In every state, someone who works on or supplies a building and doesn’t get paid can usually file a mechanic’s lien against the property, even if the owner paid the contractor in full. A lien waiver is a signed statement that gives up those lien rights for a payment. Owners and lenders collect them with every payment for exactly that reason.
The four types
| Waiver | What it gives up | When to sign it |
|---|---|---|
| Conditional progress | Lien rights for one progress payment, if and when that payment is received. | When you send the pay app. It’s safe because it only takes effect once you’re paid. |
| Unconditional progress | Lien rights for that progress payment, whether or not it’s been paid. | Only after the money has cleared your account. |
| Conditional final | All remaining lien rights on the job, once the final payment is received. | With the final pay app. |
| Unconditional final | All remaining lien rights, full stop. | Only after the final payment has cleared. |
The rule worth remembering: never sign an unconditional waiver before the money has cleared. If the cheque bounces, you’ve given away your lien rights for nothing.
States with required forms
Some states require lien waivers to follow exact wording set in law, and a waiver that doesn’t may not be valid. They include Arizona, California, Florida, Georgia, Michigan, Nevada, Utah and Wyoming, with partial rules in others (Texas, for example, except on some homes). Many states also bar waiving lien rights in advance, before the work is done or paid for. Check your state’s rule and use its form where there is one.
How they’re used on each payment
- The owner or lender collects a conditional waiver for the current payment, and an unconditional waiver for the previous one, from the GC and usually from each sub and major supplier.
- The GC collects the same from subs and suppliers before passing their money on.
- At the end, conditional final waivers go with the final pay app, and unconditional finals once it’s paid.
For homeowners
Ask your contractor for lien waivers from the subs and suppliers on each payment, not just from the contractor. It’s the simplest protection against paying for the same work twice.
This is a general explanation, not legal advice. Lien laws differ a great deal by state, with short deadlines for notices and filings. Use your state’s required form where there is one, and talk to a construction attorney if a lien is threatened or filed.