Your client asks for a final lien waiver before releasing the payment to your final invoice. Maybe you’ve been in this situation before or wondering if it’s the right time to sign. Knowing how to properly handle final waivers ensures you get paid without giving up your legal protections for payment.
In this article, we’ll explain what is a final lien waiver, when and how to use it, and how to avoid common mistakes that can lead to payment disputes.
What is a Final Lien Waiver?
A final lien waiver is a legal document that confirms the contractor, subcontractor, or supplier is relinquishing any future right to file a mechanics lien on the property after being paid in full. This document protects the client from future claims once the final payment to your invoices has been made. Before requesting a final waiver, it’s essential for payers to verify that all payments have been settled to prevent any lingering claims down the line.
When Should You Use a Final Lien Waiver?
A final lien waiver should be used when a construction project is completed, and you’ve received your final payment or are about to. The waiver ensures that no further claims for payment or liens can be made on the property.
Here’s a breakdown of when and how to use it:
- If the final payment is in process: Use a conditional final lien waiver, which protects your rights until the payment clears.
- If the final payment has cleared: Use an unconditional waiver, waiving all rights to file a lien for the completed project.
Make sure you always match the waiver to the payment status.
For those issuing a final waiver request as the payer, confirming that funds have been cleared is a crucial step to avoid any subsequent claims on the project.
Common Mistakes to Avoid with Final Waivers
Mistakes with lien waivers can lead to costly disputes or loss of legal rights. Here are some pitfalls to avoid:
- Signing an unconditional waiver too early: Signing before the payment is fully received removes your ability to file a lien if the payment falls through.
- Not following state-specific rules: Lien waiver forms must comply with state regulations, which can vary widely.
- Forgetting to keep a copy: Always keep a signed copy for your records in case of future payment disputes.
- Not tracking waivers issued and requested: Inconsistent tracking of all lien waivers exchanged can lead to confusion and complications, especially if there are disputes about what has been signed and what payments have been made.
For those working on multiple projects, a waiver management portal streamlines the process ensures you have a clear history of waivers tied to specific payments.
State-Specific Final Waiver Rules
Different states have different rules about final waivers. Knowing these rules is critical to ensuring compliance and avoiding invalid waivers. Here’s a quick look at how rules vary in some states:
| State | Key Rules |
| California | Requires a statutory lien waiver form, and some waivers must be notarized for large payments. |
| Texas | Final lien waivers are only enforceable once payment is received. Avoid signing an unconditional waiver before the invoice payment clears. |
| Florida | The waiver must specify payment amounts and dates to be valid. |
| New York | Waivers must comply with lien laws and contract terms to be enforceable. |
Always check your state’s lien waiver laws to ensure you’re using the correct form.
Key Considerations for Final Lien Wavers
- Always verify the final payment has cleared before signing an unconditional waiver. If you are the payer requesting a final waiver, make sure payments are fully processed to safeguard yourself from any potential future claims
- Ensure that the final lien waiver form complies with the state’s specific laws.
- Keep signed copies of all lien waivers for your records.
- Check if your state requires notarization to make the waiver enforceable.
Final Lien Waiver vs. Progress Lien Waivers
It’s important to understand the difference between a final lien waiver and a progress lien waiver:
- Progress Lien Waiver: Used during the job when partial payments are made. It waives lien rights for work completed up to that point.
- Final Lien Waiver: Used when the entire construction job or delivery is finished and final payment has been made.
Both documents protect the property owner, but the final lien waiver is definitive, ensuring no further claims can be made on the property.
Sending and Requesting Final Waivers
Whether you’re using a final waiver of lien template or filling out a custom form, it’s crucial to ensure the form is accurate and follows state-specific laws. Never rush to sign an unconditional waiver before confirming payment of your invoice, as this could leave you without legal recourse.
By understanding when and how to use a final lien waiver, you protect both yourself and the client, ensuring a smooth and legally sound project closeout. If you’re requesting a final waiver as the payer, confirm that all payments have cleared to ensure you are protected against future claims.