Lien Waivers in Construction: What to Know
Although lien waivers aren't new, they're often complex, and many of the details can get overlooked. Unfortunately, that never ends well for anyone. All people who are involved in construction projects should understand lien waivers and how they work, as well as why they're used. To that end, this article will uncover the details that you need to know.
What is a Lien Waiver?
During construction projects, contractors need to get paid. If they aren't getting paid by
the project financer, they can opt to place a contractor's lien or construction lien on the
property until they get compensation. For example, if a general contractor isn't paid for
the final $10,000 of finished work on a renovation, they can place a construction lien on
the property for that amount. The lien will remain in place until it's paid.
A lien waiver is a document signed by contractors and subcontractors that essentially says the bills have been paid and therefore, they don't need to have the right to file a lien anymore
How Does it Work?
Let's say a contractor subcontracts work to plumbers, electricians, and specialty cabinet
finishers. The electricians get paid, so the contractor sends along a Lien Waiver form
that they can sign. The electricians will complete and sign the waiver, which removes
their right to file a lien later on down the road.
When dealing with complex construction projects and trying to make sure that everyone gets paid, lien waivers can come in handy. They're also a good tool to give homeowners or others peace of mind because they know that they won't have to worry about the risk of having a lien placed on their property.
Essentially, lien waivers are proof of payment that ensures payees get their money and that they won't file a lien as a result. This works in everyone's favor so it's never a bad idea to consider. In fact, some contractors report that lien waivers help get jobs paid that much faster.
Types of Lien Waivers
There are also different types of waivers to choose from, separated into four major
* Partial conditional
* Partial unconditional
* Final conditional
* Final unconditional
As the names suggest, the first two are for partial job payments, while the last two are for final payments. Conditional means there will be conditions or terms with the payment agreement or waiver, while unconditional means that there are no conditions present that need to be considered in the waiver.
Work with the Experts
The best thing that you can do is to work with professionals who understand lien
waivers and other important construction documentation and job requirements. That
way, you can have the peace of mind that everyone is getting paid and that you're using
all the tools you can to make that happen. To learn more about lien waivers,
construction liens, or how you can provide your subcontractors with various notices,
reach out to Nationwide Notice, Inc. today.
Our goal at Nationwide Notice, Inc. is to protect receivables - no matter the kind or size of the construction company. We focus on assisting construction companies to get their construction payments. It is important to utilize lien waivers in construction to build trust and relationships among parties. As a self-service and full-service lien service and preliminary notice company, Nationwide Notice, Inc. is here to serve you. To learn more about Nationwide Notice, Inc, check out our main website here, or click this link to learn about our process.