How does it work when the owner has required lien waiver forms?
5 replies
Jun 24, 2020
Hello!
The simple explanation is that you hand a conditional lien waiver to the person requiring it and, if they hand you a check that clears, you are no longer allowed to lien for that value of the project. The key is that the payment must clear your bank account. Otherwise the conditional lien waiver's conditions have not been met for it to take effect as a lien waiver. I hope that made sense.
Example: The project is for $45,000. Your first draw is for $15,000. You hand over a conditional lien waiver and, if you are paid that $15K (and it clears the bank) but nothing on the rest of the project, the total amount that you may lien for is $30K (the remaining balance after you were paid assuming you complete all the work).
E. Aaron Cartwright III
214-789-1354
Aaron@EACLawyer.com
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Jun 24, 2020
Hello,
The conditional waiver and release on progress payment is submitted at the same time a pay application is provided. The waiver and the payment application should state the exact same time period. This first agreement is conditional, meaning your lien rights are not waived until payment is made.
For the next pay application, you will need an unconditional waiver for the month before and a conditional waiver for the current pay application. The unconditional waiver states that your lien rights are now waived, since you have been paid in full, for the period indicated in your payment application. You should not sign the unconditional lien waiver until you have been paid in good funds (the check has cleared).
This process is followed throughout the whole project, until the final pay application. For the final pay application, the subcontractor submits the conditional waiver on final payment, which states the total remaining amount you are due for the project, including retainage. Once you are paid in full (including retainage), you supply the general contractor with the unconditional waiver. The unconditional waiver and release on final payment state that your lien rights are waived now that the final payment has been received.
I've written a blog post that explains the lien waiver process in detail, here is the link if you would like further explanation.
Thanks,
Karalynn Cromeens
Managing Partner
8431 Katy Freeway
Houston, TX 77024
www.TheCromeensLawFirm.com
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Jun 24, 2020
Thank you for your response. The commercial project is broken down in 4 draws, initial, progress payment, final payment, and 30 day after job completion. As far as lien waiver goes for each draw? Is a conditional lien waiver in progress of job required for each payment amount or just one inital one for job cost and then once job is complete you would send a final lien waiver?
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Jun 24, 2020
Hi!
A conditional lien waiver should be submitted for each draw.
-Aaron