During payment negotiations, a property owner or another higher-tier party may ask you to sign a lien waiver in exchange for payment. This practice is fairly common in the construction business. Your clients want an assurance that as long as they release payment, they will not be dealing with a mechanics lien filed against their property.
States like Florida have strict regulations on how lien waivers must be used. Florida even has a specific form that must be used by all construction participants looking to waive their lien rights.
There are two types of lien waiver forms in Florida: one for progress payment and one for final payment. This guide will explain everything you need to know about the Florida Waiver and Release of Lien Upon Progress Payment.
When do you use a Florida Waiver and Release of Lien Upon Progress Payment?
The keywords to take note of are “progress payment.” This means that your work on a project is still in progress, and the payment that you will be receiving (or have received) in exchange for the Progress Payment waiver is only a portion of your full contract amount.
You must, therefore, use the Florida Waiver and Release of Lien Upon Progress Payment when you are only receiving partial payment and expecting regular payments in the future. If your work on a project is completely done, consider signing a Florida Waiver and Release of Lien Upon Final Payment.
Is the Florida Waiver and Release of Lien Upon Progress Payment a conditional waiver?
No, it is not. Florida Statutes actually impose no distinction between a conditional waiver and an unconditional one. By default, the Florida Waiver and Release of Lien Upon Progress Payment is an unconditional waiver.
An unconditional waiver takes effect the moment you sign the document. When you sign an unconditional waiver, you relinquish your lien rights regardless of whether you get paid or not. It is a common mistake among construction participants to sign an unconditional lien waiver without first verifying that they have indeed received their payment.
Signing a conditional waiver is better than singing an unconditional waiver because a conditional lien waiver takes effect only on the condition that the payment is made. Even though Florida lien waiver forms as described in the statutes are unconditional lien waivers, Florida Statutes § 713.20(6) implicitly allow parties to modify the prescribed forms.
A Florida Waiver for Progress Payment can, therefore, be turned into a conditional waiver by adding a statement similar to the following:
“Pursuant to Florida Statutes § 713.20(6), this waiver is conditional and effective only when the claimant receives actual payment of the amount specified on this form.”
As long as the rest of the waiver is substantially similar to what is stated in Florida Statutes § 713.20(4), adding a conditional statement as shown above is perfectly valid.
How to fill out a Florida Waiver and Release of Lien Upon Progress Payment
First, verify that your Florida Waiver and Release of Lien Upon Progress Payment is substantially in the following form:
The form above shows the blank lines in which you must provide the following information:
1. $
This is the amount of the partial payment that you are waiving.
2. Through date
This is the date that will be covered by the lien waiver. All services provided up to this date will no longer be subject to a mechanics lien claim.
3. Name of customer
This is the name of the party who hired you for the project. Be sure to write the complete business name, including the correct suffix (e.g. Ltd. or Inc.).
4. Name of owner
This is the name of the owner of the property. You may write multiple names if there are multiple owners.
5. Description of the project
This is a brief description of the property location. For Florida lien waivers, a street address will suffice.
6. Sign date
This is the date when you sign the Lien waiver.
7. By-line
This is your or your agent’s information, including your or their name, address, and signature.
Remember that you may add a conditional statement to turn the form into a conditional lien waiver. If you choose to not include a statement, you must sign the Florida Lien Waiver for Final Payment only when you have received the payment on hand.
Best practices before signing a Florida Waiver and Release of Lien Upon Progress Payment
1. Ensure that you are using the correct Florida lien waiver type
The Florida Waiver and Release of Lien Upon Progress Payment is used when you are only receiving partial payment and your work on a project is still ongoing. A different Florida lien waiver must be used if you are expecting to receive or have already received your final payment.
Note that aside from ensuring that you must indeed use a progress payment waiver, you must also verify that the form you are signing is substantially similar to the prescribed form in Florida laws. Using a substantially different form may invalidate a lien waiver in Florida.
2. Add a statement that turns your Florida lien waiver into a conditional waiver
Adding the following statement to your Florida Waiver and Release of Lien Upon Progress Payment can turn it into a conditional waiver:
“Pursuant to Florida Statutes § 713.20(6), this waiver is conditional and effective only when the claimant receives actual payment of the amount specified on this form.”
A conditional waiver will take effect only once you receive payment. It is best practice to use a conditional waiver in Florida, as in any other state, to protect you from bouncing cheques or rejected credit card transactions. Unconditionally waiving your lien rights is ill-advised because you may end losing the right to lien and not receiving your payment altogether.
3. Verify that your Through Date is correct
The Florida lien waiver for progress payment requires you to write a Through Date. All your services up to this date may no longer be subject to a mechanics lien once you sign the waiver and its conditions are met. It is a common mistake among construction parties to write an inaccurate Through Date, and making this error can be fatal to your lien rights.
For example, if you write “May 2021” when you intend to waive your rights only until “May 2020,” you will have no right to claim a lien on anything you do on the project until May 2021. That is a huge difference, so you must be extremely careful not to make an error in the Through Date portion of your Florida lien waiver.
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