Tagged: Lien Waivers
Should we collect an Unconditional lien waiver once payment is made… IF we already have a signed Conditional lien waiver from the sub/vendor?
General question for a general contractor.
Great question. Certainly, some contractors and owners prefer having both conditional and unconditional waivers in hand regarding the same amounts. In theory, that makes sense – what better way to be sure that lien rights are waived than a waiver that’s unconditional. However, as I’ll explain a little more below, collecting unconditional waivers after payment has been made is unnecessary and could even hurt relationships and reputations, in some instances.
When a conditional lien waiver is in hand, and when the payment indicated on that waiver has been made in full, that lien waiver isn’t really “conditional” anymore. That is, once the condition on a conditional waiver has been fulfilled, that waiver is effectively an unconditional lien waiver. So, if full payment has been made in accordance with the waiver and if the general contractor can prove that the payment was made, then there’s really no need for collecting unconditional lien waivers.
Additionally, it’s worth noting that there isn’t really a need for lien waivers from direct subcontractors when those subs have been paid in full and where the contractor can prove that the payment was made. After all, lien rights only exist for amounts that are owed but unpaid – so, when a sub has been paid in full, they wouldn’t be entitled to lien rights anyway. Of course, at least with the conditional lien waiver, there’s written and signed confirmation that payment was made in full and that lien rights can’t be exercised. Still, following up conditional waivers which are paid in full with an unconditional lien waiver is generally not necessary and doesn’t actually provide additional protection since there are no lien rights to waive anyway.
These resources also have great insight into lien waivers, and I think they might be helpful:
(1) How To Handle Requesting & Tracking Lien Waivers
(2) The Ultimate Guide to Lien Waivers