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Home>Levelset Community>Legal Help>Rights to lien (We have a 'Independent Contractor Agreement' signed by us when we started work for the company that has a line iten clause in it the waives our rights to lien is the legal? We are attaching the verbage below. We are in New York and They are in California

Rights to lien (We have a 'Independent Contractor Agreement' signed by us when we started work for the company that has a line iten clause in it the waives our rights to lien is the legal? We are attaching the verbage below. We are in New York and They are in California

New YorkLien Waivers

LIENS. Contractor agrees to, and hereby does, waive any and all rights under any and applicable state statutes to file liens of any kind whatsoever against properties on which it or its subcontractors have performed work, for nonpayment of invoices or any other reason whatsoever. Contractor further agrees to take no action of any kind which would affect in any way the chain of title to such properties including but not limited to the filing of any liens, lis pendens notices, civil actions, or the taking of any action which clouds title to such properties or in any way interferes or affects UFS’s clients’ ability to transfer title to the subject property to third parties. Contractor agrees that in the event Contractor breaches this provision and files a lien against any property covered by this Agreement, irreparable damage to UFS’s reputation and business relationships will be caused thereby. The Parties agree that if Contractor breaches this covenant, Contractor shall pay to UFS liquidated damages in an amount equal to the sum of (i) $50,000, (ii) the dollar amount of the lien or other encumbrance placed on any applicable property by Contractor; and (iii) any attorneys’ fees and costs incurred by UFS in the removal or clearance of the title clouding issue. Contractor shall not permit or cause any lien to be filed on any property by Contractor or any subcontractor or other third party that provides services to Contractor in relation to the services provided by Contractor to UFS hereunder. If a lien of any nature is filed by any person who has supplied materials, work or services of any kind at the request of Contractor or its subcontractors, against a property or properties which services were performed for UFS pursuant to this Agreement, Contractor shall promptly, at its expense, take any and all action necessary to cause any such lien to be released and discharged, and shall indemnify UFS against any and all losses, claims and damages, including reasonable attorney’s fees and costs resulting from Contractor’s failure to obtain a release or discharge of any such lien. Nothing contained in this provision shall limit or prevent UFS from taking whatever action it deems necessary to protect the value of any applicable property and its interest in the subject real property, including but not limited to the right to obtain immediate reimbursement from Contractor or for any amounts paid by UFS related thereto. This provision shall survive the termination of this Agreement.

1 reply

Oct 29, 2018
That's a good question. First, it's worth noting that the lien laws of the location where the improved property is located will apply. This makes sense - ultimately, the property would be encumbered by a lien claim, so the laws of where that property is located should apply. California is very strict when it comes to lien waivers. Under § 8122 of the California Civil Code, "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." Based on this section of the California Civil Code, a contract clause that attempts to waive lien rights prior to work being performed would be void and ineffective to waive the claimant's lien rights in and of itself. New York also prohibits lien waivers prior to payment. Specifically, under § 34 of the New York lien statute, "any contract, agreement or understanding whereby the right to file or enforce any lien created under article two is waived, shall be void as against public policy and wholly unenforceable." In New York, lien waivers should be exchanged with or after payment. If work is being performed in some state other than New York or California, that state's lien waiver rules will apply - and you can read up on any state's lien waiver rules at that state's section of zlien's Construction Payment Resources.
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