The unconditional waiver and release on progress payment is a key document for contractors and subcontractors working in California. Once signed, this waiver gives up your right to file a mechanics lien for the work done up to a specified date. Unlike a conditional waiver, which only takes effect once payment clears, an unconditional lien waiver goes into effect immediately upon signing, even if the payment doesn’t clear.
In this guide, we’ll walk you through everything you need to know about the unconditional lien waiver, including when to use it, how to fill it out, and the risks involved. If you’re a contractor, subcontractor, or supplier, this guide will help you use this waiver effectively without jeopardizing your lien rights.
What Is an Unconditional Lien Waiver?
An unconditional lien waiver is a legally binding document that waives your right to file a mechanics lien against a property once payment has been made. Once you sign this waiver, your right to file a lien is permanently waived—even if there are payment issues, such as a bounced check.
The waiver is typically used for progress payments, meaning partial payments made during a project. When you sign an unconditional lien waiver and release on progress payment, you confirm that you’ve been paid for work completed up to a specific date, and you’re relinquishing your right to file a lien for that portion of the work. It is described in California Civil Code Section 8134.
Unconditional Lien Waiver vs. Conditional Lien Waiver
The main difference between a conditional lien waiver and an unconditional lien waiver is the timing of when lien rights are waived:
- Conditional Lien Waiver: Lien rights are only waived once the payment clears. This waiver offers protection in case there’s an issue with the payment.
- Unconditional Lien Waiver: Lien rights are waived immediately upon signing, even if the payment hasn’t cleared yet. This waiver is riskier, as you lose your lien rights regardless of whether the payment goes through.
When Should You Use an Unconditional Waiver and Release on Progress Payment?
You should use an unconditional waiver and release on progress payment when two conditions are met:
- You’ve received payment in full for the work done up to a certain date.
- The project is still ongoing, meaning you expect more payments in the future.
Before signing an unconditional waiver, make sure you’ve received and confirmed the payment has cleared. Unlike a conditional waiver, the unconditional waiver does not provide any protection if a payment fails after signing.
1. Have you received your payment yet?
Use this type of California lien waiver only if your answer is yes. Otherwise, you should consider signing a different type of lien waiver. Since this is an unconditional lien waiver, you will lose your lien rights the moment you sign the form. You don’t want to relinquish your lien rights unless you have gotten paid, so use this lien waiver only if you have your payment on hand.
2. Is your work on the project still in progress?
If the answer is yes, then this is a good lien waiver to sign. A work in progress means that your participation in the project will continue even after receiving the payment for which you are signing this waiver. If your work on a project is already complete and you are no longer expecting more payments in the future, consider signing a final payment waiver instead.
How to Fill Out an Unconditional Lien Waiver Form
Filling out an unconditional lien waiver form is straightforward, but it’s crucial to do it accurately. Here’s how to fill in the important fields:
- Name of Claimant: This is the name of the person or company releasing the lien (you or your business).
- Name of Customer: The party who hired you for the project.
- Job Location: The physical address where the project is located.
- Owner: The property owner’s name.
- Through Date: The date through which work has been completed and paid for, and lien rights are waived.
- Amount Paid: The amount you received for the work.
- Claimant’s Signature and Title: Your signature and job title.
- Date of Signature: The date you sign the waiver.
Double-check all the details before signing, as mistakes could invalidate the form or lead to legal issues.
The Risks of Signing an Unconditional Waiver
An unconditional waiver comes with significant risks, especially if you haven’t confirmed the payment. Here are some of the key risks:
- Permanent loss of lien rights: Once you sign an unconditional lien waiver, you lose your right to file a mechanics lien—even if the payment doesn’t clear or is disputed.
- No legal recourse: With a conditional waiver, you still have the right to file a lien if the payment fails. However, an unconditional waiver offers no such protection.
- Payment disputes: If you sign before verifying the payment, you may find yourself unable to recover unpaid amounts in case of a dispute.
Always ensure that the payment has cleared before signing an unconditional release on progress payment to avoid these risks.
Make sure that your California Unconditional Waiver and Release on Progress Payment is substantially the same as the template specified in Civil Code Section 8134.
What Is a Partial Unconditional Lien Waiver?
A partial unconditional lien waiver is used when you’ve received a progress payment for part of the work, but not the entire project. This waiver releases your lien rights for the portion of the work that has been paid for, but not future payments.
Make sure to accurately specify the through date and amount paid on the waiver to avoid waiving your rights to future payments unintentionally.
Full Unconditional Waiver and Release
A full unconditional lien waiver is used when the project is complete and final payment has been received. Once signed, it permanently waives your right to file a lien for any work done on the project. This waiver should only be signed after confirming all payments have been received and cleared.
Using an Unconditional Lien Waiver Template
If you’re a contractor, subcontractor, or supplier, using an unconditional lien waiver template can simplify this process. Make sure you use a form that complies with your state’s legal requirements. States like California, Arizona, and Texas have specific rules for these lien waivers.
For example, California requires specific statutory forms for all lien waivers, so it’s critical to ensure that your unconditional lien release form follows state guidelines. Many companies offer downloadable unconditional lien waiver templates that are compliant with state laws.
Free Unconditional Lien Waiver Forms
You may find free unconditional lien waiver forms online, but it’s important to make sure they meet the statutory requirements of your state.
For example, California’s lien waiver forms must follow strict rules, and using the wrong form could invalidate the document.
If you’re unsure, it’s best to consult with legal professionals or use a service that provides free, compliant templates.
Best Practices for Signing an Unconditional Waiver on Progress Payment
Before signing an unconditional waiver upon progress payment, follow these best practices:
Use the right form: Ensure that the unconditional lien waiver form you’re using is compliant with your state’s laws, especially in states like California, which have specific statutory lien forms.
Verify payment: Make sure the payment has fully cleared in your bank account before signing.
Check all details: Double-check that the through date and amount paid are accurate. Any mistake could result in unintended consequences.
Conditional vs. Unconditional Lien Waivers: Which Should You Use?
When deciding between a conditional lien waiver and an unconditional lien waiver, it boils down to the payment status:
- If you’re still waiting for payment or there’s uncertainty, always use a conditional waiver to protect your lien rights until the payment clears.
- If you’ve received and confirmed the payment, you can safely use an unconditional waiver to release your lien rights for that portion of the work.
Conclusion
The unconditional waiver and release on progress payment is a crucial document that should only be signed once payment has been fully received. It permanently waives your right to file a lien for the work covered by the payment, so it’s essential to follow the correct steps and verify all details before signing.
By using the appropriate unconditional lien waiver form and following the best practices outlined in this lien guide, you can protect your rights while ensuring smooth payment processes on construction projects.
For downloadable templates and more detailed instructions, be sure to check out trusted resources offering free unconditional lien waiver forms that comply with your state’s lien laws.
Further reading