Signing off lein rights

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Cletis

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Location
OH
Is it typical for a company to ask
You to sign off your lein rights? He said its normal in the industry. This is a really big job with tons of potential profit. Sounds fishy to me ??


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Cletis said:
Is it typical for a company to ask
You to sign off your lein rights? He said its normal in the industry. This is a really big job with tons of potential profit. Sounds fishy to me ??


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Sign the lien waiver after you've been paid in full.
 
Netpog said:
Apparently such waivers really are customary, in some circumstances or venues. Owners worry about suffering subcontractor liens, after passing a deadbeat G.C.
https://www.muchshelist.com/knowled...ics-lien-act-what-property-owners-should-know

But I still hate the idea: "As a sign of good faith, how about you give away your recourse against my acting in bad faith?"
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Not un heard of. I won't. I'll provide a conditional waiver upon payment. To give a waiver before payment is stupid even if you have no intention to file a lein.
 
Cletis said:
Is it typical for a company to ask
You to sign off your lein rights? He said its normal in the industry. This is a really big job with tons of potential profit. Sounds fishy to me ??


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yes and no. it seems more prevalent on larger projects.
 
Read the lien waiver carefully. If it is worded to make it clear it only means you won't try to lien on the invoice(es) the payment is for then don't sign it unless you received the payment.

If it is not clear what it covers - they can try to make it mean you can't ever ask them for funds on same property ever again, in that case you need to request they clarify what is covered by the waiver before you will sign one.
 
kwired said:
Read the lien waiver carefully [...] they can try to make it mean you can't ever ask them for funds on same property ever again
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Excellent advice! Just because it says "lien waiver" on the package doesn't mean you know what's inside. I saw a "non-disclosure agreement" that, instead of the usual "we won't steal your stuff", actually said "you hereby give us all all your stuff." In your case, Cletis, you probably don't want to waive change orders, other claims, future work, the simple right to get paid, etc etc.

Also the rules, and thus the meaning of the waiver, will vary state by state. In New York, these apparently are enforceable only upon or after payment, as opposed to (say) before work has begun.

Ditto in other states, and for federal projects, according to this essay, written for the contractor (rather than the payor!) which gives a few warnings. (For example, to avoid giving acknowledgement of payment without conditioning the waiver on a stated dollar amount.) http://www.dysarttaylor.com/news-events/blog/lien-waivers

You don't want to waive lien rights on future work. Nor do you want to give a final waiver, against the full amount due, in exchange for a partial payment.

It might be worth having a lawyer look at this, especially since it's "a really big job." In the worst case, a friend who's used to looking at contracts might catch something, but you would rather have someone who knows Ohio commerce law.

For a randomly-googled-up example of a relevant Ohio-specific law, apparently
Those who bill and receive payment, and fail to pay their subs and suppliers within ten (10) days of receipt of the money for that work, face the sizeable risk of being liable for 18% interest and legal fees under Ohio’s Prompt Payment Act.
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These lawyers caution that you'd want to understand how to use that Act, especially if there are disputes: http://www.taftlaw.com/news/publications/detail/1204-ohio-s-prompt-payment-act-revisited (Caution: especially-lawyerly prose.)

As with any contractual request, you want to ask, and understand, what's motivating the other guy. (This is why I never want to involve lawyers until AFTER there's a handshake.) For example, you shouldn't need to give protections to the owner that are already granted by state law: the Ohio AG tells homeowners that according to
The Ohio Mechanic’s Lien Law[...], if you pay the original contractor in full before receiving official notice of a mechanic’s lien, a lien can’t be placed on your home[....]
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The should-be-obvious disclaimers: IANAL, YMMV, park and lock it not responsible. Emphasis added. I've wrangled contracts, but nothing lien-related, and very-much IANAL. Also: you might find the various links helpful, but I can't vouch for any of the sources. (Except maybe OhioAttorneyGeneral.gov, I guess.)
 
Never had trouble with lien waivers, but do read them with caution - especially if they want me to sign one after only a partial payment on a project. When I was building my house my lender wanted all the sub's to sign a waiver with each partial payment that was sent out during the project. I would turn the bills into the lender and lender would send me the checks and waivers to distribute to the subs. When I read the wording on the first one (even though I was not the one signing) I called them and told them I didn't think it was right as it was worded and that if I were one of the subs I would refuse to sign it until the project was completed. They sent out differently worded waivers after that.:roll:

Only time I ever filed a lien on a customer - I was suspecting they were going to file bankruptcy, which they eventually did leaving me with unpaid bills. I suppose it was still worth the very marginal chance I may collect something, but since I had a lien, I was automatically a creditor in the bankruptcy case and received all relevant paperwork from the case. I knew who all was a creditor and how much they were owed. I also know who got paid and how much. Unfortunately after the attorneys and banks took what they could get - there was nothing left for anyone else.
 
Speshulk said:
Meaning_you're_more_likely_to_lose_your_shirt.__For_some_reason_my_space_bar_won't_work.
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Others have that random problem. Hitting the "enter key" then the "backspace" key when that happens seems to make it go away.
 
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Consider having a document written and executed by the GC that states that the GC is responsible for payments to you regardless of whether or not the property owner pays the GC. Then you are relying on the GC's financial stability for payment. In that case, if you are comfortable with the GC, you might be willing waive your rights to put a lien on the property.

Having the GC purchase and supply all equipment, materials and supplies for your work would also help reduce your financial risk.
 
David Goodman said:
Having the GC purchase and supply all equipment, materials and supplies for your work would also help reduce your financial risk.
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And at same time opens the door for them to get the wrong equipment, partly because they don't know what is needed, or not have it when it is needed - opening the door for accusing you of holding the project up/not meeting deadlines, plus they mark those items up an you do not.

An arrangement where you control what is ordered and when may work out, but if you have no such control they might not care - until you are behind on the project because of lack of materials needed.
 
David Goodman said:
Consider having a document written and executed by the GC that states that the GC is responsible for payments to you regardless of whether or not the property owner pays the GC. Then you are relying on the GC's financial stability for payment. In that case, if you are comfortable with the GC, you might be willing waive your rights to put a lien on the property.

Having the GC purchase and supply all equipment, materials and supplies for your work would also help reduce your financial risk.
Click to expand...

The only way I would accept the lien waiver in this circumstance is if the GC put up a bond for my contract amount. Yeah, I know, good luck with that. On the other hand, good luck getting me to sign an unconditional waiver.
 
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