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If we sign a lien waiver though a specific date are for an amount less than what is owed us are we giving up the rights

Alabama

We have a commercial job that is wanting only to pay us part of the amount owed until all issues are resolved. They want a pay application and a lien waiver to date for the partial amount. Is that acceptable when they owe us more?

3 replies

Jan 12, 2021

If you're only receiving part of what you're owed for a specific period, then it's important to note that on the waiver that's being signed. Otherwise, you could end up waiving lien rights for amounts that are still outstanding. 

The easiest and most common way to do that is to exclude whatever amounts are still owed but unpaid by putting them in the "Exceptions" section of a waiver. Exceptions sections identify amounts that shouldn't be waived because they haven't yet been paid, while also allowing other amounts to be waived for that same period. By using a lien waiver with an Exceptions section that identifies what amounts haven't been paid, and by making sure the waiver language protects the identified, unpaid amount - a claimant can be sure they don't accidentally waive rights beyond what they're currently being paid to waive.

Of course, it's also important to make sure you're using the correct waiver form for your situation (whether that be conditional or unconditional, and whether it be a progress or final waiver). For more information on how to choose the waiver form that's right for you: (1) The Ultimate Guide to Lien Waivers in Construction; (2) Unconditional Lien Waivers vs Conditional Lien Waivers; and (3) Alabama Lien Waivers Guide and FAQs.

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Jan 12, 2021

That you so much for confirming that information for me.

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Jan 12, 2021

You will lose the right to collect the additional owed if you sign such a lien waiver. Pleae feel free to contact me to discuss if you would like.

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