What is a Partial Waiver of Lien and How Can it Affect You?
When you sign a construction contract or when it's time for you to get paid for your work, you probably also sign a lien waiver of some kind. There are several different types of lien waivers, but a partial waiver of lien is particularly common and something you should understand before signing on the line.
A lien waiver, in short, in a contract between you and the company or person above you on the chain of contractors that states you have received payment for the work performed and therefore waive your right to place a mechanics lien or file a bond claim on the project. Many construction workers and companies treat them as receipts for payment received.
Partial lien waivers are executed in exchange for a progress payment on a project. In other words, you're receiving a portion of the payment you're owed for the complete project and you're waiving a corresponding portion of your right to file a lien. So if you're working on a project that is $50,000 total and you receive a payment of $20,000, signing a partial lien waiver means that you've waived your right to file a lien on $20,000, but can still file a lien on the project for the remaining $30,000 if necessary.
Lien waivers are either conditional or unconditional:
Conditional waivers mean that you've signed the waiver, but it's only good once you actually receive payment. The condition is the receipt of payment and once you've gotten your check, the lien waiver is valid.
Unconditional waivers means that the waiver is valid and enforceable as soon as you sign it. This can be much more dangerous for a subcontractor and supplier and you want to make certain you've been paid before you sign an unconditional waiver.
Depending on the state you're working in, there may be a regulated version of a lien waiver form you need to sign. In the rest of the states, lien waiver forms can be any written contract. In those cases, be sure to make a point of reading the agreement or having an attorney review it to be sure you understand and are clear about what it says.
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