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Financialaka: mechanic's lien waiveraka: lien releaseaka: conditional waiver

Lien Waiver

In Plain English

A signed document from a contractor or supplier giving up their right to file a lien in exchange for payment.

Definition

A lien waiver is a legal document signed by a contractor, subcontractor, or supplier that relinquishes their right to file a mechanics lien against the property for the amounts covered by the waiver. Conditional waivers are effective only upon receipt of payment; unconditional waivers take effect immediately upon signing. Lien waivers are exchanged with each progress payment and final payment to provide the owner with a clear title.

Why It Matters in Bidding

Lien waivers are the payment-control mechanism that links every progress payment to a release of lien rights, so they sit at the center of construction procurement and accounts payable workflows. Getting the conditional-versus-unconditional distinction wrong can leave an owner exposed to a lien even after paying, or cause a subcontractor to waive rights before money actually clears.

Example

The GC collected signed conditional lien waivers from every subcontractor with each pay application, then exchanged them for unconditional waivers once the corresponding checks cleared.

Related Terms

Payment ApplicationProgress PaymentAccounts PayableBilling

Related Tools & Templates

Conditional Lien WaiverUnconditional Lien Waiver

Frequently Asked Questions

A conditional waiver only takes effect once the promised payment is actually received, protecting the signer if a check bounces. An unconditional waiver releases lien rights immediately upon signing, regardless of payment. Subcontractors should sign conditional waivers with pay applications and unconditional waivers only after the funds have genuinely cleared.
They are typically exchanged at each progress billing and at final payment. A subcontractor submits a conditional progress waiver with its pay application, then provides an unconditional waiver after that payment clears. Final unconditional waivers are collected at closeout so the owner can release retention and confirm clear title.
The general contractor usually collects waivers from its subcontractors and suppliers, then passes consolidated waivers up to the owner with each pay application. Owners and lenders often make payment contingent on receiving them. Accounting and project teams share the tracking burden, since a missing waiver can hold up an entire payment cycle.

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