I am making a bid for a job but the lender is requiring that everyone sign unconditional waivers in order to be considered for the job. This seems risky to me. What should I do?
1 reply
Aug 25, 2017
It's never a good idea to sign an unconditional waiver prior to receiving payment. In the realm of lien waivers, what you say is often more important than what actually happened, at least as regards payment.
This particular situation is very complex, however. In California, "no lien clauses" or other attempts to force a party to waive lien rights by contract prior to work are void and unenforceable. Section 8122 of the California Civil Code notes that: "An owner, direct contractor, or subcontractor may not, by contract or otherwise, waive, affect, or impair any other claimant’s rights under this part, whether with or without notice, and any term of a contract that purports to do so is void and unenforceable unless and until the claimant executes and delivers a waiver and release under this article."
There are two things to specifically note here: 1) this does not name lenders [which makes sense because they do not contract for the completion of the work]; and 2) there is an "exception" when the claimant delivers a waiver and release pursuant to the waivers rules in the statute. This means that providing the waiver, provided it is in the correct statutory form, may indeed work to waive lien rights, even though work has not yet begun, and payment has not yet been made.
So, in this situation, the choice comes down to whether or not it is worth doing the job with the risk that there may be no mechanics lien protection in the event of non-payment. While it's an iffy legal decision the choice is a business one.