Would like to get the skinny on material lien waivers

What does it say?
How do I get it and use it?
Exactly how does it benefit the customer?
Most importantly (this is directly largely towards dstew, AD, Alltex, and others who have specific, proven experience) how do I successfuly use it to sale?

Obviously I see how an article like a lien waiver can speak to my legitimacy in the eyes of a customer, but I’m really asking for someone like Dstew to provide us w a lien waiver course for dummies :smiley:

There is a conditional and unconditional waiver. Have your supplier sign the conditional and give that to the homeowner when you are getting paid. You can then follow up with the unconditional if you want.

finding forms is as easy as a Google search

Assume a cash deal on material purchase.

If this is an essential part of your marketing strategy, I’d say you’re doomed anyway so the answer to this is irrelevant. I’m not saying it doesn’t have the potential in being important in about .01% of the jobs out there. I’m saying that 99.99% of the potential Customers aren’t aware of the potential problem and it isn’t on their top 25 list of decision making criteria. Logic would therefore dictate that it shouldn’t be of interest to you until you’ve at least covered the top 25 criteria on the potential customers decision making list in your marketing strategy.

Customers lack of awareness of such issues was a consideration. Someone had mentioned it in another thread. I had never heard of it. It being a small issue I still figured it might be worth posting the question seeing how threads rarely stay right on topic around here anyway. :smiley:

[quote=“jaredinnwarkansas”]What does it say?
How do I get it and use it?
Exactly how does it benefit the customer?
Most importantly (this is directly largely towards dstew, AD, Alltex, and others who have specific, proven experience) how do I successfuly use it to sale?

Obviously I see how an article like a lien waiver can speak to my legitimacy in the eyes of a customer, but I’m really asking for someone like Dstew to provide us w a lien waiver course for dummies :D[/quote]

In the mechanics lien process, a lien waiver is a document from a contractor, subcontractor, materials man, equipment lessor or other party to the construction project (the claimant) stating they have received payment and waive any future lien rights to the property (of the owner). There are typically four types of lien waivers:

Lien Waiver -
Conditional waiver on progress payment - The safest waiver for claimants, this waiver generally specifies that if they have indeed been paid to date (and that includes no return or stopped payment checks) the waiver is an effective proof against any lien claim on the property.

Unconditional waiver on progress payment - This waiver releases all claimant rights through a specific date unconditionally (and that includes no return or stopped payment checks).

Conditional waiver on final payment - This waiver releases all claimant rights to file a mechanics lien if they have indeed been paid to date (and that includes no return or stopped payment checks).

Unconditional final waiver final payment - The safest waiver for owners, this waiver generally releases all rights of the claimant to place a mechanics lien on the owners property unconditionally. It is immaterial if the payment check has been returned or stopped payment. Claimants should issue this type of release only when they are positive their work is done and the payment has cleared their bank. Owners should demand this release when they are paid in full. Some states allow an Unconditional Release upon final payment that is used to induce the final payment. It is an inherent vagary in the lien release law.

What does it say -

This is an example.

For good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned Contractor hereby waives, discharges, and releases any and
all liens, claims, and rights to liens against the above-mentioned project, and any and all other
property owned by or the title to which is in the name of the above-referenced Owner and
against any and all funds of the Owner appropriated or available for the
construction of said project, and any and all warrants drawn upon or issued against any such
funds or monies, which the undersigned Contractor may have or may hereafter acquire or
possess as a result of the furnishing of labor, materials, and/or equipment, and the performance
of Work by the Contractor on or in connection with said project, whether under and pursuant to
the above-mentioned contract between the Contractor and the Owner pertaining to said project
or otherwise, and which said liens, claims or rights of lien may arise and exist.

The undersigned further hereby acknowledges that the sum of Dollars ($) constitutes the entire unpaid balance due the undersigned in connection with said project whether under said contract or otherwise and that the payment of said sum to the Contractor will constitute payment in full and will fully satisfy any and all liens, claims, and demands which the Contractor may have or assert against the Owner in connection with said contract or project.

You will get to use them 1. When mortgage companies or homeowners request or require them.

The benefit to the customer is really simple. You are waiving your rights to file a lien. Upon waiving those rights if you try it can easily be become problematic for you if in fact you have been paid.

I have found that the lien waiver has very little if any value in any sales presentation. However, you must be comfortable and knowledgeable about them if the question does come up.

Depending on the lien waiver required they can be problematic. If you finance your jobs through your supplier you could see some issues. You may be forced to sign a lien waiver that states the materials and labor have been paid for when in fact they have not. If something happens and your supplier does not get paid the supplier could then file a materialmans lien on the property. (Major Problems)

Education is the key. Good Luck.
I hope that helps.

[quote]In the mechanics lien process, a lien waiver is a document from a contractor, subcontractor, materials man, equipment lessor or other party to the construction project (the claimant) stating they have received payment and waive any future lien rights to the property (of the owner). There are typically four types of lien waivers:

Lien Waiver -
Conditional waiver on progress payment - The safest waiver for claimants, this waiver generally specifies that if they have indeed been paid to date (and that includes no return or stopped payment checks) the waiver is an effective proof against any lien claim on the property.

Unconditional waiver on progress payment - This waiver releases all claimant rights through a specific date unconditionally (and that includes no return or stopped payment checks).

Conditional waiver on final payment - This waiver releases all claimant rights to file a mechanics lien if they have indeed been paid to date (and that includes no return or stopped payment checks).

Unconditional final waiver final payment - The safest waiver for owners, this waiver generally releases all rights of the claimant to place a mechanics lien on the owners property unconditionally. It is immaterial if the payment check has been returned or stopped payment. Claimants should issue this type of release only when they are positive their work is done and the payment has cleared their bank. Owners should demand this release when they are paid in full. Some states allow an Unconditional Release upon final payment that is used to induce the final payment. It is an inherent vagary in the lien release law.

Education is the key. Good Luck.
I hope that helps.[/quote]

Copied & Pasted in educational file for further review (after I finish Larry’s package).

Thank You

Jared - You are much over thinking this. Take a few steps back and find out what people really find important.

I have a list of things the homeowners should be aware of. Majority of them do not know about any of these things until they read through my sheet. Nearly all of them don’t know that after they pay their contractor, they (the HO) is still liable for the materials being paid if the contractor does not pay the materials.

My supply company send out their own Notice of Lien Rights. This is MUCH different than an intent to lien or a lien release. All it simply says is they provided the materials and if they are not paid, can pursue further action against the homeowner by placing a lien on their property. THREE people asked me this week what the heck it was. I had to explain the same thing to all of them that it is nothing to worry about. I even mention this in the contract signing.

Don’t make anyone think of more stuff than they need to when it comes to roofing. Majority of them are overwhelmed enough just by the price of the job.

Alltex, bam, home run on those two posts. Many thanks.

However as much hack work as I do see round here I’ve see. Several jobs go in beautifully wo a single issue… Until the final check is due then all of a sudden Ho gets greedy and wants to nitpick or whatever excuse to keep money. Makes me wonder if some kind of preemptive lien followed by a release is called for.

Thanks for all that good info, both were very informative and well written.