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Our lien is working but how do I manage waiver before getting paid?

We filed a lien and it worked, the developer called me stating willingness to pay. However, they need to pay with funds from draw than is currently on hold due to our lien. He wants a clean title to get his financing and has promised to pay. How do I best handle this? He said he would forward a copy of statement with our company info listed as party to be paid. Should I take this as enough for me to release lien and what happens if he's dealing in bad faith?

1 reply

Jun 21, 2018

First, that's great news! While it's unfortunate that a lien filing became necessary, it's great to see a claimant get paid what they're owed. Anyway, this can be a challenging part of recovering funds after a lien filing, but it's not an insurmountable situation by any means. That is: often, owners, GCs, or developers who offer to make payment in exchange for a release of lien often require a release prior to making payment. This can naturally be scary for lien claimants - a mechanics lien is typically their best leverage for forcing payments, and giving up a lien without first having received payment is frightening. There's always a chance that a party requesting the release is dealing in bad faith. However, if a written agreement is in place indicating that the paying party agrees to make payment in exchange for the lien release, it might be easier for many claimants to let go of a lien. In such a situation least an agreement is in place that, if broken, could preserve the right to recover payments owed. Ultimately, there's no bright-line rule as to when a lien should be released when payment has been promised. That will be up to each individual claimant when the situation arises, and the timing of the release could be based on a multitude of factors, including the relationships and track record between the claimant and the party promising payment.

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