A lien waiver is a document used in what's known as the mechanic's lien process. The lien waiver is a document that goes from a contractor or other party (this person is the claimant) to the owner of the project and states that the claimant has both received payments for his or her work and waives any future lien rights to the property. Sound complicated? In what follows, you'll learn about the four major types of lien waivers and how they work.
The first type of lien waiver is a conditional waiver on progress payment. This type of lien waiver states that if the claimant gets paid on time, then the waiver can serve as proof against a lien claim. This type of lien waiver is the safest type of waiver for a claimant, as it makes it more flexible for him or her to seek restitution in cases of wrongdoing or payment failure.
An unconditional waiver of progress payment releases the claimant of his rights through a given date without conditions, including no returned or stopped checks. For obvious reasons, this gives the claimant less flexibility than a conditional wavier on progress payment.
A conditional waiver on final payment is the third type. This lien waiver removes the claimant's right to file a mechanics lien if he or she does get paid on the specified date.
The last type of waiver is the unconditional final waiver on final payment. This harsh type of waiver releases the claimant of all right to put in a mechanics lien on the property. This last lien provides the most protection to the owner of the property; once the waiver is signed, the claimant can do nothing to receive restitution for nonpayment or late payment. Before agreeing to a waver on such a project, you must make sure you understand which of the four types you're signing.