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Release of Stop Payment vs. Unconditional Waiver Upon Final Payment

Anonymous Material Supplier

I issued a stop notice against a contractor in August. In October the property owner sent a letter saying they were withholding the amount owed us + 25% from their next payment. The payment amount to the contractor however wouldn't be issued until a release of stop notice was issued and in turn we wouldn't get paid. My question is does the bond release cancel out the unconditional waiver upon final payment? We haven't issued that yet and on the bond release I listed the amount owed was still unpaid.

1 reply

Matt Viator

Construction Lawyer

Levelset Admin at Levelset

| 1,000 reviews

Nov 26, 2019

If a final unconditional mechanics lien waiver is submitted in California, then lien rights will generally be waived upon that submission - even if there's some other documentation, like a bond release, that states payment is owed and unpaid. To be sure, a final unconditional lien waiver should generally only be submitted after payment is in hand for the work performed, and some other documentation usually won't affect the viability of a final unconditional lien waiver. Certainly, when negotiating payment, it's common for a customer to request unconditional lien waivers. However, in a situation where a customer has been less-than-solid about making payment, and when a claim has already become necessary in one form or another, it's generally a good idea to be cautious about submitting such a waiver without first being paid. Rather, utilizing a conditional lien waiver might be more appropriate. For more background on California waivers, this resource should be valuable: California Lien Waiver Forms & Guide – All You Need to Know.

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