As part of the process of getting paid for construction work you’ve performed, you often have to execute a lien waiver and release. These documents say that you have been paid (or will be paid) and eliminate your lien rights. There are different types of lien waiver and release documents, and it’s important to know the difference between them and what signing them might mean for you.
Lien Waiver
A lien waiver is used to preemptively waive lien rights. A lien waiver is signed before a lien is actually filed. The party submitting the lien waiver states that they waive the right to lien against the project.
In some instances, the property owner or general contractor may request that you sign and deliver a lien waiver before payment is disbursed. This is to protect them from paying you and still have a lien filed on the property. While it works in their favor, it may not work to your benefit to release your rights before the check has cleared.
There are two types of Lien Waivers, and it is important to understand what you are signing:
Unconditional Lien Waiver: Signing an unconditional waiver immediately waives the right to file a lien for the specific payment noted in the waiver document. An unconditional waiver for payment should only be used when the payment has actually been made and received. It is important to note that many states prohibit owners and contractors from requiring an unconditional waiver before payment has been issued. This regulation provides you with some protection from being confronted with an unconditional waiver before payment. If the property owner or general contractor insists that an unconditional lien waiver be signed before payment is disbursed, you could request to use an escrow service to hold the money from the contractor and ensure you are paid. Once the documents are done, the money you are owed automatically comes to you.
Conditional Lien Waiver: This document states that the lien release is valid once payment is received. This protects your rights until the check has cleared, and the agreed amount is in your business’s account.
Lien Release
A lien release is used to cancel a lien that has already been filed. If the claimant receives payment and wishes to cancel a previously filed lien, generally they will file a lien release (also known as a release of lien or cancellation of lien). This action releases the claim of lien from the property in question.
Even if it is not required by your state, it is best practice to release a lien (and file any necessary documents with the registrar of deeds) as soon as payment clears. You do not want to have a lien outstanding after you’ve been paid for the work performed. Especially since as some states have penalties for failing to release the lien in a certain period of time or you could get sued for slandering the title of the property.
Negotiating Lien Waivers and Releases
Usually, handling lien waivers and lien releases is a straightforward process that occurs regularly throughout the construction project when different payment milestones are met. Your general contractor may have a preferred method of payment that addresses both the need for lien releases and payment. Consider the timing of the payments and the type of document to decide if it is something you’re comfortable with. As long as you’re aware of whether you’re signing a conditional or unconditional waiver, and you’re comfortable with the process for exchanging waiver for funds, then the property owner, the general contractor, and you can work out an intelligent system that balances everyone’s concerns.
For assistance understanding a particular waiver request, the process for releasing an existing lien, or help to handle a contentious situation, reach out to the team at National Lien & Bond. We have the experience necessary to help you get comfortable with a payment process and can provide escrow services when necessary.
A version of this blog post was first published in Aug. 2017.
Frequently Asked Questions
When should I sign a lien waiver?
The safe rule for unpaid contractors: sign a CONDITIONAL lien waiver only in exchange for an actual payment being delivered at that moment. The conditional waiver releases lien rights only IF the payment clears. After the payment has actually cleared the bank (typically 3-10 business days for a check, faster for wire transfer or ACH), you can then sign the UNCONDITIONAL waiver for that specific payment. Never sign an unconditional waiver before payment clears. Never sign a waiver in exchange for a 'promise to pay' or 'check in the mail' without the payment in hand.
Why should I sign a lien waiver at all?
Lien waivers are industry-standard exchange instruments. Owners, GCs, and lenders require waivers from each tier as a condition of releasing funds — without waivers, the upstream payor faces 'double payment' risk (paying twice if the unpaid sub-tier files a lien). Refusing to sign a waiver typically stops the payment chain entirely. The risk is not WHETHER to sign — it's WHICH waiver to sign and WHEN. Conditional waivers tied to specific payments are safe; unconditional waivers signed before payment clears are dangerous.
Can I refuse to sign a lien waiver?
Technically yes, but practically rarely. Most subcontract and supply agreements require lien waivers as a condition of receiving progress payments — refusing to sign typically stops the payment chain entirely and may breach the contract. The right approach is not to refuse but to negotiate: insist on the CONDITIONAL version, insist on waivers limited to the specific payment being made, refuse blanket future-rights waivers, and never sign an unconditional waiver before the payment clears. National Lien & Bond can negotiate revised waiver language with owners and GCs on contractor's behalf.
When should I refuse to sign a lien waiver?
Refuse to sign when: (1) the waiver is UNCONDITIONAL and the payment has not yet cleared; (2) the waiver is for FINAL PAYMENT but retention has not been included; (3) the waiver releases rights for amounts in dispute or back-charged; (4) the waiver language is non-statutory in a state requiring statutory forms (CA, AZ, GA, MS, MO, NV, TX, UT, WY); (5) the waiver releases rights against the wrong party (e.g., against the surety when only the GC contracted with you). Counter-offer with a properly-conditioned waiver instead of refusing entirely.
What is the timing trick that causes most lien waiver losses?
The most common loss pattern: GC says 'sign this unconditional waiver and I'll release your check.' Contractor signs the unconditional waiver to get the check. GC issues check. Contractor deposits check. Check bounces or payment is stopped. Contractor has now released lien rights with no payment received. Some courts will set aside the waiver under fraud or consideration-failure doctrines, but the legal hurdle is high and litigation cost often exceeds the underlying debt. Safe alternative: sign only CONDITIONAL waivers tied to specific payments. Sign unconditional only AFTER the payment has cleared.
Can I sign a lien waiver before completing the work?
Generally no — lien waivers should only be signed in exchange for payment for work already performed. Some construction contracts contain forward-looking waiver clauses purporting to release lien rights for work not yet performed; these are unenforceable in most states under the principle that lien rights cannot be waived prospectively. California specifically prohibits prospective waivers under Cal. Civ. Code § 8122. Even where prospective waivers might be enforceable, they are dangerous and should never be signed without consultation with construction-payment counsel.
How does National Lien & Bond help with lien waiver timing?
National Lien & Bond reviews lien waiver requests BEFORE the contractor signs to confirm: (1) the waiver is the correct type (conditional vs unconditional); (2) the timing is correct (before or after payment clears); (3) the scope is limited to the specific payment, not blanket future rights; (4) the language complies with statutory requirements in form-state jurisdictions. For Illinois-based engagements, Hal Emalfarb's firm at Emalfarb Swan and Bain handles direct review. For 50-state coverage, NLB's network attorneys verify state-specific compliance. Contact NLB for a free initial consultation before signing any waiver.