I am doing a bathroom remodel for a customer who asked me the other day if I would have the subs provide a lein waver so that their suppliers could not file a lein if they were not payed. He knows me, and has supplied materials to me as a supplier, and knows that I pay my bills, but he does not know the plumber and electrition whom I use; both of whom are reputible. I don’t know of any reason not to honor his request, other than insulting my subs. I have signed s lein waver only once in my career, and have never needed one elsewhere.
Is there a free source of boiler plate forms, that would be legal in Ks. that anyone knows about. I did a Google search the other evening, and came up with many that could be had for a price, but I’m cheep. Thanks. Fred
Replies
Here in Oregon what he is asking is standard procedure. Not a big deal , and not an insult. It works to protect everybody involved.
If the bills are not paid they still come back on the homeowner. The lien release just states that the bills were paid. A crook could say that too.
Fbart ,
Contact your states contractors board or builders board for a copy from your state or try a stationary / office supply in your area .
As has been stated , the waivers actually state that even if the sub stiffs the supplier , the home owner has the responsibility to pay , maybe again .
good luck dusty
Wrong info been given out here....The lien waiver is signed by the supplier not the sub!! The supplier is stating in a legal document that he has been paid for whatever materials he /she supplied for the project. Same applies to subs stating they have been paid by the G.C.. It is not uncommon on commercial jobs to have the lien waver signatures notarised
Once that is signed then the project owner is off the hook.
A smart G.C. or Homeowner hold retainage (generally 10%) until they see this proof that everything has been paid for. Sample attached.
Some construction loans require evidence of payment (that evidence being a sub's signiture on a lien release) prior to making a disbursement for said loan.
Your customer is simply protecting his financials. Nothing wrong with that.
Don't think of it as an insult, think of it as just good business.
Mongo
Haven't seen you around here in a while.Good to see your name come up on the screen.
Thanks fo the greeting.By the time I see a thread these days it already has 20 replies to it.Nowadays I read a lot, post a little.Mongo
I do not know what state you are in, but in Arizona the form is listed under the mechanics' lien laws. It provides exactly the language required. Perhaps your state does the same. Take a look. Under Arizona law, each contractor or subcontractor must provide one in order to receive a progress payment. The contractor or subcontractor signs that he warrants that all labor, materials, subcontractors, and equipment have either been paid for or will be paid for from the progress payment. Since it is the law here, it is not to be considered an affront to any contractor or subcontractor. Your state may be different.
If you are easily insulted, it is an insult. The customer is saying to you and your subs, "I don't trust you." He may have any number of past experiences which form this attitude that have nothing to do with you.
It is a pain in the a** to do this completely and probably adds up to $50 per lien waiver considering the time costs for everyone involved. If the waiver is required to be notarized, add to this cost. If you have this built into your initial bid, this is obviously no problem. If not, you, your subs and your suppliers are paying for your customer's piece of mind.
Was the lien waiver requirement discussed when you formed a contract?
Why would the HO care how much a lien waiver is going to cost a sub? I don't think it is something that needs to be addressed in the contract because it is basic business for subcontracting. I don't care how much trust you have with someone, I don't risk my reputation with the hope that someone else is paying their bills. It only takes 1 bad spot for a business to go into the red, and I don't want that time to effect me or my client.
Everyone of my subs know that they do not get a check from me until they furnish me with a waiver. There is no judgement or insulting involved. It is just the way the business is run.
If a sub balks, I would have a concern as to why they were concerned with getting me a waiver. All the yards I deal with have an associate that can notarize their waiver that they just print off the computer. It takes them 5 minutes to get it from the accounting staff and EVERYONE gets to sleep at night.
"Why would the HO care how much a lien waiver is going to cost a sub?"
If it costs the sub or the GC anything, it will cost the HO that much. Or it should if they are to stay in business. I can well understand why the HO would want to pay for the piece of mind, but it is not free.
If lien waivers are a common part of your business and that of your suppliers, the cost is lower because of the routine nature of the paperwork. The OP stated that he had only used a lien waiver on one previous occasion. We use lien waivers almost exclusively on commercial work and then only at the instigation of the architect. I venture to say that this is the norm for residential construction.
Would there be less problems if lien waivers were more widely used? Maybe, but one of the few times our company has had a collection problem in 30 years of business was when we signed a lien waiver at the request of the GC who needed it to get his draw. We had to hire an attorney to pressure the bonding agent to force the payment by the GC. That was an $800 lesson. There is no precaution that will fully protect you from a dishonest person.
A year ago I was personally close to a job that went bad and the GC went out of business in our state, moving to another and leaving 4 clients with unpaid balances to suppliers and subs of various sorts.
Had the client simply insisted on lein wavers prior to each draw, none of this would have happened, or at least it would have been greatly reduced.
If someone is insulted by good business, so be it.
Beer was created so carpenters wouldn't rule the world.
Similar to others except that it doesn't waiver anything if the check the sub gets for his work is bad.
Let's go back to the original language you used:
"have the subs provide a lein waver so that their suppliers could not file a lein if they were not payed"
You could have your subs sign waivers, but that does nothing to guarantee your client that their suppliers have been paid. To do that, you need to have those suppliers sign waivers, and I'm not talking about the office manager or A/R manager, you need a signature from someone who is actually authorized to sign, which often means owner, partner, or corporate officer.
The difficulty is in knowing who those suppliers are. I could order pipe or wire from any number of places and bring it to your job and install it. And the suppliers are going to have a hard time knowing where that material went if they are not paid. You can safely assume that a supplier who delivers directly to your jobsite knows, but other than that it gets a lot more difficult.
If your subs are insulted then get new subs. You are simply passing on a requirement imposed by the owner. It is very easy to generate both a partial lien waiver and unconditional lien waiver and have the appropriate form signed by the appropriate person each time you issue a check. If you did not include time in your proposal to do lien waiver admin then add a charge for it.
just down the road a bit and i got lesson in lien waivers years ago. if your elec. gives me a lien waiver all it's saying is he won't file a lien,now if he didn't pay the wholesale house for the romex,they lien my house. now when i asked for a lien waiver i want one from supplier,and the sub and you.for some reason it seems insulting but the bottom line is as a homeowner you can pay once and that don't mean your done. i paid for concrete twice one time,not funbut a very good lesson. larry
hand me the chainsaw, i need to trim the casing just a hair.
I don't understand why a supplier would ever sign away their right to lien a property for non-payment.
I worked on the supply side for years and the only way I'd do it is if you pay COD.
A GC gets partial lien waivers from his suppliers and his subs.
The process does not tier down to suppliers of subs.
The partial lien waiver is essentially an affadivit you sign that says, "I have furnished $x in materials and/or labor to this job, and I hereby waive my rights to file a lien on the property for the work or materials that $x amount."
By executing a partial waiver, you certainly are not waiving rights to any future amounts owed.
Have you done this in your business, either on the giving or receiving end?
"The process does not tier down to suppliers of subs."It should. If the sub is supply major items such as kitchen cabinets, plumbing fixtures, or furances/AC then you should get waviers from those suppliers also.They can lien the project just like the others..
.
A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
I have to agree with you too. My question here is, what advantage is there for a supplier to sign a lien waver? If the supplier signs one, then what legal stand do they have to collect for unpaid bills run up by the contractor or their subcontractor?
A lien waiver is only signed when payment has been received. If you have payment in hand, why would you be unwilling to sign a waiver? I have been on both sides of the process--it's easy to do and easy to understand. Ideally the waiver identifies the contract, the work performed, the amount of the contract, the amount being paid (if not the full amount of the contract), the check number, etc. It is a written agreement that payment has been made, and is more secure than simply handing someone a check that does not identify all of the above.
Read the original post.
"the subs provide a lein waver so that their suppliers could not file a lein if they were not payed"
sledge ,
There seems to be some confusion here and you noticed it as well .
I think the OP may have misunderstood the client .
In My state by law the original contractor or GC , not all the subs working for him are required to give the home owner a copy of the right to lien notice as it is called , along with a signature proving they received it is safest .
I have been asked to sign lien waivers to show I have been paid in full to date and forfeit my right to lien .Sometimes the bank will want to see proof that the builder/ HO is indeed making payments as he goes . Also in my state if the original contractor does not give the home owner a notice he may not file a lien against the property in the event he does not get paid he can still go to court .In the case of say a cement contractor pouring a slab for the HO , he would be the original contractor if a GC did not hire him but the HO did .
Maybe the HO meant he wanted the subs to sign off , this is common .
dusty
I'm not sure what you're trying to say. The supplier has lien rights unless he signs a waiver. It does not matter whether the sub he sold to signs it. Have you been on either side of this equation? I have been on both.
I have been on both sides and can't imagine why I would sign a waiver unless I've been paid.
OK... so where do you read that anyone is asked to sign a waiver before being paid. Only a fool would do that, I agree. Waivers are signed at the exact moment the check is written and handed over. I hand you the check with one hand and you are handing me the waiver with the other, exact same moment. The waiver is an agreement that the money I am handing you applies to the property and the contract in question. Especially important if we are working on 10 properties together at the same time and I am funneling you a whole lotta money.
And again, the sub signing a waiver does nothing to effect the supplier's lien rights. My main point is that on most residential projects it would be very hard to know exactly who supplied every item and to get a waiver from them. I know at least one GC who supplies ALL drywall, paint, roofing, plumbing, electrical, HVAC, etc. materials to his jobs thru his own accounts. His subs bring nothing but labor. That way he can get waivers for 100% of the supplied materials. Otherwise you have no guarantee.
"Waivers are signed at the exact moment the check is written and handed over. I hand you the check with one hand and you are handing me the waiver with the other, exact same moment."From one bad experience, I'd have to say take it a step further, and wait till the check clears, too, even as a GC who cuts such checks all day long. If I was taking a check from a questionable client, they wouldn't get a lien release until the check posts, why should the sub provide me one?DCG Your Neighbor's Contractor LLC
"A wrongdoer is often a man who has left something undone, not always one who has done something."--Marcus Aurelius
standard op for companys here to get lien waiver before issuing check.
Duke... Catfish... when I've signed lien waivers (a couple of times total) it's been as I received the check, otherwise why would I sign? When I've received them (many times) it's at the moment I am handing over the check. In all cases the waiver states that it is only valid if check #X clears, so if the check bounces the waiver is void.
In that case I would sign too. But, the original message was about a customer asking his contractor to sign a waver, his subs too. It sounds like the customer wants lien wavers before he's initiated a signed contract for the project. That, to me, would not be possible? Must be something I'm missing here.
IMHO, the OP isn't clear on the procedures, nor is the HO.
I'd be happy to sign a lien waiver before starting work, as long as you pay me 100% of the contract up front.
I don't know of any reason not to honor his request, other than insulting my subs. I have signed s lein waver only once in my career, and have never needed one elsewhere.
When you signed it, were you insulted?
Signing waivers is a normal part of business. I prefer to subcontract with builders that actually use waivers. That tells me that they pay attention to their paperwork. I generally trust them a bit more.
blue
"...if you just do what you think is best testing those limits... it's pretty easy to find exactly where the line is...."
From the best of TauntonU.
Thank you all for your inputs. I have learned sometheing about lein wavers here, and should not have said that a waver might insult my subs, as I'm sure that it shouldn't , now that I better understand how they work.
Just remember that it is a quid pro quo... no money = no waiver.. no matter what anybody promises about how it will be there tommorrow.
I am going through the lien waiver process here in Virginny on a commercial job where I am the owner. GC and subs have not flinched at all in supplying signed waivers. I talked with in-house counsel just this morning, and she explained that there is no reason to get waivers from subs and suppliers, because VA law generally states that the owner is protected if we have a waiver from the gc, cuz that's who our contract is with.
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
If the GC goes bankrupt and doesn't give you a waiver, and you have none form the subs, they will be coming after you. Getting them from the subs is an extra insureance policy. Even though your contract is with the GC, the subs made the improvements to your structure and have lien rights. At least it works that way here in GA. Don't ask how I know.
When I did work in Texas, we got waivers from everybody. And no one complained, at least those who were reputable. But my corporate attorney said all I need is the gc, so that makes my job easier. I suspect that the gc will continue to collect them from his subs and suppliers.
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
Lien laws vary a lot from state to state. In VA, it may be that subs have no lien rights against the owner. In MA where I mostly practice, they do, and a waiver from the general won't protect an owner from a sub or supplier who didn't get paid.
An individual who is from Oregon sent me an E-mail concerning Lien Law here in Or.
I have tried to respond to you but have gotten a message that the return E-mail address is not valid. Please drop me another line using a differnt E-mail address and I will try to respond again.