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Do I send an Unconditional waiver on progress payment to the roofing company I am making a progress payment to even if I
don't know for sure that they filed a lien waiver?
2 replies
Sep 25, 2019
Lien waivers, in the broadest sense, work like receipts for payment. So, whenever payment is being made to a construction participant it is a good and reasonable idea to request a lien waiver from he party being paid in the amount of the payment. The lien waiver is simply a statement saying that the party getting paid is giving up their rights to file a lien against the improved property the the extent of the payment referenced on the waiver.
Whether the party who is getting paid filed or sent a preliminary notice (or any other document) may have impacts on their ultimate lien rights, but it doesn't necessarily preclude the benefits of obtaining a lien waiver that corresponds to the payment made. California has specific lien waiver forms that must be used, and has certain requirements relating to lien waivers that can be helpful to take a look at. Information on California lien waivers can be found here.
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Helpful
Sep 25, 2019
It's a good idea to collect lien waivers any time payment is made. Lien waivers, when utilized properly, act like receipts - they show that payment has been made, and they verify that a mechanics lien won't be filed for the payment already made, and that payment won't have to be made twice.
So, if the question is whether or not a waiver should be requested upon making payment - absolutely! Mechanics lien waivers are intended to be exchanged with payments. Typically, a conditional lien waiver is most appropriate if it will be submitted before payment is made, and an unconditional lien waiver is most appropriate after payment is in hand.
But, if the question is whether payment should be released without a lien waiver in hand, that's less cut and dry. On one hand, if a claimant has actually received payment, then they won't be entitled to file a lien claim - it's that simple. On the other hand, it's a good idea to have a lien waiver on file for each payment released. That way, if some payment dispute does erupt, it's easy to show the receipts and quickly get to the bottom of the issue and fend off potential claims.
I hope this information was helpful, and feel free to add any clarifying questions here or by asking another Expert Center question.
Finally, here are some additional resources I think will be valuable:
(1) California Lien Waivers Guide and FAQs(2) California Lien Waiver Forms & Guide – All You Need to Know