Home>Levelset Community>Legal Help>When retention invoice is demanded before last progress payment received, do we send a conditional final; if yes, do we put the total of both the retention and the last progress amount due on the conditional final? Thank you.

When retention invoice is demanded before last progress payment received, do we send a conditional final; if yes, do we put the total of both the retention and the last progress amount due on the conditional final? Thank you.

CaliforniaLien Waivers

Our last progress billing on this project was in March (for which a conditional progress release was included). We will not receive payment on that invoice until 4/30. On 4/25, we are asked to submit our retention invoice. Will the accompanying release for the retention invoice be a conditional final release (even though there is a progress amount owed)? If yes, will the amount due on the conditional final release be only the retention amount or the total of all that is owed (including retention and outstanding progress payments)?

1 reply

Apr 23, 2019

That's a good question. First, I'll note that I'm not able to provide advice on how to submit any particular waiver - but I am able to provide some relevant information that should help you determine what's best for your business. Unless, upon receipt of payment in exchange for the waiver, a claimant will be paid in full - executing a conditional final waiver for an amount that's less than the total that's owed might not be a good idea. A conditional final waiver states that, upon receipt of the payment indicated in the waiver, all lien rights are waived. So, in a situation where both a progress payment and retention are still owed, it would seem that executing a final waiver indicating that only retention remains unpaid could result in a loss of rights. Further, a partial conditional waiver is not effective to waive any retentions - on the statutory form set out by § 8132 of the California Civil Code, retentions are included in the "Exceptions" section and explicitly not waived. Thus, where a conditional waiver is requested along with an invoice for retention, the only remaining option might be to execute a final conditional waiver that includes all amounts remaining owed and unpaid (i.e. progress payments, retentions, change orders - anything that's owed and not yet paid). That way, full lien rights wouldn't be waived until all payments have been received. Of course, seeing a large amount on a conditional waiver for retention might be jarring - so explaining how the figure was come to might be a wise idea. It's easier to get everyone on the same page before an issue (or a perceived issue) arises, so letting a customer know what's coming and how amounts were calculated should help make sure calmer heads prevail. For more on California lien waivers, the following resources should be helpful: (1) California Lien Waiver Forms & Guide (Conditional & Unconditional); (2) California Lien Waivers Overview & FAQs; and (3) Lien Waivers 101 and Easy Exchanges.

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