I didn't get paid for paint from the owners, but I signed a lien waiver with them. I owe money to sub contractors that I hired out.
1 reply
Dec 31, 2018
I'm sorry to hear about that. As a general matter, where a conditional waiver is being used, signing a lien waiver prior to receiving payment isn't all that big of a deal. Thats' what they were made for - when a conditional lien waiver is exchanged, no lien rights are waived until payment is actually received. However, if an unconditional lien waiver is requested prior to receiving payment, signing the unconditional waiver could waive lien rights prior to payment and leave a claimant with fewer options to recover what they're owed. Looking to Utah - Utah is a unique state in that it is extraordinarily strict about when and how lien rights are waived. Based on 38-1a-802(2) of Utah's construction lien statute, even if the correct forms are used, lien rights will not be waived if payment has not actually been made. Specifically, it states that "Notwithstanding Section 38-1a-105, a claimant's written consent that waives or limits the claimant's lien rights is enforceable only if the claimant:
(a)
(i) executes a waiver and release that is signed by the claimant or the claimant's authorized agent; or
(ii) for a restrictive endorsement on a check, includes a restrictive endorsement on a check that is:
(A) signed by the claimant or the claimant's authorized agent; and
(B) in substantially the same form set forth in Subsection (4)(d); and
(b) receives payment of the amount identified in the waiver and release or check that includes the restrictive endorsement:
(i) including payment by a joint payee check; and
(ii) for a progress payment, only to the extent of the payment." Thus, based on 38-1a-802(2)(B), if payment is not actually received, lien rights are not waived in Utah. Of course, that's not to say that there won't be a dispute over the validity of the waiver or that an owner won't argue that the lien waiver is effective. Thus, in order to avoid unnecessary expense or dispute, it's a good idea to either use conditional lien waivers or to avoid exchanging a lien waiver until payment is made. It's also worth noting that prior to filing a lien, many claimants find that the mere threat of lien - using a tool like a Notice of Intent to Lien - can be powerful to compel payment. Plus, if a Notice of Intent to Lien is ineffective, a claimant can always proceed with their lien (assuming all other notice and deadline requirements are adhered to). Finally, the following resources should be helpful: Utah Lien & Notice FAQs and Utah Lien Waiver FAQs.