When you are asked to sign a lien waiver during a construction project, it goes without saying that you must read through the entire document and make sure that you understand everything written on it. This becomes more important when you are working in states like Delaware, where there are no statutory lien waiver forms.
Without statutory lien waiver forms, it is difficult to be certain what type of lien waiver you are signing. This guide offers tips to make sure you are signing the correct lien waiver in Delaware, specifically the conditional lien waiver upon progress payment.
When do you use a Delaware Conditional Waiver and Release Upon Progress Payment?
When signing a Delaware conditional lien waiver upon progress payment, make sure that the following scenarios apply:
- You are not yet done working on a project.
This is a progress payment lien waiver, so you are only waiving a part of your lien rights. You should use this lien waiver if you are expecting more payments in the future because your work on a project is still in progress.
- You have not received your payment yet.
This is a conditional lien waiver, so it will take effect only once payment is made. You should use this lien waiver if you are awaiting payment or if a client asks that you hand a lien waiver before they pay up.
Be aware that pending credit card transactions or uncleared bank cheques do not count as payment yet until they are cleared in the bank. If you have been paid but are still waiting for the payment to get cleared, you should still sign a Delaware conditional lien waiver.
How to sign a Delaware Conditional Waiver and Release Upon Progress Payment?
1. Make sure that you are signing the correct lien waiver
Because Delaware has no statutory lien waiver forms, it may be hard to tell what type of lien waiver you are signing. These are some signs that you can look for to know that you are signing a conditional lien waiver upon progress payment:
- The waiver has a conditional statement
The conditional statement is the statement that says the lien waiver will only take effect once payment is made. Without a conditional statement, a lien waiver is most likely an unconditional lien waiver that becomes binding as soon as it is signed, regardless of whether payment is made or not.
- The waiver requires a “through date.”
The through date is the date that marks the coverage of the lien waiver. Everything you do after this date is not covered in the lien waiver. You only waive your lien rights for the services that you performed up until this through date.
2. Verify that you included all the important details in the lien waiver form
Delaware has no strict rules on what details to include in a lien waiver. However, note that a lien waiver typically asks for the following information:
- The name of the property owner
- The name of the hiring party
- Your name, address, and signature
- A description of the property location
- A description of the services you furnished to the project
- A through date
- The amount of payment you are expecting to receive for signing the waiver
- A list of the lien waivers that you have signed, if applicable
Best practices before signing a Delaware Conditional Waiver and Release Upon Progress Payment
1. Verify that the lien waiver has a conditional statement
It is very important that the lien waiver that you sign only takes effect once you actually receive the payment. Look for a statement that specifies this provision. If a lien waiver takes effect immediately or it does not say that the lien waiver will only be binding if payment is released, you must verify that you have the payment on hand before signing that lien waiver.
2. Verify the accuracy of the “through date”
The “through date” determines the coverage of your lien waiver, so this date must be accurate. Remember that all the services you provided up until this date should be paid, which is why you are waiving your lien rights over them. Always double-check that this date is correct; otherwise, you might end up waiving your lien rights for payments that have not yet been released.
3. Verify that you understand every statement in the lien waiver form
Signing a Delaware lien waiver for progress payment means that you are relinquishing your lien rights for part of the services that you furnish to a project. Some lien waivers, however, may include provisions that let you waive not just your lien rights but also your right to retention and other payments. You must therefore make sure that you understand every statement in a Delaware lien waiver before you sign it.
Further reading