I own a small commercial construction company in Texas and we always ask for the hard copy of lien waivers. I was wondering if this is required or not and if it is required, how long do I keep it for?
Feb 19, 2019
That's a good question, and it's one we get relatively often. First, the Texas Property Code doesn't require that lien waivers be kept for some specific amount of time. Rather, the practice of hanging onto a lien waiver is up to each business. While it may make sense to hold on to original lien waivers for some specified amount of time (for instance, until the timeline for the given claimant has passed to file a lien, or for some set amount of time after project completion), there's no one-size-fits-all answer. It's a good idea to hold on to some version of the lien waiver for whatever amount of time the claimant feels is necessary - but, if the threat of a lien claim is no longer present, going through the trouble of holding onto original copies might not be worthwhile. Regardless of what timeframe makes sense - it would likely be valuable (and not particularly labor intensive) to keep a permanent digital record saved of every single lien waiver received. While that can seem cumbersome for parties receiving a multitude of waivers, there are solutions available - such as via using the cloud, external hard drives, or some other digital record keeping method (there are plenty). As for whether an original copy must be requested in the first place - that's also up to the party managing their lien waivers. On one hand, an original signed copy is a tried and true source of documentation, and it may be the absolute safest way to proceed. However, there's nothing in the Texas Property Code that requires a party to receive and maintain an original version of a lien waiver submitted. On that front, demanding that only original lien waivers be submitted and then holding on to the physical copy might be a little old school (and potentially unnecessary). Ultimately, as long as the requirements were adhered to (including the strict form and notarization requirements for Texas lien waivers), it shouldn't really matter what form the lien waiver is held in. This is especially true where a contractor can show when and how the waiver was sent (which could also potentially be stored via electronic record). It might also be helpful to think of when and why record of a lien waiver might be necessary. So, typically, the use of lien waivers is necessary for a GC, owner, or lender to release payments and/or close out a job. Where these parties do not object to the use of digital records, then using digital copies of lien waivers is likely sufficient. Further, records of lien waivers may also come into play if a lien is eventually filed for amounts already waived. In this situation, having an original record of the lien waiver might be considered helpful. However, there are some other things to consider - namely, (1) The lien waiver (presumably) has been signed and notarized by the party submitting the waiver prior to creating the digital file; and (2) there is presumably some record of how and when that waiver was received. So, even where a digital lien waiver is kept, that waiver has been signed and notarized, and it should be easy to show that it was actually sent and received. In that case, producing an original lien waiver might not be necessary considering how plainly obvious it would seem that the waiver was, in fact, submitted. For more on Texas lien waivers, this resource should be helpful: Texas Lien Waiver FAQs.