Lien waiver

What it is

On private projects, most contractors, subcontractors and suppliers who are not paid can file a mechanics lien against the property; on public jobs, where a lien cannot attach, the claim is against the payment bond instead. A lien waiver is the document that gives that right up for a specific amount, and it is exchanged for the payment that amount covers. There are four kinds, by two questions: whether the waiver takes effect only once the payment clears (conditional) or immediately (unconditional), and whether it covers a progress payment or the final payment. About a dozen states prescribe the exact forms, and most set when a waiver takes effect.

Why it matters

A general contractor needs waivers from every sub and supplier to show the owner, and the lender, that the money paid down the chain reached the people who did the work. A payment released without the waiver it requires leaves the property exposed to a lien for work the owner has already paid for. That is why so many sub payments wait in a drawer for a signed form, and why the final release of retainage so often waits for the final waiver.

How Aquifer fits

In contracts and billing, each lien waiver is recorded against the bill or payment it covers, conditional or unconditional, progress or final, and a payment to a sub missing a required waiver is held until someone with the authority overrides it, with the reason kept. Subs upload the waiver themselves through the portal, where a payment on hold says so and what will clear it, and the document stays attached to the bill or payment it belongs to.