Lien waivers allow construction participants to waive their mechanics lien rights in exchange for payment. In states like California, issuing lien waivers is strictly regulated, which means that if you want to relinquish your lien rights, you have to use the statutory lien waiver templates.
There are four lien waivers in California, and each lien waiver is applicable to a specific scenario. This guide explains how to use one of the four California lien waivers: the California Conditional Waiver and Release on Final Payment.
When do you use a California Conditional Waiver and Release on Final Payment?
Before you sign a California Conditional Waiver on Final Payment, make sure that your answer to the following questions is “Yes.”
1. Are you still waiting to receive your payment?
If your payment is not yet on hand and you are still waiting to receive the check or to get the check cleared in the bank, you should use a California conditional lien waiver. This is because a conditional lien waiver offers you protection in case a check bounces or your client does not issue payment altogether. The conditional lien waiver will take effect only once you officially receive your payment.
2. Is your work on the project all done?
If your work on the project has wrapped up and you are waiting to receive your final payment, then you can use this lien waiver. This waiver is a final payment waiver, which means that you are no longer expecting to receive more regular payments for the same project in the future. Note that you can also specify exceptions in the lien waiver (e.g. dispute amounts).
If you answer “no” to the questions above, you may consider signing one of the other three California lien waivers. However, note that it is always best practice to sign a conditional lien waiver over an unconditional lien waiver. It is also equally important that you sign a final payment waiver only when your work on a project is over.
Signing an unconditional lien waiver may cause you to lose your lien rights if, for instance, the check that you receive does not go through. Signing a final payment waiver when your work on a project is still ongoing can cause you to lose all your lien rights when you only meant to relinquish a portion of it. Should a lien prove unsuccessful, you may choose to explore suing for outstanding payments through California small claims court if applicable.
How to fill out a California Conditional Waiver and Release on Final Payment
The first step is to cross-check if the lien waiver that you have is substantially the same as the California Conditional Waiver and Release on Final Payment form specified in Civil Code Section 8136. The statutory lien waiver form is the only correct conditional final payment lien waiver template in California.
Make sure that you write all the required information specified above by filling the appropriate blanks with the following details:
1. Name of Claimant
You are the claimant, so you must write your full business name.
2. Name of Customer
This is the name of the party who hired you to work on the project.
3. Job Location
This is the street address or a brief and identifiable location description of the property.
4. Owner
This is the name(s) of the property owner(s).
5. Maker of Check
This is the name of the entity issuing your payment check.
6. Amount of Check $
This is the amount of the payment you are expecting to receive.
7. Check Payable to
This is the name of the recipient specified on the check.
8. Exceptions
This part allows you to specify the payments over which you will not waive your lien rights. You may write the total disputed amounts, if any.
9. Claimant’s signature and title
This is the part where you or your agent sign and specify your job title.
10. Date of signature
This is the date when you sign the lien waiver.
California lien waivers do not have to be notarized.
Best practices before signing a California Conditional Waiver and Release on Final Payment
1. Sign a conditional lien waiver instead of an unconditional one
Whenever possible, choose to sign a California conditional final payment waiver instead of its unconditional counterpart. A conditional lien waiver keeps your lien rights intact in case a check bounces or you do not receive your payment altogether. An unconditional lien waiver, on the other hand, lets you relinquish your lien rights once you sign the form, regardless of whether you receive your payment or not.
2. Ensure that you are signing the California statutory lien waiver template
In California, construction participants are not allowed to customize their own lien waivers. A conditional final payment lien waiver will only be enforceable if it is substantially the same as the template specified in California’s Civil Code Section 8134. Make sure that you read the form carefully and that you understand what it says before signing.
3. Use this waiver only when you are expecting to receive your final payment
This is a California final payment waiver, so the form assumes that you are finished with a project and that your contract is completely fulfilled. You must not be expecting any future payments other than any disputed amounts once you sign this waiver. If your work on a project is still in progress, consider signing a California Conditional Waiver and Release on Progress Payment.
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