A lien waiver is a legal document signed by a contractor, subcontractor, supplier, or other party on a construction project to confirm they have received payment and, in exchange, waive their right to file a mechanic’s lien for that amount.
A lien waiver may go by several other names depending on the context or state. It could be referred to as a release of lien, lien release, or waiver of mechanics’ lien, all of which emphasize that the signer is giving up certain lien rights.
When tied to specific payments, it might be called a payment waiver, a progress payment waiver for partial payments, an interim waiver, or a final payment waiver when the project is complete.
In some states like California, the legal documents use the term Conditional Waiver and Release on Progress Payment that have been issued but not yet cleared or Unconditional Waiver and Release on Progress Payment that are fully received and final.
While terminology can vary, the purpose is always the same: to document payment has been made and the party signing the waiver is relinquishing their right to file a lien for the amounts covered.
Every lien waiver should clearly identify the property name & project location, the debtor’s name (your customer), the invoice or purchase order number, the payment amount and the disputed claim amount. If the lien waiver is for partial payment, you should also include the payment period or a through date.
Lien waivers serve as proof of payment and help ensure that once money is exchanged, no further mechanic’s liens can be filed for that portion of work.
Property owners use them to confirm they are paying only once for the same labor or materials. Contractors and suppliers use them to demonstrate they have been paid and to maintain good working relationships.
The lien waiver process is designed to confirm payment and protect the rights of everyone on a construction project. While details vary by state and contract, most waiver exchanges follow a similar sequence:
Lien waivers work best when key elements are in place. These factors help protect all parties, reduce disputes, and ensure payments are handled transparently.
Sworn statements confirm what’s been paid and what’s owed, giving everyone confidence that lien rights are waived accurately.
Listing suppliers ensures all contributors are acknowledged, reducing the risk of overlooked claims or disputes.
Notifying owners keeps them informed of potential lien claims, protecting their interests and making waivers enforceable.
Lien waivers may seem straightforward, but small errors can create big problems. Misusing a waiver can delay payment, weaken lien rights, or expose a project to unnecessary risk. Here are some of the most common mistakes to avoid:
There are four primary types of lien waivers, first separated by conditional and unconditional, and then separated by partial and final.
A conditional lien waiver is conditioned up receipt and clearance of the payment. If the terms of a conditional lien waiver aren’t met, the waiver becomes null and void. For example, if you don’t receive payment or the payment doesn’t clear the bank, you have a right to file a mechanic’s lien to recover the payment.
An unconditional lien waiver is not conditioned upon receipt and clearance of payment. Without conditions, you lose leverage. If you don’t receive payment or the payment doesn’t clear the bank, you’re unable to file a mechanic’s lien because you waived your right to file the mechanic’s lien.
This waiver can be conditional or unconditional.
This waiver can be conditional or unconditional.
Conditional lien waivers are preferred over unconditional lien waivers, because the “conditions” provide the creditor with leverage, in the event payment is not received or does not clear.
A lien waiver is exchanged at the time of payment, while a lien release (aka release of lien) is filed after a lien has already been recorded. A lien waiver acknowledges receipt of payment whereas a release of lien releases a previously recorded document.
Lien waiver rules are not the same nationwide. Each state sets its own requirements for how waivers must be written, signed, and enforced. Some states mandate specific statutory forms that cannot be altered, while others allow parties to create their own language. Certain states may also require waivers to be notarized or signed under oath.
Because of these differences, a waiver that is valid in one state may not hold up in another. Contractors, suppliers, and owners need to pay close attention to the laws where the project is located. Using the wrong form or missing a requirement can create disputes, delay payment, or even invalidate the waiver entirely.
Some states require lien waivers to follow exact statutory language. These states include:
While most states do not require notarization, Georgia, Mississippi, and Wyoming do require notarization. Because requirements vary, it’s important to review the state law and consult a legal opinion before signing a waiver.
In construction, a lien waiver functions as both a receipt of payment and a legal safeguard. It ensures subcontractors, suppliers, and laborers cannot file a lien against the property for amounts they have already been paid.
Often, general contractors provide lien waivers to subcontractors, suppliers, and other lower-tier parties before releasing payment. These waivers are signed and returned to confirm payment has been received and lien rights are waived for a specific amount.
However, lien waivers are not limited to subcontractors and suppliers. Any party on a construction project, including property owners, lenders, and general contractors, may request a waiver to confirm payment and protect against future lien claims.
Lien waivers provide protection for every party involved in a construction project. By clearly documenting payments and confirming that lien rights are waived only for amounts received, waivers create transparency and reduce the risk of disputes. This protects owners from double payment, ensures general contractors can keep funds flowing, and gives subcontractors and suppliers confidence that payment has been properly exchanged.
Documentation reduces misunderstandings and helps resolve issues quickly.
Consistent use of waivers builds trust and demonstrates reliability among all project partners.
Waivers provide a transparent paper trail for managing payments effectively.
Requiring waivers before disbursement helps ensure all parties are paid on schedule.
Fewer payment disputes mean projects stay on track and avoid unnecessary delays.
A lien waiver form is the document signed by the contractor, subcontractor, or supplier. It outlines the type of waiver (conditional, unconditional, partial, or final) and confirms payment terms.
Each project and circumstance will be different, but generally:
Lien waiver management requires precision, consistency, and deep knowledge of state requirements. Even a small mistake can delay payments or put lien rights at risk. That is where NCS Credit provides unmatched value.
NCS Credit has built a reputation as the industry leader in protecting construction receivables. Our team of experts and network of attorneys understand the nuances of lien waivers and bring hands-on support to ensure your documents are accurate, compliant, and returned on time.
We combine this expertise with powerful technology that automates tracking, organizes documents, and integrates into your existing workflow. Our people work alongside your team, supported by technology designed to simplify the process, reduce errors, and keep projects moving forward.
Partnering with NCS Credit means you gain a trusted ally who protects your rights while freeing your team to focus on growing the business.