signing a lien waiver prior to getting paid

[Sierrasparky]

Instead of running to pay a lawyer or the court, a phone call is cheaper. The first phone call is the GC and discuss wording for a partial lien that takes effect when the check clears. If that phone call is not fruitful the next calls are to the landlord and tenant. Neither 1 of them want to be tied up with liens. You don't have to fly off half cocked. Just try to work it out calmly with the parties involved before loosing money through the courts.

They call this a conditional lein upon progress payment.
All EC should have the standard lein release forms. There are several for different purposes.
1) Conditional upon progress paymet ( for the payment not yet made)
2) unconditional Release of lein progress payment
3) conditional waiver and release of Final payment
4) un conditional waiver andrelease of final payment

 

[weressl]

SO a GC owes us about 40k. They want us to sign a lien waiver before they give us payment. The form specifically states that we are giving up all rights to lien even if we don't get paid. I told them I wouldn't sign it until I actually had a check in my hand. They claim they won't mail it and have me fax it after - I have to fax it before they release and mail the check. I told them that would be the dumbest thing anyone could do. They said - well that's our policy. You can come to our offices and pick it up - it is a 3 hr round trip for me. I told them it is our policy to not sign waivers before we get paid.

They told me they have never had a problem before with any other sub. I refuse to waive my rights before I get paid - what a PITA to have to go pick up the check.
They don't trust us that we will fax the waiver after we get the check and I don't trust them to send the check after we sign the waiver.

To break the stalemate you can ask them to take the non-payment clause out of the waiver of lien and deposit the payment with a bonded escrow service that releases the payment and signed waiver of lien simultaneously.

 

[K8MHZ]

If a GC were to place a stop payment on a check after your fulfillment of your obligations, it would be check fraud, criminally chargeable.

Not in Michigan.

My better half owns a business and teaches nurse aids. One of them completed the course, got the diploma and stopped payment on a 400 dollar check. She then took the diploma and got 're-reimbursed' by a care facility for the 400 bucks she stiffed us for.

There was nothing she could do about the check. She still could pursue for non-payment, but writing a check and stopping payment on in is no longer illegal in Michigan. I even have a letter from a congressman addressing the issue. He said that a check is not legal tender and is only an order from a person to their bank to release funds.

Now, writing a check with insufficient funds is illegal here, but stopping payment one is not.

 

[bbaumer]

Partial waivers of lien with progress payments and final waivers of lien from subcontractors are a standard requirement between GC's and Owners on AIA contracts and payment procedures.

Most subs sign them even though they haven't been paid yet. GC generally doesn't, or maybe can't due to his financial situation, pay the subs until he is paid by the Owner. Just life as a commercial/industrial contractor.

 

[Sierrasparky]

Partial waivers of lien with progress payments and final waivers of lien from subcontractors are a standard requirement between GC's and Owners on AIA contracts and payment procedures.

Most subs sign them even though they haven't been paid yet. GC generally doesn't, or maybe can't due to his financial situation, pay the subs until he is paid by the Owner. Just life as a commercial/industrial contractor.

I as most contractors will have no problem signing a conditional waiver . That is why they have them. To sign a unconditional waiver would be financial suicide. A GC can have the owner dispurse joint checks if necessary.

 

[Pierre C Belarge]

Partial waivers of lien with progress payments and final waivers of lien from subcontractors are a standard requirement between GC's and Owners on AIA contracts and payment procedures.

Most subs sign them even though they haven't been paid yet. GC generally doesn't, or maybe can't due to his financial situation, pay the subs until he is paid by the Owner. Just life as a commercial/industrial contractor.

Once a contract has been signed in NYS, the GC is obligated to pay his subs whether or not his customer has paid him.
That is why a payment schedule is so important in the contract verbiage.

In NYS, stopping a check is not considered fraud.
I understand different states have different rules, that is why contacting a contract or construction attorney is so important. It does not matter too much what we say here otherwise.

 

[Sierrasparky]

Once a contract has been signed in NYS, the GC is obligated to pay his subs whether or not his customer has paid him.
That is why a payment schedule is so important in the contract verbiage.

In NYS, stopping a check is not considered fraud.
I understand different states have different rules, that is why contacting a contract or construction attorney is so important. It does not matter too much what we say here otherwise.

Same rule in CA. contractor must pay unless otherwise in writing.

 

[boboelectric]

Last time I signed anything,I stepped off a bus at Paris Island .

 

[mivey]

Last time I signed anything,I stepped off a bus at Paris Island .

Hmmm...paying for everything in cash, not filing tax returns, no job, not going to the doctor, no house, no insurance, no car...:grin:

 

[jaylectricity]

I want to agree with "celtic" and say that you should take out a lien and tell them that you will cancel the lien if they just give you your money.

 

[mivey]

I want to agree with "celtic" and say that you should take out a lien and tell them that you will cancel the lien if they just give you your money.

Then they will say they won't give you the money till you cancel the lien...the next step is court...seems like a contingency waiver would be the best route.

 

[480sparky]

Has anyone ever used an intermediary? Someone who can 'broker' the transaction?

You send this person a signed lein waiver. The GC send him/her your check. Once the person has both of them, you get sent the check to deposit. 7 days later, if the check hasn't bounced, the person forwards the waiver.

I'm sure a lawyer or someone could do this for a small fee. Heck, even I would do it.

 

[realolman]

My wife works for a branch of the government that makes construction loans, and the contractors always have to sign a no-lien waiver. I have always thought that was odd.


Golden rule I guess... I got the gold... I make the rules.

 

[jrannis]

Do they want releases from your suppliers as well?
What would be wrong with a conditional release of lien?

 

[Sierrasparky]

Do they want releases from your suppliers as well?
What would be wrong with a conditional release of lien?

I don't know if they are trying to screw the sub or the GC is just trying to get paid from his owner/bank. The best thing is to for the bank / customer to make disbursments directly or with joint checks. I have had this happen to me. A guy wanted for me to release a claim of lein first I said no way. I'll do escrow or something like that?

 

[jaylectricity]

Then they will say they won't give you the money till you cancel the lien...the next step is court...seems like a contingency waiver would be the best route.

How about the two of them go for a ride? First stop...the bank to get the cash. Second stop, the lien office...sign the paper, hand over the cash, give customer a ride home.

 

[RH1]

I'm gonna chime in with the guys that said to sign a "conditional lien release", that's what I always do.

Anyway, let's have a reality check, what would happen if you signed a unconditional release and got stiffed by the contractor? Nothing really, you can't lien the property, that's all. You are still entitled to be paid and can sue the GC and property owner.

Liening a property is not the biggest gun in your arsenal, the property owner can "bond around" your lien and effectively remove it, so it's not as big a deal as many people think it is.

I have liened many properties, I'm something of a legend at the County Recorder's office. I once liened a house because the GC owed me $50. Here in Los Angeles it costs $21 and consumes about 5 minutes of time.

Liening houses produces lots of drama, real "shock and awe" but beyond it's theatrical effects, it is of little use...

 

[mivey]

Liening houses produces lots of drama, real "shock and awe" but beyond it's theatrical effects, it is of little use...

True enough. Can be more drama if someone is trying to sell or re-fi.

 

[hardworkingstiff]

Can be more drama if someone is trying to sell or re-fi.

That's when it has clout.

I agree with the friendly conversation about conditional lein wavers leading to, if necessary, the conversation about how it's just business, and you have to protect yourself (keep it vague) and he should understand that.

Hopefully it's a property that needs to be sold or refinanced so your lein (if necessary) will carry a serious road bump. I don't know if it will help, but you could register a complaint with the GC contracting board.

I've been lucky, but a buddy of mine was not so lucky. Even with leins and phone pressure, he wound up getting about 50 cents on a dollar. Keep your head and don't let emotions get going during conversations.

 

[RH1]

True enough. Can be more drama if someone is trying to sell or re-fi.

If you don't perfect the lien (file a lawsuit) within 90 days, the lien is vacated. At least that's the law here...

I have never recorded a lien release. I get paid, go down the road, no fuss no muss.