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Payments and Lien Waivers

Hello, I live in Illinois and want to know the proper process with regards to a title company or GC collecting original lien waivers in exchange for payment. Here is the process I normally abide by with my larger title companies - once payout is available I complete a lien waiver and get a material waiver from my vendor. I submit these notarized documents via scan to the title companies and they release my check if approved. The title companies I have dealt with are First American, Chicago Tile and Old Republic. All of them operate this way. However, I have a GC who uses his accountant for payouts and he requires all the original waivers (3 copies) prior to payout and won't mail a check until he has them, despite me offering to scan a waiver over. I don't like this process because I'm giving up my waivers and haven't collected payment - not to mention it delays us in getting paid. Can he require these before I have received payment?

1 reply

Feb 5, 2020

Illinois does not have statutory lien waivers, and the state does not specifically require that lien waivers must be notarized. So, before getting too far along, note that lien waivers can generally take whatever form the parties agree upon in Illinois, and notarization isn't an actual requirement (though, unfortunately, some companies insist on it). Further, note that nothing in Illinois' lien statute forces a party to submit a lien waiver in order to obtain payment. But, practically, lien waivers will usually be expected prior to or in exchange for payment, and it's exceedingly common for a contract to require waivers. Regarding original waivers - it can be annoying to provide original waivers to multiple parties, but executing multiple copies of the same waiver should be an easy enough fix. And, this can be made even easier by using digital waivers (with electronic signatures), then submitting those via email or through an online platform. Though, if a GC is requiring original, notarized lien waivers - they might not go for that option, despite it being perfectly valid. Finally, note that conditional lien waivers can solve a world of problems. Conditional mechanics lien waivers aren't fully effective until after payment is made. So, if a conditional waiver is submitted but the associated payment isn't made, then the party who submitted the conditional lien waiver will still be entitled to pursue a mechanics lien claim. Naturally, this relieves a lot of the stress associated with submitting a lien waiver before payment is made. Plus, the conditional waiver is automatically fully effective once payment is made - so, a contractor should have little problem accepting a conditional waiver since that waiver becomes unconditional once payment is made. For more discussion on Illinois lien waivers, including free downloadable forms, this resource should be valuable: Illinois Lien Waivers Guide and FAQs.

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