AEC definitions
A lien waiver is a document in which a contractor, subcontractor, or supplier gives up the right to file a lien for the amount of work the waiver covers, in exchange for payment. A conditional waiver is effective when the payment clears. An unconditional waiver is effective when it is signed, so it should not be signed before the money is in hand.
Definition
Owners and lenders collect waivers so they are not paying the prime contractor while a subcontractor preserves a lien. Partial waivers cover a payment period. Final waivers cover the rest of the work. The form should state the through date and the amount, and it should reserve rights for retainage and unresolved changes if those are not being paid. Many states specify the form. A waiver that releases more than the check, or that a state form does not allow, creates a different deal than the parties thought. This is a payment document. It is not a determination that the work is defect-free, unless the form says that too.
In depth
The safe exchange is a conditional waiver with the pay application, and an unconditional waiver next month for the payment that cleared. Signing an unconditional waiver against a promised payment leaves the signer unsecured if the check fails.
The condition should name the amount and the payer. A waiver conditioned on 'payment' with no amount is sloppy.
Work performed after the through date is not waived. Work before it is. A through date that runs past the payment, or that includes unapproved changes, releases claims the check did not buy.
Retainage should be excluded in writing until it is paid. A final waiver that forgets retainage arguments is a common surprise.
A waiver from the prime does not waive the subcontractor's rights. Owners require waivers from subs and suppliers for the amounts the prime says it paid them. False statements about those payments are a separate problem.
Lower-tier waivers should match the amounts the prime's payment breakdown claims.
Some states mandate statutory waiver forms and limit what extra language can do. A custom form pulled from another state can be void or can waive more than intended. Counsel picks the form. The project team uses it consistently.
Notarization, if required, is part of the form, not a courtesy.
Unless the document clearly releases warranty and defect claims, a lien waiver releases lien rights for the dollars stated.
Quality claims travel under the warranty and the contract. Do not assume one signature did both. Do not hide a claim release in a lien form without saying so.
Examples
A subcontractor signs a conditional partial waiver for a progress payment. The waiver becomes effective when that payment clears.
The final waiver excludes retainage by amount and excludes a pending change the owner has not approved.
The owner rejects an unconditional waiver signed before funds were received and asks for the conditional form instead.
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