Lien waivers are routine on construction projects, signed and exchanged so often that it's easy to treat them as a formality. But the wrong waiver, signed at the wrong moment, can quietly waive lien rights a subcontractor or supplier was counting on. In this episode of the NCS Credit podcast, host Alec Papesch sits down with Mark Grzymala, founding attorney of Grzymala Law Offices in Skokie, IL, to break down the four main types of lien waivers, the role title companies play, and the practical steps credit teams can take to stop over-waiving their rights.
Before getting into the four waiver types, it helps to separate two distinctions that often get blurred. Partial and final describe when the waiver is signed (during progress payments versus at project completion). Waiver of lien to date and waiver to the extent of payment describe what scope of rights is being released (a date range versus a dollar amount). The two distinctions work together rather than interchangeably and getting them mixed up is one of the easiest ways to over-waive lien rights without realizing it.
With that framework in place, there are two primary categories of lien waivers, each with two variations. A waiver of lien to date (also called a time waiver) waives lien rights up to a specific point in time. A waiver to the extent of payment (also called a money waiver) waives lien rights only up to the dollar amount actually received. Each can be conditional or unconditional, depending on whether the waiver takes effect when payment clears or the moment it's signed. The combination a contractor uses, and whether they understand what they're signing, has a direct effect on what's recoverable if a project goes sideways.
Lien waivers may look like routine paperwork, but every signature carries weight. The difference between a conditional waiver to the extent of payment and an unconditional waiver of lien to date can be the difference between recovering what's owed and absorbing the loss
NCS Credit works with subcontractors, material suppliers, and credit teams across the country to help them manage lien waivers with the right structure, the right timing, and the right level of protection at every stage of a project. For a deeper dive into waiver mechanics, our lien waivers whitepaper is a good companion piece to this episode.