Conditional vs Unconditional Lien Waivers

A conditional lien waiver gives up your lien rights only after the payment it names actually reaches you. An unconditional lien waiver gives them up the moment you sign, even if the check never clears. Use the conditional version until the money is in your account, then trade it for the unconditional one.

A lien waiver (also called a waiver and release) is a document a contractor, subcontractor or supplier signs to confirm payment and give up the right to file a mechanics lien for that amount. A mechanics lien is a claim against the property you improved. Owners and lenders ask for waivers as proof that everyone down the chain is being paid.

What are the four types of lien waivers?

Most waiver systems sort waivers on two questions. Is the waiver tied to a payment you have not received yet (conditional) or one you already have (unconditional)? Does it cover a payment during the job (progress) or the last payment (final)? That gives four types. Arizona, California, Michigan, Nevada and Texas print all four in their statutes.

California's conditional progress form says it takes effect only when the named check has been paid by the bank it is drawn on (Cal. Civ. Code 8132). Its unconditional forms carry a notice to the claimant that the document is enforceable even if you have not been paid (Cal. Civ. Code 8134, 8138).

When should you use each one?

Use a conditional progress waiver when the general contractor or owner wants a waiver before releasing your pay application. You hand it over with the invoice. It does nothing until the payment clears.

Use an unconditional progress waiver only after that progress payment is in your account. Many payers ask for it with the next pay application, as proof the last payment arrived.

Use a conditional final waiver to collect your last payment, including retainage. Retainage is the part of each payment the payer holds back until the job is done.

Use an unconditional final waiver only when every dollar is in your account. After that, your lien rights on the job are gone.

If you have not been paid and the deadline to protect your rights is close, a waiver is the wrong tool. Look at a notice of intent to lien or a payment demand letter instead, and check your dates in the mechanics lien deadlines guide.

Why is signing an unconditional waiver early so risky?

An unconditional waiver works like a receipt. It says you were paid. If you sign it before the money clears and the check bounces, the owner can rely on the waiver, and you may have no lien left to file.

Some states build protection into the law. Texas bars anyone from requiring an unconditional waiver unless you actually received that payment in good and sufficient funds (Tex. Prop. Code 53.283). Utah prescribes no unconditional forms at all. Both of its forms take effect only when your check is paid, and a waiver tied to a check that fails to clear is void (Utah Code 38-1a-802). Nevada voids any waiver given for a check that does not clear (NRS 108.2457).

Two states start a clock instead. In Georgia, a signed waiver becomes effective 90 days after you sign it, even without payment, unless you first file an affidavit of nonpayment in the county where the property sits (SB 315, rewriting O.C.G.A. 44-14-366). Mississippi uses 60 days (SB 2622, enacting Miss. Code Ann. 85-7-419). If you sign a waiver in either state and the money does not come, put that deadline on your calendar the same day.

Which states require a statutory waiver form?

In twelve states the statute sets the form, or the rules for one narrow form. Use the state's wording. Do not add terms, and do not add a notary block the form does not have.

• Arizona: four forms. A waiver is unenforceable unless it substantially follows them (A.R.S. 33-1008). See Arizona waivers.
• California: four forms. A waiver not in substantially the statutory form is null and void (Cal. Civ. Code 8136 and the sections cited above). See California waivers.
• Florida: safe-harbor forms for progress and final payments. No one may require a different form, and you may condition a waiver on payment of a check (Fla. Stat. 713.20).
• Georgia: two forms, interim and final, in at least 12-point type, with a witness line (O.C.G.A. 44-14-366).
• Massachusetts: no general form. Contract clauses that bar lien filing are void. The one statutory form is a partial waiver and subordination for contractors who recorded a notice of contract (Mass. Gen. Laws ch. 254, sec. 32).
• Michigan: four forms, called partial and full, each conditional or unconditional (MCL 570.1115).
• Mississippi: two forms, interim and final, sworn before a notary (Miss. Code Ann. 85-7-419 and 85-7-433).
• Missouri: one form, for an unconditional final waiver on residential real property (Mo. Rev. Stat. 429.016).
• Nevada: four forms, with no "substantially" allowance, so use the exact text (NRS 108.2457).
• Texas: four forms that a waiver must substantially comply with (Tex. Prop. Code 53.284). See Texas waivers.
• Utah: two forms, both conditional on the check clearing (Utah Code 38-1a-802).
• Wyoming: one form for every payment, with a notarial acknowledgment (Wyo. Stat. 29-10-101).

In the other states, no statute sets the form. The waiver's wording is a matter of contract, so read it line by line before you sign.

What does the through date mean?

The through date is the last day of work a progress waiver covers. California's progress forms have a blank labeled "Through Date" (Cal. Civ. Code 8132). Florida's progress form waives lien rights for work furnished through a date you insert (Fla. Stat. 713.20). Work after that date stays protected.

Match the through date to the period the payment actually covers. If your pay application runs through March 31, do not sign a waiver through April 15.

What stays protected: retainage and disputed work

A progress waiver should leave out money you have not been paid. California's unconditional progress form lists retentions and unpaid extras as exceptions the waiver does not affect (Cal. Civ. Code 8134). The Texas conditional progress form excludes unpaid retention and pending modifications and changes (Tex. Prop. Code 53.284). Wyoming's form has blanks to reserve retainage and any sum not yet paid (Wyo. Stat. 29-10-101).

Final waivers leave much less room. California's final forms have one exception line, for disputed claims for extras, with a dollar amount (Cal. Civ. Code 8136). If a change order is in dispute, write the amount there. Leaving it blank can give up that claim.

Common mistakes

• Signing an unconditional waiver with the invoice instead of after payment.
• Signing a final waiver for a progress payment, which can release retainage.
• Using a through date later than the work the payment covers.
• Adding a notary block or extra terms to a statutory form.
• Forgetting the 90-day (Georgia) or 60-day (Mississippi) clock after signing.

eRegister's lien waiver generator fills in each state's form, and the basic tier is free; start at the lien waiver page. For a field-by-field walkthrough, read how to fill out a lien waiver.

This guide is general information, not legal advice. For a waiver tied to a large or disputed payment, confirm with counsel.