A contractor must supply you with a lien waiver upon payment - be sure to ask for it with every payment issued!
A problem may arise when a contractor does not pay his subcontractors, workers and suppliers, even though the homeowner has paid the contractor. The other parties may than file a claim or lien against your property which can result in:
Please Note: Links to all the related information and free legal forms referenced for contracting can be found on our main Contractor page.
Note: Where a lien was recorded as security for a Promissory Note or Installment sale, our Lien Release Template specifically for that purpose may be used.
A Lien Release upon Progress Payments:
For every payment issued for a complete phase, materials supplied or work completed by a subcontractor, the homeowner should insist on an unconditional lien waiver.
A Waiver of Lien upon Final Payment:
Except for possible disputed claims for extra work done or retention monies outstanding (which must be specifically stated on the form) the contractor or any third party will waive all further rights against the homeowner.
Note: A conditional lien waiver can be issued for either progress or final payment. The heading must state CONDITIONAL LIEN WAIVER and must specify: This document shall become effective once the check has been properly endorsed and cleared through the bank or proof of any other form of payment has been provided.
The onus is on the contractor, subcontractor or supplier to record a lien within 90 days of completion of the work or when the owner starts "using" the work.
If the owner files a Notice of Completion with the County Recorder, the time allowed to record a lien by the contractor is reduced to 60 days and for a subcontractor or supplier it is reduced to 30 days.
The homeowner must keep all lien waivers safely. In the event of a lien being filed they will be used to gain a lien release. The laws may vary in different states or countries and the forms supplied here are to be used as sample documents only. Consult with legal counsel to ensure you are adequately protected.