Lien waivers are among the most misunderstood documents in construction. Sign the wrong waiver at the wrong time, and you could lose your payment rights entirely. Here's what you need to know to protect yourself.
What Is a Lien Waiver?
A lien waiver is a document where you give up (waive) your right to file a mechanics lien for certain amounts or certain work. It's essentially a receipt that says "I've been paid (or will be paid) this amount, and I won't file a lien for it."
GCs and owners require lien waivers to ensure they're not paying you while you can still lien the property for the same work.
The Four Types of Lien Waivers
Conditional Waiver on Progress Payment
This waiver says: "When I receive payment of $X, I waive my lien rights for work through [date]."
The key word is "conditional" — your waiver only becomes effective when you actually receive the payment. If the check bounces or payment doesn't arrive, you retain your lien rights.
This is the safest waiver to sign before receiving payment.
Unconditional Waiver on Progress Payment
This waiver says: "I waive my lien rights for work through [date], regardless of whether I've been paid."
The waiver is effective immediately upon signing — even if you never receive payment. This is dangerous to sign before money is in hand.
Conditional Waiver on Final Payment
This waiver says: "When I receive final payment of $X, I waive all lien rights on this project."
Same principle as the progress conditional — effective only upon receipt of payment.
Unconditional Waiver on Final Payment
This waiver says: "I waive all lien rights on this project, regardless of whether I've been paid."
Signing this without having received payment is extremely risky. You've given up all rights to lien the project.
State-Specific Requirements
Many states have statutory lien waiver forms that must be used. Using non-compliant forms may make the waiver unenforceable — which could work for or against you.
Check your state's requirements. Common states with statutory forms include California, Texas, Georgia, Arizona, and Michigan.
When to Sign What
Before Receiving Payment
Sign conditional waivers only. Your waiver becomes effective only when you're actually paid.
After Receiving Payment (and it's cleared)
You can sign unconditional waivers once payment is confirmed in your account.
Never Sign
An unconditional waiver for more than you've been paid, a waiver covering work not yet paid, or waivers that waive rights beyond lien rights (some sneaky forms include broad releases).
Reading the Fine Print
Amount Covered
The waiver should specify exactly what amount it covers. Verify this matches what you're being paid.
Period Covered
The waiver should specify "through [date]." Make sure this matches the billing period you're being paid for.
Exceptions
Your waiver should preserve rights to unpaid retention, disputed amounts, and future work not yet invoiced.
Extra Language
Watch for language that goes beyond lien waivers: "release of all claims," "waiver of bond rights," or "indemnification." These may give up more than just lien rights.
Protecting Yourself
Use Correct Form Type
Match the waiver type to the situation. Conditional before payment, unconditional only after.
Track What You've Waived
Maintain a log of all waivers you've signed, what amounts and periods they cover, and whether they were conditional or unconditional.
Don't Waive More Than You're Paid
The waiver amount should never exceed the payment you're receiving.
Verify Payment Before Unconditional Waivers
Before signing unconditional, confirm the payment has cleared your bank.
Preserve Retainage Rights
Ensure your waivers explicitly exclude retainage unless you're also being paid retainage.
Common Waiver Mistakes
Signing Unconditional Before Payment
This is the biggest mistake. Once signed, you've waived your rights whether or not you ever get paid.
Signing for More Than Received
A waiver for $50,000 when you're receiving $40,000 waives your rights to that extra $10,000.
Not Reading the Form
Assuming all waivers are the same is dangerous. Read every waiver before signing.
Signing Under Pressure
"Sign this or no check" is a common tactic. If you must sign to get paid, make sure you're signing the appropriate conditional form.
Losing Track
Not tracking what you've waived can lead to discovering you've signed away rights you didn't intend to waive.
When the GC Insists on Unconditional Waivers
Some GCs require unconditional waivers before releasing payment. Your options are negotiate for conditional waivers (the appropriate form), request joint check arrangements (payment to you and your suppliers together), or accept only if payment is simultaneous (sign when the check is in hand).
If a GC insists on unconditional waivers without simultaneous payment, consider whether you want to work with them.
Frequently Asked Questions
What if I signed an unconditional waiver and didn't get paid?
In some states, unconditional waivers are ineffective if the stated consideration (payment) wasn't received. Consult an attorney — you may have options.
Can I modify a waiver form before signing?
You can try, but GCs may not accept modified forms. At minimum, never increase amounts or change conditional to unconditional.
Do lien waivers affect my bond claim rights?
Standard lien waivers shouldn't affect bond rights, but watch for language that waives "all claims" or specifically mentions bonds.