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Why am I being asked to provide an executed lien waiver

North CarolinaLien Waivers

May company has completed a job if removal of a burned historical building. We completedcthe job in Feb 2021. Since that time we have not received payment. We were asked to provide a W9 40 days past completing the job, which I sent. Today, I received an email, from the bank. They had received the estimate for the job and the W9. They are now requiring an executed Lien waiver in order to make payment faster. I am fully aware of what's Lien is. What are my rights?

2 replies

Apr 13, 2021

It's common for an owner or lender to want lien waivers before they make payment. However, as you know, mechanics liens are incredible leverage for fighting off slow payment or nonpayment. So, from a contractor's point of view, submitting a lien waiver before getting paid is a risky proposition. 

Just because the bank wants a lien waiver doesn't necessarily mean they're entitled to it. If there's some contractual agreement present regarding what waivers will be used and when they'll be exchanged, that could affect whether a lien waiver is required. However, typically, it's more of a stalemate or standoff and the parties need to find some middle ground. Further discussion here: (1) Do I Have to Sign a Lien Waiver to Get Paid?; and (2) Should You Sign That Lien Waiver? | A Checklist.

One way to smooth out that exchange is to offer up a conditional lien waiver. Conditional waivers are designed to be exchanged before payment is made, and they're only effective if and when payment is actually made. So, if the bank is demanding that they have some waiver in hand before payment can be disbursed, using a conditional waiver there would minimize risk. Plus, once the money changes hands, the conditional waiver is fully effective to waive lien rights. Even still, offering to submit a follow-up unconditional waiver could help nudge a bank to accept a conditional waiver in the first place. 

More on conditional waivers here: Unconditional Lien Waivers vs Conditional Lien Waivers.

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Apr 13, 2021
Call me and set up an appointment to discuss. Ask for Maddy Lohmeir
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