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If I have interim lien waivers, do I have to get final lien waivers too?

We are the builder. I have interim lien waivers on almost all the subs on a home we are building. Getting the lien waivers took time and a fair amount of follow-up. Do I have to get final lien waivers? Does not getting a final lien waiver somehow invalidate what I have? I understand that to absolute certainty I need them but from a practical standpoint, I could spend weeks getting finals and not get much more gain. Steve Dabbs

1 reply

Jun 3, 2019

That's a good question, and as hinted at above, deciding what waiver practices make the most sense will depend on the circumstances of a business as well as that company's appetite for risk. Still, there are some general principles that should be kept in mind. An overview of Georgia's waiver rules and some light analysis should help here.

For one, Georgia is home to statutory lien waivers - and there are 2 forms provided by statute: one for progress payment waivers, and one for final payment waivers. Unlike other states which might have conditional and unconditional waivers, Georgia waivers begin as conditional waivers and then automatically convert to unconditional over time (a period of 60 days). So, while there might be as many as 4 waiver options in other states, in Georgia, there are only 2: the partial or "progress" waiver, and a final payment waiver.

Now, when deciding what's sufficient between those two waiver forms, it should be a little easier to parse out what waiver practices should be used. First and foremost, if the property owner or if some other higher tiered party (like an architect or project manager) requires that both partial and final waivers be used, then there's really no decision to be made. Generally, more sophisticated owners or architects will want both partial and final waivers. But, in the absence of a process set out by a higher tiered party, a construction business might be left to their own devices to make a decision on how waivers will be collected. If that's the case, there are some things to consider...

First, a partial lien waiver will only waive what's stated on that waiver. So, if a partial lien waiver has been issued, but if work was performed and payment was given after that partial waiver, the partial waiver won't protect whatever has happened after the waiver was issued. That's why partial waivers are typically followed up by either additional partial waivers, or by a final waiver. But, if no work is performed after a partial waiver has been issued, then it might not be necessary to issue another waiver. Recall from above - Georgia lien waivers become unconditional over time, and if the waiver covers all work that's been performed, then requesting another waiver will likely be unnecessary. So, if all of the project's work was covered in waivers that were already issued and collected, there's no need to collect additional waivers - and there isn't really a benefit to be gained, either. As noted in your question, it can actually slow things down and serve as a source of frustration.

Another thing to consider is that when all payments have been made, there might not really be any need for a lien waiver at all. Mechanics lien rights exist for work performed that goes unpaid. That means if all work has been paid for, no one will have lien rights. Of course, things get interesting when there is more than 1 tier of project participant. If a contractor hires a subcontractor, and that subcontractor hires their own sub - it may be crucial to obtain a waiver from the subcontractor's sub to ensure they've been paid. While a contractor can verify that they've paid all of their own debts, the debts of a sub-sub could lead to a lien claim and ultimately a nightmare for the contractor. So, when a direct contractor's subs and suppliers have hired their own subs, suppliers, laborers, equipment renters, etc. - it becomes more important to hold a waiver in hand from every sub-tier project participant.

But, as mentioned above, it all comes down to the policies of the contractor, owner, or architect in charge of the project. If a contractor isn't required to provide final lien waivers for everyone on the job, and if that contractor is confident that everyone on the job has been paid in full, then there might not necessarily be a need for final waivers. At the same time - when there are multiple tiers involved in a project (like a sub-sub or a supplier to a sub), then collecting final waivers might be wise. Ultimately, that decision is up to the contractor themselves.

For more information on lien waivers, these resources should provide a lot of great information:
(1) Georgia Lien Waiver Guide and FAQs
(2)The Ultimate Guide to Lien Waivers
(3) 4 Tips on Requesting, Collecting, and Tracking Lien Waivers
(4)The Benefits of Adopting Lien Waiver Technology – Get Paid Faster

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