Conditional vs unconditional lien waivers: which one, and when
A lien waiver is a document where you give up some or all of your right to file a mechanics lien on a project, usually in exchange for payment. General contractors, owners and lenders collect them so they know every party that worked on the job has been paid.
Signing the wrong one, or signing the right one too early, can leave you with no lien rights and no check. Here is how the common types work.
The four common types
Lien waivers vary along two questions: is the waiver conditional on payment, and does it cover a progress payment or the final payment?
| Progress payment | Final payment | |
|---|---|---|
| Conditional | Waives rights for this payment, only once it is received | Waives all rights, only once final payment is received |
| Unconditional | Waives rights for this payment immediately | Waives all rights immediately |
Conditional progress waiver
This is what you usually send with a pay application. It says, in effect, “once I receive this payment, I waive my lien rights for the work it covers.” If the check never arrives, or bounces, the waiver does not take effect.
Unconditional progress waiver
This waives your rights for the payment amount the moment you sign it, whether or not you have been paid. Sign one only after the funds have cleared your account. GCs commonly request an unconditional waiver for the previous payment along with a conditional waiver for the current one.
Conditional final waiver
Used at the end of the job, when you are about to receive your final payment including retainage. It waives all remaining lien rights once that payment is received.
Unconditional final waiver
Waives all lien rights on the project immediately. It should be the last document you sign, after the final payment has cleared.
Statutory forms
Roughly a dozen states require specific statutory waiver language, including California, Texas, Arizona, Georgia, Michigan, Nevada, Utah, Wyoming and Mississippi. In those states, a waiver that does not follow the statutory form may not be enforceable, and a GC may reject it. Other states let parties use their own forms, which means the language can be broader than you expect. Read the form before you sign it, especially when a GC sends their own.
Mistakes that cost subcontractors
- Signing an unconditional waiver before the money clears. This is the biggest one. “The check is in the mail” is not payment.
- Waiving more than the payment. Some forms waive rights “through” a date, which can cover work you have not been paid for yet, including unapproved change orders and retainage.
- Forgetting disputed amounts. If a change order is still in dispute, note the exception on the waiver where the form allows it.
- Not collecting waivers from your own suppliers and sub-tiers. Your GC may ask for them, and your suppliers still hold lien rights against the project.
- Losing track of which waivers were sent. On a job with monthly pay apps, you can have a dozen waivers per project. Missing one can hold up payment.
Where Payrung fits
Payrung is being built to generate the correct conditional and unconditional waivers for each pay period, in the state form where one is required, and to track which ones have been sent and which are still owed. Join the waitlist for early access.
This guide is general information, not legal advice. Lien law is state specific. Talk to a construction attorney before signing anything you are unsure about.