What is a Lien Waiver, and When Should I Use One?

For anyone wondering, what is a lien waiver, the simplest answer is that it's a legal document acting like a receipt. By signing it, a contractor, subcontractor, or supplier gives up their right to file a mechanics lien against a property for the amount specified in the document. It is typically exchanged for payment. Understanding when to use one—and which type to use—is absolutely critical to ensure you don't accidentally give up your payment rights before actually getting paid.

The Four Key Types of Lien Waivers in Florida

A lien waiver florida document is not a one-size-fits-all form. Using the wrong one can have severe financial consequences. It's crucial to understand the different types of lien waivers, which are primarily broken down into two pairs of categories: Conditional vs. Unconditional, and Progress vs. Final Payment.

Conditional vs. Unconditional Lien Waiver

This is the most important distinction you need to understand.

• Conditional Waivers are the safest option for the party getting paid. The waiver is conditional upon a specific event happening—namely, you receiving and clearing the payment. If you sign a conditional waiver but never receive the money, the waiver is invalid, and you still have your lien rights.
• Unconditional Waivers are effective the moment you sign them, regardless of whether you've been paid. If you sign an unconditional waiver and the check bounces, you have likely lost your lien rights permanently for that amount. It is extremely risky to sign one of these before payment is confirmed in your bank account.

Progress vs. Final Payment Waivers

This category defines the scope of the lien rights being waived.

• A progress payment lien waiver is used for partial payments during the course of a project. It should clearly state the "through date," meaning you are only waiving your lien rights for the work performed up to that specific date.
• A Final Payment Waiver is used at the end of a project when you receive your final payment. Signing this typically waives all remaining lien rights on the project.

Best Practices: When and How to Use Lien Waivers

Knowing when to use each waiver protects your business. The best practice is to always use the statutory forms provided in Florida Statute 713.20.

Always prefer Conditional Waivers

Whenever possible, provide a "Conditional Waiver and Release Upon Progress Payment" or "Conditional Waiver and Release Upon Final Payment." This protects you until you have cash in hand.

Be Extremely Cautious with Unconditional Waivers

Only sign an unconditional waiver after you have confirmed the funds have cleared your bank. A promise of payment is not enough.

Check the "Through Date" and Amount

For any progress payment lien waiver, double-check that the "through date" and the payment amount are accurate. You don't want to accidentally waive rights for work you haven't been paid for yet.

Don't Waive Your Rights to Retainage

If retainage is being withheld, ensure your progress payment waiver doesn't waive your right to claim that money later.

Navigating the Payment Process with Confidence

The payment cycle in construction, from Notice to Owner to final lien waiver, is complex. Ensuring your foundational documents are correct from day one gives you the leverage and security you need when it comes time to exchange payments and waivers.

At Builders Notice Corp, we have over 50 years of experience helping Florida contractors secure their payment rights from the very start. While we don't provide legal advice on signing waivers, we ensure your NTOs are flawlessly prepared and delivered, establishing a strong foundation for your entire project.

Partner with us to manage your preliminary notices with the expertise the law demands. Contact Builders Notice Corp today to start your project with confidence.

Next FAQ: What's the Difference Between Conditional and Unconditional Lien Waivers?