Hi, I'm still confused about the CONDITIONAL WAIVER AND RELEASE ON PROGRESS PAYMENT. I mean, what is the purpose of this form? Is it to protect the payer or payee more? What is the risk for both sides? Thanks！
Good morning! This should be helpful. Primaily, the waiver and release form is to protect owners, lenders, and direct (prime) contractors. https://www.levelset.com/lien-waivers/california-lien-waiver-faqs/
That’s a good question. A conditional waiver and release form really protects both the person being paid and the person who’s paying. The conditional form protects the contractor or supplier being paid by saying their lien rights, stop payment notice, and bond rights are only being waived if they receive a check in the amount shown on the form AND the check clears their bank. In this way, the contractor or supplier being paid is protected by not giving up their lien rights if the check they’re given bounces or is stopped by the bank.
An unconditional waiver and release has no conditions and says that the contractor or supplier being paid is immediately waiving their lien rights. If the contractor or supplier signs an unconditional form and that check later bounces, then they’re out of luck and have waived their lien rights for that pay period.
It also protects the person who’s paying by confirming the amount owed to the contractor or supplier for that payment and allowing them to rely on the form once it’s confirmed that the payment has been made and is valid. If the contractor or supplier signs the conditional form and gets paid and then tries to lien the job for work covered during the time period stated in the form, the person who’s paying can use the signed form as a defense against the lien. This can be a bit tricky, I know. I’m happy to answer any questions you have about this.
Cathleen M. Curl, Esq.
Law Office of Cathleen M. Curl