Virginia Conditional Lien Waiver on Partial Payment

Lien waivers are quid-pro-quo arrangements between contractors and owners, intended to induce payment from an owner in return for the contractor waiving some or all available mechanic's lien rights.

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).

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 it when a party pays by check, but the recipient is not sure that it will clear. Therefore, if the bank returns the check unpaid, it is still possible to claim a lien down the line. This type of waiver offers greater protection to the contractor.

Use a partial payment waiver to acknowledge a payment on account. Think of it as a receipt that shows the owner has at least paid up to that amount.

So, a conditional waiver on partial payment releases the claimant's lien rights, to an agreed-upon point, on the condition that the check clears at the bank.

When used properly, waivers are advantageous for both a contractor and owner, and can facilitate the flow of business and encourage prompt payment without any unnecessary delays.

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