Lien Waivers
Pitfalls for Contractors
The Pitfalls of Lien Waivers
Partial lien waiver
Upon making progress payments, the owner or
general contractor will generally require the contractor to
waive all lien claims that the contractor may have for the
work invoiced.
Practical pointers:
- the requirement and the form of partial
lien waivers should be contained in the contract.
- Partial lien waiver are often used in conjunction
with Affidavit of Contractor.
Final lien waiver
Upon completing the job, the contractor must
usually complete a final lien waiver.
Practical pointers:
- The Fairness in Contracting Act provides
that the requirement to sign a final waiver of claims in
order to obtain final payment is void and against public
policy, if the contractor has asserted a claim or request
for an adjustment to the contract price. Ohio Revised
Code §4113.62(B).
- Because of the Fairness in Contracting
Act, no longer will contractors be caught between waiving
a previously asserted claim, and getting paid for its work.
Protecting lien rights in contract and in waivers
Make sure lien waiver is contingent on payment,
either partial or final. Only waive liens through the date
of the invoice, not through the date of the payment.
Look for no lien clauses in your contract,
and in the contract with the owner, if that contract is incorporated
by reference.
Practical pointers:
- A no lien clause in the contract with the
owner may be incorporated into a lower tier contract, if
there is incorporation language in the lower tier contract.
- Such incorporation language is usually
enforced. If a no lien clause is in the contract, try to
negotiate it out of your contract.
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Fortney
& Klingshirn
4040 Embassy Parkway, Suite
280
Akron, Ohio 44333
telephone 330-665-5445 - fax 665-5446
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