Home>Levelset Community>Legal Help>If I pay an invoice which has a valid, signed lien waiver from the sub, but I deduct something from the payment, how does that affect the sub's lien rights?

If I pay an invoice which has a valid, signed lien waiver from the sub, but I deduct something from the payment, how does that affect the sub's lien rights?

GeorgiaLien Waivers

Our insurance company requires us to require our subs to carry worker's comp insurance, and they audit us yearly. If we choose to work with a sub that does not carry worker's comp, we have a form that we require the sub to sign in which they agree to an 11% "admin fee" for every invoice to cover the fine that we will incur from our insurance company when the invoice shows up in our audit. For instance, if I have a $100 invoice but the sub does not carry worker's comp, I will deduct $11 as an admin fee. If the sub signed a lien waiver with $100 on it, do I now have exposure or does the signed 11% admin fee agreement cover us? Also, what happens if I take a backcharge or an early-payment discount against the invoice? Thank you.

1 reply

Aug 29, 2018

That's an interesting situation. If there is a written agreement in place that invoices will be discounted 11% after they're submitted, accepting a lien waiver in conjunction with an invoice would likely not create issues. Of course, it would be wise to communicate that the invoice will be discounted prior to submitting a discounted payment - receiving a check discounted by 11% could be jarring if the recipient is not prepared for it, and miscommunications like that can lead to escalated payment disputes. When a lien waiver does not exactly match the payment received, it will not automatically invalidate that lien waiver. But, as mentioned above, if the party submitting the waiver is not prepared for the discount or is not aware of it, they may be upset upon receipt and could threaten to utilize a mechanics lien. A lien waiver will not prevent a lien filing from occurring - a claimant can actually file a mechanics lien regardless of whether they've submitted a waiver. Rather, a lien waiver is an agreement that the party won't file a lien and the waiver will serve as proof that the filed lien is invalid. So, while a filed lien may be invalid, the steps to remove the lien would still need to be taken. This is all to say that: A waiver that does not perfectly match the amount paid will not automatically invalidate the waiver. But, clearly communicating that an invoice will be discounted is pivotal, because even when a valid lien waiver is in hand, a claimant could cause headaches with a lien filing (even when that lien would be invalid).

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