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What are Lien Waivers and Why are they Important

If you're in the construction business, you've likely come across the idea of a lien before. However, if you know about liens, you must know about lien waivers as well.
A lien waiver is a specific agreement in writing that binds (a) someone who will pay for a provided service and (b) a counterparty in a contract that states that the counterparty will give up their right to put a lien on property that the payer owns. In most cases, lien waivers can be used at different stages of the process, as well.

Lien Waivers: Looking Deeper

Lien waivers are very common aspects of the construction industry. This document can come from a supplier, subcontractor, contractor, or another party that has legally protected their rights to a mechanic's lien. Once the owner of the mechanic's lien claims they have been fully paid, they'll waive the rights of additional liens

In most cases, there are four specific types of lien waivers:
  1. 1. Unconditional release upon progress payment.
  2. 2. Conditional release upon progress payment.
  3. 3. Unconditional release upon final payment.
  4. 4. Conditional release upon final payment.

The first removes all of the claimant's rights through a predetermined date and doesn't offer any other stipulations. The second does the same, but only if the payments that have already been paid have been received and processed. The third removes all the claimant's rights once payment is received, and the final removes all the rights upon the final payment with certain stipulations.

Importance of Lien Waivers

As mentioned, these specific waivers are frequently used in the construction industry, and multiple can be used during different project phases. These waivers can be used/exchanged as each portion of the project is completed and paid for, or it can be spaced out further.
In many cases, people won't release necessary payments until the waiver is signed and delivered so that they're not beholden to hidden fees or further payment requests from the construction company. However, for those issuing the waiver, make sure you've received the payment and that said payment has been fully processed. Checks can bounce, and payments can become delayed, which is why it's important to ensure you have access to all due funds.
At the end of the day, a lien waiver acts as a document meant to remove any possibility of the construction company acting on a mechanic's lien. Waivers allow both parties involved in the construction project to be confident that payment is being handled and processed in a manner that benefits both halves of the equation.

Nationwide Notice, Inc.

If you're trying to figure out how best to issue a lien waiver, then you can reach out to us at Nationwide Notice, Inc. for aid. We have a team of professionals who know how best to help you with liens, so contact us today. Our team specializes in streamlining processes like filing a lien - we assist clients to secure their payments. As a self and full-service notice and lien company, that is what we do! Nationwide Notice, Inc. is here to secure your payments. Find out more about the services we offer on this page or check out what sets us apart here. to learn how to get started.

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