Conditional Lien Waivers vs. Unconditional Lien Waivers

It has become standard practice that property owners and contractors often require their contractors, subcontractors, and suppliers to submit conditional lien waivers together with payment applications before the payment itself will be issued. In general, a conditional lien waiver represents that rights to lien accrued for work through a certain date or pay period will be waived upon receipt of payment.

An unconditional lien waiver, by contract, purports to waive the right to lien for work through a certain date or pay period, without conditioning that waiver upon receipt of future payment. A waiver may be simply a few sentences stamped on the back of a check, or it may be a separate document.

Increasingly, some contractors have begun to insert contract provisions requesting unconditional lien waivers to be submitted prior to issuance of final payment.

Subcontractors and suppliers should always verify that any lien waiver accurately represents the amounts actually paid, amounts due, what work was performed, and when that work was performed. Signing an incorrect lien waiver may have the effect of waiving legal rights you did not intend to waive. These errors can be costly.

This is even more true when it comes to executing unconditional lien waivers for amounts not actually received. Such waivers will make collection of unpaid amounts more difficult. Mechanic's liens are powerful legal tools for tradespeople and suppliers to ensure that they receive payment. The right to record a lien should not be waived without fully understanding the terms of the waiver and what rights you are giving up, and taking care to verify the accuracy of all information on the waiver.