Legal Definitions - lien waiver

A lien waiver is a legal document typically used in construction and property-related transactions. It is a formal declaration by a party (such as a contractor, subcontractor, or material supplier) that they are giving up their right to place a lien on a property. A lien is a legal claim against a property to secure payment for a debt. By signing a lien waiver, the party acknowledges that they have received payment (either partial or full) for their services or materials and, in exchange, agrees not to file a lien against the property for the work or supplies covered by that payment. This document helps protect property owners from future claims against their property once they have paid for services or materials.

Here are some examples illustrating how a lien waiver works:

• Example 1: Progress Payment on a Home Renovation
  A homeowner is undertaking a major bathroom renovation. The general contractor submits an invoice for the first phase of work, which includes demolition and rough plumbing. Before the homeowner makes this progress payment, they request a partial lien waiver from the general contractor. The contractor signs the waiver, confirming they have received payment for the work completed up to that point and will not place a lien on the house for that specific phase of the project.

  This example illustrates how a lien waiver protects the homeowner. By obtaining the waiver, the homeowner ensures that the contractor cannot later claim non-payment for the work covered by that specific progress payment and attempt to place a lien on their property.

• Example 2: Final Payment for a Commercial Building Project
  A new office building has been completed, and the general contractor has paid all subcontractors in full. To provide assurance to the building owner that all parties involved in the construction have been compensated and to prevent any future claims against the property, the general contractor collects a final lien waiver from each subcontractor, including the electrical, HVAC, and landscaping companies. These waivers confirm that the subcontractors have received their final payments and have relinquished their right to file a lien on the property.

  This example demonstrates the use of a final lien waiver as a critical document at the end of a project. It serves as proof that all parties have been paid and have given up their right to encumber the property with a lien, providing the property owner with clear title and peace of mind.

• Example 3: Material Supplier for a Custom Furniture Order
  A custom furniture designer orders a large quantity of exotic wood from a specialized timber supplier for a client's unique dining table. Upon delivery of the wood and full payment to the supplier, the supplier provides a lien waiver to the furniture designer. This waiver confirms that the supplier has been paid for the materials and will not place a lien on the furniture designer's workshop or the client's future dining table for that specific wood order.

  This example shows that lien waivers are not exclusive to large construction projects. They can also be used by material suppliers to confirm payment and waive their right to a lien, providing protection to the party who purchased the materials.