Lien Waiver and Lien Release Forms

A contractor must supply you with a lien waiver upon payment - be sure to ask for it with every payment issued!

A problem may arise when a contractor does not pay his subcontractors, workers and suppliers, even though the homeowner has paid the contractor.

The other parties may than file a claim or lien against your property which can result in:

• Your having to pay for the work again.
• A cloud on the title of your property which can restrict your ability to refinance or sell your property.
• The forced sale of your property to effect payment, if you can not afford to do so.

The homeowner can protect himself by:

• Thoroughly investigating the contractor before entering into an agreement e.g. whether the contractor and subcontractors are licensed, payment history to suppliers, previous claims filed and by having a written General Contractor Agreement in place as well as Contractor Insurance.
• Demanding a construction lien release from all parties involved with every payment and by refusing any further payments until receipt thereof.
• Knowing which subcontractors and suppliers are involved and the payments due to them. Any party who does not have a primary contract with you must provide you with a Preliminary Notice, stating that they did or will in future supply you with goods or services and could file a mechanics lien if not paid.
  
  It is most important for the homeowner to keep track of these notices and to get a lien release upon payment.
  
  It is a good idea to specify in your agreement that preliminary notices must be issued, even if it is not required in your state or country. This way the homeowner will know to whom monies may be owed.
• Issuing joint checks to both contractor and third party or by paying the third party directly.

Note: Where a lien was recorded as security for a Promissory Note or Installment sale, our Lien Release Template specifically for that purpose may be used.

Lien Waivers can be issued in the following way:

A Lien Release upon Progress Payments:
For every payment issued for a complete phase, materials supplied or work completed by a subcontractor, the homeowner should insist on an unconditional lien waiver.

A Waiver of Lien upon Final Payment:
Except for possible disputed claims for extra work done or retention monies outstanding (which must be specifically stated on the form) the contractor or any third party will waive all further rights against the homeowner.

Note: A conditional lien waiver can be issued for either progress or final payment. The heading must state CONDITIONAL LIEN WAIVER and must specify: This document shall become effective once the check has been properly endorsed and cleared through the bank or proof of any other form of payment has been provided.

Time Limits:

The onus is on the contractor, subcontractor or supplier to record a lien within 90 days of completion of the work or when the owner starts "using" the work.

If the owner files a Notice of Completion with the County Recorder, the time allowed to record a lien by the contractor is reduced to 60 days and for a subcontractor or supplier it is reduced to 30 days.

The homeowner must keep all lien waivers safely. In the event of a lien being filed they will be used to gain a lien release. The laws may vary in different states or countries and the forms supplied here are to be used as sample documents only. Consult with legal counsel to ensure you are adequately protected.

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