Menu
Home>Levelset Community>Legal Help>What homeowners expect from the GC in requiring releases from subs at time of payment?

What homeowners expect from the GC in requiring releases from subs at time of payment?

CaliforniaLien Waivers

With regards to a homeowner, when requesting a lien release upon each payment made to the contractor, it's recommended by government agencies (Contractors Boards) to also request a lien release from the subs and material suppliers who performed work or materials for that part of the work for which you are paying the contractor. Is he to provide those releases from the subs, (to the homeowner) etc at the same time of payment or is there a delay in receiving them from the subs, such as they need to first receive payment from the GC? And what if any, is there a reasonable time to expect those releases from the sub?

1 reply

Jan 24, 2020
It's a good idea to make sure that waivers are being collected from multiple tiers of the project, not just the GC. And, as you mention above, GC's are often held accountable for collecting the lien waivers of their subs and suppliers in order to exchange those for payment. And, if there are additional tiers to the project, it might make sense to have a GC collect the lien waivers of sub-subcontractors, suppliers hired by subs, etc. - whether they do that personally, or whether they do that through their direct subs. Most GC's will be familiar with this process, so when undertaking a project, it's a good idea to make that expectation clear from the jump and to even make that a contractual requirement that must be met. But, for a little more clarity, these articles should be valuable: (1) The Property Owner’s Guide to Lien Waivers; and (2) How To Handle Requesting & Tracking Lien Waivers. You're also right that the timing of lien waivers can create some tension. Luckily, though, California provides for the use of conditional mechanics lien waivers. Unlike an unconditional lien waiver, conditional waivers won't actually waive rights until after payment is receieved. So, contractors, subs, suppliers, etc. can confidently submit a conditional lien waiver knowing that, if the amount on the waiver isn't paid, they can still move forward with a lien claim, if necessary. More on that principle here: Unconditional Lien Waivers vs Conditional Lien Waivers. Even with the use of conditional waivers, it's relatively common for some pushback on requiring lien waivers prior to payment - and it's generally up to the owner, contractor, and other parties on the job to feel out the situation and land on a resolution that works for everyone involved. And, discussing the matter early in the job can help to create healthy expectations later on.
0 people found this helpful
Helpful