We have a customer who wants me to back date a lien waiver (they didn't do their job at the time) to mid-June. Is there any reason we shouldn't back date the waiver?
1 reply
Aug 6, 2019
Good question. First, it's generally a bad idea to put incorrect information on a lien waiver. Lien waivers are essentially just contracts, and they have a profound impact on the ability to recover payment if something goes awry. So, why would anyone want to lie on or manipulate such an important document? Plus, when a construction business signs the waiver, they're putting their seal on the document and stating that the information contained in the waiver is true. So if there is an issue later on, it will be hard to explain, in a satisfactory manner, that the information on the waiver was not, in fact, true.
In Georgia, though, there's one more big reason why claimants might want to be hesitant to backdate a lien waiver - especially when payment hasn't yet been made. In Georgia, a lien waiver starts off as a conditional lien waiver. Meaning, it's only effective if payment is actually made. However, 60 days after the lien waiver is exchanged, it automatically converts to an unconditional waiver. So, generally, a Georgia construction business will have 60 days - about 2 months - to make sure that payment is actually made once they've submitted a lien waiver. If payment isn't made during that time, the business can proceed with a mechanics lien claim or with an Affidavit of NonPayment even though a waiver has been given (as long as the 60 days haven't passed).
But, when a Georgia lien waiver is backdated, a construction business cuts into their own safety net. For example, if a lien waiver is backdated by 40 days, but the payment isn't made immediately after the waiver is exchanged, that claimant will only have 20 days - less than 3 weeks - to do what they can to get their hands on payment. Of course, in a situation where payment has already been made when a lien waiver is submitted, this fear might not be as pronounced. But still - it's generally not a good idea to intentionally put incorrect information on a waiver. Though, if you're really inclined to help a customer out by backdating a waiver, it'd probably be a good idea to at least fully discuss why the lien waiver is being backdated, potential repercussions from backdating the waiver, and to make sure that there's trust and communication with that customer before deciding one way or another.