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was wondering how to tell the difference between a conditonal and non-conditional partial lien waiver

7 months ago

I am often required to sign lien waivers prior to getting paid by certain customers, but the lien waivers clearly say that I acknowledge and certify that I have been paid in full; when I have not. Is this legal? I am in MA but the company I am concerned about is headquartered in NY. thanks

Senior Legal Associate Levelset

Excellent question! Understanding what’s in a lien waiver is crucial before signing it. As noted above, the difference between a final lien waiver and a conditional lien waiver can be subtle on the face of the document, but the implications are far-reaching. Before getting too far along – it’s worth noting that the lien (and lien waiver) rules of the state where the project is located will apply. So, if work is being performed in a state that has statutory lien waivers (like Massachusetts), the Massachusetts statutory lien waivers would need to be used. But, if work is being performed in a state that doesn’t have specific waiver forms (like New York), the parties may be free to use whatever form they like. You can learn more about which states require specific waiver forms here: Lien Waivers: The 12 States With Statutory Lien Waiver Forms. As for whether it’s legal to request an unconditional waiver be submitted even before payment is made – there’s no one-size fits all answer. For Massachusetts projects, as long as the waiver abides by the statutory form, it appears that waiver will be effective to waive lien rights (regardless of whether payment is actually made). For New York projects, it appears that a lien waiver won’t be effective until payment is actually made. Lien waiver rules for all 50 states can be found here: State by State Construction Payment Resources. Ultimately, regardless of what’s legal or not, it’s a good idea to carefully read a lien waiver before signing it. If the lien waiver does not explicitly state that payment hasn’t been made, that lien rights are only waived upon the receipt of payment, or if the waiver doesn’t otherwise reserve rights in the case that payment isn’t made, typically, that waiver will be unconditional. Further, often, lien waivers will indicate whether the waiver is conditional or unconditional in the title of the document. If things still remain unclear, one option for a claimant may be to try and submit (or request to submit) their own lien waiver form. That way, a claimant can be confident about what’s in their waiver. Alternatively, reaching out to the party requesting the lien waiver could be helpful – they may be able to discuss the waiver and explain its effectiveness. Of course, keep in mind that regardless of what any person or business says, the text of the actual documentation signed is what’s important. For more information about lien waivers and their use, these resources should be helpful: (1) Should You Sign That Lien Waiver?; (2) Unconditional Lien Waivers vs Conditional Lien Waivers and the Construction Payment Catch 22; and (3) The Ultimate Guide to Lien Waivers.

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