Home>Levelset Community>Legal Help>Lienwaivers.io, requested by GC. Is this a safe way to receive payment?

Lienwaivers.io, requested by GC. Is this a safe way to receive payment?

WashingtonConstruction ContractLien ReleasesLien Waivers

We've recently been asked by our GC to onboard Lienwaivers.io, in order to receive our pay requests. This is a third party lien collecting company, who holds money in a trust (?) and then releases payment once an unconditional is signed. Is this safe? Legal? to have Subcontractors sign their unconditional BEFORE payment is fully received?

1 reply

Oct 8, 2020
There's a lot to unpack here, but it boils down to weighing how comfortable you feel with lienwaivers.io or any other third-party solution, with how much you feel you can push back against the GC's request if you don't want to change systems. Having a third party hold both money and an unconditional lien waiver in an "escrow account" type situation, and facilitating the exchange is the business model of Textura, and was the foundation of a very large and successful business. lienwaivers.io was purchased by Built Technologies, and is apparently using a similar process. The idea is that, to get around the dilemma of the payor wanting an unconditional lien waiver in order to make payment, and the payee wanting payment before giving up lien rights, a neutral third party can hold both and facilitate the exchange. One issue, is that this is not an actual dilemma, a conditional waiver can be used to accomplish the same thing. A conditional waiver does not waive lien rights until the associated payment is actually made, at which time the waiver becomes effective to waive lien rights with respect to that payment. An unconditional waiver can then be sent to provide further emphasis, if the GC requests. In Washington, a party may waive lien rights at any time - before payment, or even before work in the contract itself. So, there is nothing preventing a party from supplying a lien waiver at any point during the work or payment process. If you do work in other states, different rules may apply. While it is generally not best practice to supply an unconditional lien waiver prior to actual receipt of payment (since third parties must be able to rely on waiver documents, what it says can be more important than what actually happened), relying on a neutral third party can potentially reduce that risk. Whether you want to implement any specific process, software, or other solution, however, if a business decision.
2 likes

Add your answer or comment

Not the answer you were looking for? Check out other Construction Contract topics or ask your own question