Pennsylvania Conditional Lien Waiver on Progress Payment
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Conditional Lien Waiver on Progress Payment for Real Estate Located in Pennsylvania
In Pennsylvania, a contractor or subcontractor may waive his right to file a claim against residential property by a written instrument signed by him or by any conduct which operates equitably to estop such contractor from filing a claim. 49 P.S. 401(a).
Contractors use lien waivers to forfeit or give up their right to claim a mechanic's lien. Usually, the purpose of a waiver is to alleviate concerns by a property owner or other contractor that a lien will be levied on the property. In return for waiving lien rights, the owner or other party makes a full or partial payment. The type of waiver used depends on the type of payment made.
Use a conditional waiver when payment hasn't been made at the time of the waiver or the payment method takes time to clear (such as a check or bank draft). Unconditional waivers are appropriate when a full or final payment has been made and evidence of the payment can be verified. Within each of these two categories, waivers can be granted for a full payment or a partial (or progress) payment.
A waiver by a contractor of lien rights is against public policy, unlawful and void unless given in consideration for payment for the work, services, materials or equipment provided and only to the extent that such payment is actually received. 49 P.S. 401(b). Therefore, waivers will not be recognized by a Pennsylvania court unless payment is made and received. Also, conditional waivers are only available for residential property. In this regard, Pennsylvania grants more protection to parties using lien waivers (and less for the property owner).
In regard to subcontractors, a waiver by a subcontractor of lien rights is against public policy, unlawful and void, unless given in consideration for payment for the work, services, materials or equipment provided and only to the extent that such payment is actually received, or unless the contractor has posted a bond guaranteeing payment for labor and materials provided by subcontractors. 49 P.S. 401(c).
Use the Conditional Waiver and Release of Lien on Progress Payment when a partial payment is made towards the total amount due. In return for the payment, the contractor agrees to waive a lien right towards the partial amount. Because the waiver is conditional, it should be used when the payment hasn't been made or payment is made through a check and some additional time is needed to make sure the bank has properly processed the payment. If the payment is not made within the time allotted for in the waiver, the waiver becomes invalid and the claimant may seek a lien for that amount.
A valid waiver identifies the parties, the location where the work or improvement took place, relevant dates, and amounts paid. In addition, the form must meet state and local standards for recorded documents. Submit the completed waiver to the recording office for the county where the property is situated.
Mechanic's Liens are governed by Title 49 of the Pennsylvania Consolidated Statutes.
This article is offered for informational purposes only and is not legal advice. This information should not be relied upon as a substitute for speaking with an attorney. Please speak with a Pennsylvania attorney familiar with lien laws for questions regarding lien waivers or with any other issues related to mechanic's liens.