We are establishing a document retention policy for lien waiver originals.
Jan 9, 2019
That's a great question, and I don't think it's one that I've seen before here at the Construction Legal Center. First, I'll note that keeping electronic copies of signed lien waivers (or even exchanging lien waivers electronically) should be just as effective as holding onto the originals themselves. There's always comfort in holding the original, but there's no requirement I've seen that requires a lien waiver be held in original form for some period of time. But the question remains - if a contractor is determined to hold onto lien waiver originals, how long should those originals be held? One way to determine that timeframe might be to look to Michigan's lien deadline. In Michigan, the deadline to file a mechanics lien is 90 days from the claimant's last furnishing of labor or materials to the project. So, if there's clear information as to when a claimant last provided work, it may make sense to place less of an emphasis on holding onto an original lien waiver after that date. Naturally, it may be hard to keep track of every sub and supplier's last furnishing date - so basing a policy's timeframe on the completion of the overall project might make sense too. Since the lien deadline is 90 days from last furnishing, and since no one should be furnishing labor and/or materials after project completion, holding onto original lien waivers for 90 days beyond project completion might make sense. Finally, a more conservative option might be to hold onto original lien waivers for a year (or potentially a year + 90 days) from the completion of the project.
In Michigan, an action to enforce a mechanics lien must be filed within 1 year from when the mechanics lien was filed. While a lien filing is required to occur earlier than that, conceivably, a claimant could attempt to file a mechanics lien well beyond that deadline. Still - holding onto an original lien waiver forever doesn't make much sense, but holding onto that lien waiver until a suit to enforce a lien would've had to have been filed might make more sense. Naturally, some businesses may decide to be uber-conservative and hold onto lien waivers for a bit longer than that. In any case, when creating a waiver retention policy, it's essential to keep some record of a lien waiver for an extended mount of time. Since it's far simpler to store electronic copies in perpetuity, it's likely a good idea to create electronic record of a lien waiver (i.e. scanning it and saving the file somewhere) upon receipt of the waiver, regardless of how long the original will be held. For more information on Michigan's lien waiver rules, zlien's Michigan Lien Waiver FAQs should be a helpful resource. For more on lien and notice rules in Michigan, the Michigan Lien & Notice FAQs should be a good resource, too.