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6 Things To Understand About Construction Liens & Waivers

Construction liens and waivers – you may have heard of them, but do you know what they are and how they work? If you’re not sure, don’t worry – today’s blog post is all about giving you the scoop on these important legal documents. RKG Roofing and Construction Recruiting will cover everything from what a lien is to when you need to sign a waiver, so by the end of this post, you’ll be an expert on all things construction liens and waivers!

What Exactly Is a Construction Lien?

In short, a lien is a legal claim that gives the holder the right to seize and sell the property to satisfy a debt. For construction, liens are typically filed by contractors or suppliers who haven’t been paid for their work or materials. After a lien is filed, the property owner may have to pay the debt in full before selling or refinancing the property.

Persistence of Property Owners on Lien Waivers.

There are best practices that all construction parties should follow to minimize financial risk. Property owners should insist on lien waivers from all contractors, subcontractors, and suppliers before any work is performed or materials are delivered. This way, the owner can ensure that everyone who works on the project will be paid.

Records of Payments

Contractors should also keep meticulous records of all payments made to subcontractors and suppliers, as well as lien waivers received. It will help avoid any disputes down the line.

Why Send a Lien Waiver??

A lien waiver is typically sent by a contractor, subcontractor, or supplier to a property owner after being paid. The objective of the lien waiver is to waive the right to file a lien against the property for payment.

Types of Lien Waivers

There are four types of lien waivers:

  • Unconditional Waiver and Release Upon Final Payment
  • Conditional Waiver and Release Upon Progress Payment
  • Unconditional Waiver and Release Upon Receipt of Notice to Proceed
  • Conditional Waiver and Release after Substantial Completion.

Understanding the difference between these waivers is essential, as they all have different implications. In an unconditional lien waiver, a contractor waives their right to file a lien, whether or not they have been paid. A conditional lien waiver means that the contractor only waives their right to file a lien if paid.

Practices Regarding Lien Waivers.

There are best practices for both contractors and property owners regarding lien waivers.

For contractors, it is best practice to always request a lien waiver from the property owner before beginning work. This way, the contractor knows that they will be paid for their work and can avoid any potential legal issues down the road.

It is best practice for property owners to sign a lien waiver after the work has been completed and receive an invoice from the contractor. This way, the property owner can be sure that they are only paying for work that has been completed.

There you have it, the ABCs of construction liens and waivers. As you can see, there’s a lot to know about construction liens and waivers. If you reside in Keller, TX, have any questions, or need more information, don’t hesitate to contact us at RKG Roofing and Construction Recruiting (VIP). We would be happy to help!

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