A lien waiver is a document drafted by a potential lien claimant such as a contractor, subcontractor, materials provider, equipment lessor or other party to the construction project (the claimant) that states they have received payment and thereby waive any future lien rights to the owner's property. Simply put, waiving a lien means giving up the right to a future lien in exchange for the payment of the potential lien amount in full or part.
Lien waivers generally fall into two categories: conditional and unconditional. A conditional waiver is effective only upon the triggering of a specific event, such as the payment check clearing. An unconditional waiver is an absolute abandonment of the claimant's right to a future lien whether or not payment is ever made to the possible claimant. North Carolina does not provide for lien waivers by statute, although waivers are still permissible and will be recognized by a state court under the principles of contract law.
An unconditional final waiver upon final payment is the safest waiver for owners because it releases all the claimant's rights to place a mechanics lien on the owner's property, regardless of whether or not the payment check has been returned or a stop payment order was issued. 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 have paid in full.
By filing the form, the lien claimant represents that he or she either has already paid or will use the money he or she receives from this final payment in order to make prompt payment in full to all his or her laborers, subcontractors, materialmen and suppliers for all work, materials or equipment that are the subject of this waiver and release.
Getting a lien waiver also allows property owners to shield the title to their property from the general contractor, material suppliers, and subcontractors involved with the project. With a lien release upon a final payment, the property owner once again regains clear title and the ability to obtain financing or sell the property.
The property owner should require lien and labor waivers to be submitted with the contractor's invoices and should not authorize payment of any invoice without properly signed lien and labor waivers. Proper lien waivers can protect the property owner from liens filed by the contractor's subcontractors, suppliers and laborers who might record a lien if they are not paid by the contractor.
This article is provided for informational purposes only and should not be relied upon as a substitute for the advice of a legal professional. Please contact an attorney with questions about using lien waivers, or for any other issues related to liens in North Carolina.
Deeds.com North Carolina Unconditional Waiver on Final Payment Forms Have Been Updated as Recently as Wednesday May 16, 2018