in the following article, conditional waivers can be a great solution when caught between owners expecting waivers and subs and suppliers reluctant to supply them before getting paid: Do I Have to Sign a Lien Waiver to Get Paid? Alternatively, or even additionally, being honest with the customer and explaining that their pay will come from the payment you receive can be helpful. Most owners should be open-minded and understanding about how the business works. What's more, explaining why conditional waivers are being used and offering to supply unconditional lien waivers after payment is made could be helpful, too. And, subs and suppliers should typically be willing to trade unconditional waivers for payment. More on conditional and unconditional waivers here: Unconditional Lien Waivers vs Conditional Lien Waivers. Further, you can find free, downloadable conditional lien waiver forms here (just scroll down a bit): Minnesota Lien Waivers Guide and FAQs.

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