Lien Waiver
A legal document where a contractor or supplier waives their right to file a mechanics lien upon receiving payment.
Definition
A lien waiver is a legal document signed by a contractor, subcontractor, or material supplier relinquishing their right to place a mechanics lien on the property. Lien waivers can be conditional (contingent on payment clearing) or unconditional (effective immediately). They are exchanged at each payment milestone.
Why It Matters
Without proper lien waivers, paying a subcontractor does not eliminate their right to file a lien. Property owners and general contractors must collect waivers to protect against double-payment claims.
Examples
Conditional waiver on progress payment
GC pays sub $50,000 for Phase 2 work. Sub provides conditional waiver effective once the check clears.
Final unconditional waiver
At project completion, the sub provides an unconditional final waiver covering all work performed, releasing all lien rights.
How Nexus AP Helps
Nexus AP automates lien waiver collection by holding payment until the required waiver type is received and verified, eliminating lien risk.
Start Free TrialFrequently Asked Questions
What is the difference between conditional and unconditional lien waivers?
Conditional waivers are effective only when payment clears. Unconditional waivers are effective immediately upon signing, regardless of payment status.
Are lien waivers required by law?
Requirements vary by state. Some states have statutory forms; others allow custom forms. Best practice is to always collect waivers regardless of legal requirements.
Category
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