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What is the correct interpretation regarding values shown on partial lien waivers for subcontractors on SF contracts

PennsylvaniaLien Waivers

As an owners representative, a major point of delay in processing payments to General Contractors is caused by the mismatch in the value of the payments made to date and shown on partial lien waivers from subcontractors not aligning with the schedule of values reflected on the AIA Continuation Sheet, G703 for Stipulated Fee Contracts (AIA A101 and other stipulated fee forms). I have always assumed this is to be expected due to the intent of a Stipulated Fee contract for Progress Payments which are based on % complete progress. However, more and more of our clients are demanding that during Progress Payments the subcontractor lien waivers should closely align, if not exactly align, with the specific value of the applicable on the SOV. Which is the correct interpretation or what is the correct interpretation if neither is correct. thank you

1 reply

Mar 25, 2020

It's understandable that a customer would want waivers and the schedule of values to match up pretty closely. A schedule of values creates a great plan for typing the project plan, schedule, and budget together. However, I think it should be pretty easy to identify why the mismatch is happening (and why it should be expected, at least to some degree). Mechanics lien waivers are used like receipts for what's actually been paid out to the party submitting the waiver. So, lien waivers should reflect the dollar amounts actually being paid to contractors. If what's being paid out doesn't match the schedule of values, then it makes sense that lien waivers won't match the schedule of values since waivers should reflect what's actually being paid out. Parties submitting waivers won't want their waiver to exceed what they're actually being paid - and rightfully so! Reviewing the schedule of values, the work performed, and the work being billed should help to identify why the schedule of values doesn't exactly line up with the amounts being billed and paid - whether that be because of the contract type or the way that progress billings are done. And, once that discrepancy is sorted out, it should be easy to convey why waivers and the SOV don't perfectly match. Or, alternatively, it should be easier to try and get those documents to match up more closely.

Additional resources on collecting lien waivers

Below are some other resources which might be helpful in discussing lien waivers with your customers. - How To Handle Requesting & Tracking Lien Waivers - The Property Owner’s Guide to Lien Waivers - The Construction Accountant’s Guide to Lien Waivers

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