Understanding Lien Waivers in Construction
Lien waivers are legal documents that confirm payment has been received for work performed, effectively waiving the right to file a mechanic’s lien against a property. These documents help ensure that contractors, subcontractors, and suppliers are paid, preventing future claims that could affect project financing and ownership.
Types of Lien Waivers
There are four main types, each serving a different purpose:
- Conditional Waiver on Progress Payment – Valid only after payment clears.
- Unconditional Waiver on Progress Payment – Becomes effective immediately, even if payment hasn’t cleared.
- Conditional Waiver on Final Payment – Used when expecting the last payment but before it is received.
- Unconditional Waiver on Final Payment – Permanently releases lien rights after the final payment.
Why They Matter
- Protects Owners & Lenders – Prevents future disputes and financial risks.
- Ensures Transparency – Confirms that all payments have been made.
- Reduces Legal Risks – Minimizes the potential for unpaid labor or material claims.
NWM Risk Management’s Role
As part of our draw inspection services, we review general contractor waivers to verify compliance and prevent financial risk. This ensures that funds are used appropriately and that all parties are properly compensated.
For more details, visit: Lien Waiver Definition, Four Types, and Uses in Construction.
