Virginia Conditional Lien Waiver on Final Payment

Lien waivers are quid-pro-quo arrangements between contractors and owners. The purpose of such waivers is to induce payment from an owner in return for the contractor waiving some or all available mechanic's lien rights. If the correct waivers are used, they offer advantages for both a contractor and owner.

In Virginia, any right to file or enforce any mechanics' lien may be waived in whole or in part at any time by any person entitled to such lien, except that a subcontractor, lower-tier subcontractor, or material supplier may not waive or diminish his lien rights in a contract in advance of furnishing any labor, services, or materials. Va. Code 43-3(C). A provision that waives or diminishes a subcontractor's, lower-tier subcontractor's, or material supplier's lien rights in a contract executed prior to providing any labor, services, or materials is null and void. Id.

The Virginia legislature does not mandate a required form of a lien waiver, so common law principles of contract allow for the parties to use any form that clearly spells out their intentions. Note that it is a felony for any person to knowingly present a waiver form to an owner, his agent, contractor, lender, or title company for the purpose of obtaining funds or title insurance if the person forges or signs the form without authority. Va. Code. 43-13.1.

Waivers fall under two broad categories of "conditional" and "unconditional," and there are two subcategories of waivers for a "partial" or "final" payment. Each type comes with benefits and risks, so take care to use the correct form for the situation.

A conditional waiver depends on the actual receipt of payment, so use a conditional waiver when a party pays with a check but the claimant doubts whether it might clear. Therefore, if the check doesn't clear the bank, it is still possible to claim a lien down the line. This type of waiver offers greater protection to the contractor.

Use a full waiver on final payment when the fees/debt is completely paid. So, this might be the appropriate form for a situation where the owner submitted a check for the balance due, but the claimant wants to preserve the right to claim a lien until after the check clears the bank.

In this way, waivers can facilitate the flow of business and encourage prompt payment without any unnecessary holdups.

This article is provided for informational purposes only and should not be relied upon a substitute for the advice of an attorney. For any questions about Virginia lien waivers, please speak with a lawyer.