What is Lien Waiver?
Definition of Lien Waiver in Construction
A legal document, waiving the right to lien a project or a piece of property.
A lien waiver is normally required upon the payment of the second invoice on a project. The recipient of money must present a lien waiver for the first invoice of the project, indicating that the legal ability to lien the project for the money already received is waived.
In many instances the entity paying the recipient will attempt to secure lien waivers for more money than the actual payments. This becomes a game on all construction jobs, and involves whether the lien waiver has a sum of money on the form or simply a date. The payee will attempt to get away with just a date, the recipient of the money, should always insist on a sum. Owners should require lien waivers from all subcontractors and major vendors.
Without lien waivers, the contractor can simply not pay vendors or subcontractors, take the money from the owner, and the owner has no protection from double responsibility for the same product or service. Lien waivers are extremely important for the financial safety of the owner. On most major construction projects, lien waivers are formally and professionally managed to ensure that contractors, subs, suppliers and third and forth removed responsible parties are paid. A good method of establishing list of vendors, that lien waivers should be monitored and recorded, is to have the superintendent on the project make a list of all parties entering the jobsite by the company names on the vehicles. By formally writing down the names of the suppliers and the second, third and fourth tier subs, the managing party on the project can request lien waivers from the entire list. There are never too many lien waivers received to ensure that payments are properly being executed.