signing a lien waiver prior to getting paid

[Doug S.]

I'd check into your state's laws.

MI law states...
Sec. 115. (1) A person shall not require, as part of any contract for an improvement, that the right to a construction lien be waived in advance of work performed. A waiver obtained as part of a contract for an improvement is contrary to public policy, and shall be invalid, except to the extent that payment for labor and material furnished was actually made to the person giving the waiver. Acceptance by a lien claimant of a promissory note or other evidence of indebtedness from an owner, lessee, or contractor shall not of itself serve to waive or discharge otherwise valid construction lien rights.

Might be worth a few hundred bucks to chat w/ a lawyer. A feather in your cap for next time.

My 2?
Doug S.

 

[TonyEEINC]

Partial Lien Release Common Practice

Partial Lien Release Common Practice

This request is common practice with large G.C.
And although there is a little required trust, you are not giving up your rights.
It should state on the lien waver that it is a partial release contengant on them making good on the payment (should list amount)
I sign these all the time, they usually fax a copy of the check to me, to verify they intend to make payment. I then fax a copy of the release to them, and they mail the check.
If they do not complete the payment the release was fraud.
I do my back ground check before I sign a contract. See who you are doing business with.
Have they had previous money trouble?
If not you are already over a barrel you have completed 40k worth of work on a promise of payment. If they are going to stick you it will likely be the risdual payment they withhold.
You have too know who you are dealing with.
Tony

 

[Kdog76]

Amazing timing. Just as I was reading the last post I got a call to sign a lien waiver on a new detached garage that I wired. It was a total rebuild from after a fire. Insurance companies I know are slow at paying, but know I got a little extra info here on signing this waiver. I will look for a partial release contingent on them paying the amount in full.

 

[Kdog76]

Just called the owner back & he started reading the terms of this waiver to the effect of " in consideration of the full amount with xxx.xx paid and xxx.xx STILL DUE, to be paid upon , etc. " Sounded to me like at least there are acknowledging a balance due...So I will sign and get a copy. (AND get paid...)

 

[satcom]

This request is common practice with large G.C.
And although there is a little required trust, you are not giving up your rights.
It should state on the lien waver that it is a partial release contengant on them making good on the payment (should list amount)
I sign these all the time, they usually fax a copy of the check to me, to verify they intend to make payment. I then fax a copy of the release to them, and they mail the check.
If they do not complete the payment the release was fraud.
I do my back ground check before I sign a contract. See who you are doing business with.
Have they had previous money trouble?
If not you are already over a barrel you have completed 40k worth of work on a promise of payment. If they are going to stick you it will likely be the risdual payment they withhold.
You have too know who you are dealing with.
Tony

Tony, it takes years for some EC's to learn they need to check who they are dealing with, one EC told me it costs money to do a background check, then he was hit with a $60k balance due on a $90k project, now he believes in doing a credit check and background check.

 

[lineman_16735]

This is very common. I have to do this for every GC I have ever worked for. A partial waiver for the first payment, a partial waiver for the second, and an unconditional waiver for the final 10%. Every other sub I know does the same as well. Even if you signed un unconditional waiver before you received any money and the GC tried to stiff you, they would have to show proof that you cashed the check. It's really not a big deal. If your contract is written properly to protect you from being stiffed you have little to worry about.

Chris

 

[RCRosson]

In California, we have a Conditional Release that is used almost exclusively in situations like yours. DO NOT sign away your rights. A conditional release states that all claims are released upon full (or determined amount) payment. Find one and use that. If you can't find one, go one line and download one. GOOD LUCK!

 

[CopperTone]

Here is what the "unconditional waiver and release upon progress payment" actually say's - that was sent from the GC in the Original Post.
" the undersigned has been paid and has received payments in the amounts of XXX for all all labor, services, equipment or material furnished to "GC" on the job "abc" located at "main st" and does hereby release any mechanic's lien, stop notice or bond right that the undersigned has on the above-referenced job to the following extent. This release covers a progress payment for all labor, services, equipment or material furnished to "GC" through "a certain date"
notice - these documents waive rights unconditionally, and state that you have been paid for giving up those rights. these documents are enforceable against you if you sign, even if you have not been paid.
------------------------------------
they wanted me to sign that and fax back to them before they released a progress payment - I told them I refused to and to send me the check - they sent progress payment check but insisted that they needed the "unconditional waiver and release upon progress payement" before they release final payment -

why should we give up our rights prior to the check clearing ? I understand the conditional release of rights but not the unconditional release of rights prior to the check clearing - I spoke to my bank today - they said to wait 2 weeks before signing any release forms to ensure the check has cleared - even if it is an in state bank.

Anyone from Massachusetts have any input?

 

[danickstr]

When I have a legal question....I tend to ask a ....lawyer. In view of the amount of money involved, a lawyer is really the only logical choice. They may even tell you such things as, "go ahead and sign it, it is void in our state and if they do not pay, they are liable for the full amount and any legal costs you may incur", or they may say, "in this state, anyone who signs that waiver loses all rights. But we can file a lien now that they sent that to you and get you all your money."

They have the inside track and are probably even smarter about law than the "wily" GC.

 

[sparky 134]

Here is what the "unconditional waiver and release upon progress payment" actually say's - that was sent from the GC in the Original Post.
" the undersigned has been paid and has received payments in the amounts of XXX for all all labor, services, equipment or material furnished to "GC" on the job "abc" located at "main st" and does hereby release any mechanic's lien, stop notice or bond right that the undersigned has on the above-referenced job to the following extent. This release covers a progress payment for all labor, services, equipment or material furnished to "GC" through "a certain date"
notice - these documents waive rights unconditionally, and state that you have been paid for giving up those rights. these documents are enforceable against you if you sign, even if you have not been paid.
------------------------------------
they wanted me to sign that and fax back to them before they released a progress payment - I told them I refused to and to send me the check - they sent progress payment check but insisted that they needed the "unconditional waiver and release upon progress payement" before they release final payment -

why should we give up our rights prior to the check clearing ? I understand the conditional release of rights but not the unconditional release of rights prior to the check clearing - I spoke to my bank today - they said to wait 2 weeks before signing any release forms to ensure the check has cleared - even if it is an in state bank.

Anyone from Massachusetts have any input?

While I'm not familiar with the legal system in Massachusetts but if a person gives you a check and the check bounces you can sue for said amount. Just because you sign a waiver doesn't mean the payer can give you a check that will not clear.

Here in Illinois I will supply partial waivers to customers to receive partial payouts. But when it comes to final payouts I will supply a copy of a final waiver but the original doesn't leave the office until I receive a final payout. Copies of waivers are not legal documents.

 

[480sparky]

While I'm not familiar with the legal system in Massachusetts but if a person gives you a check and the check bounces you can sue for said amount. Just because you sign a waiver doesn't mean the payer can give you a check that will not clear...............

If the check bounces because the GC knew it wouldn't (intentionally gave you a rubber check), you can sue for treble damages as well.

 

[kbsparky]

Yea but what if the customer makes a claim you did something wrong.

Then you have your inspections to show that the job was done right. Having the legal paper trail of proper permits/inspections can go a long way towards dispelling any claims of improper installations, when the inspections all passed in the first place.