Lien Waiver vs Lien Release: Know the Difference
If I were ever asked what the most commonly misused terms in the lien world would be, it would be when someone asks me for a lien release when they need a lien waiver or a lien waiver when they need a lien release. Lien Waivers and Lien Releases mean two, totally different things.
Here’s a quick breakdown to help breakdown the differences, exhibit the implications of each, and how to best use these documents in the regular course of business.
Lien Release: a lien release is a document that releases a duly recorded mechanics lien. These documents are typically statutorily driven and, in most cases, have several requirements in order to be enforceable.
Elements of a Lien Release:
- Original claimant’s name and address
- Reference to the recorded mechanics lien
- Usually, a recording number or similar
- Property’s legal description
- Property’s parcel number
- A parcel number can be referred to as a property card id, property id, or similar. This number is the county’s unique identifier for the property – primarily for tax purposes.
- Signature of legal authority from the original claimant’s company
- Recording with the county in which the property is located & where lien was filed
Lien Waiver: these are a series of documents that will waive (defer) money you may have a lien right to. This will essentially affirm that you have received payment and waive the future lien right against that amount paid. In many states, lien waivers are provided in the state’s statutes and have specific requirements that must be met in order to be enforceable.
Types of Lien Waivers & Implications:
- Conditional Lien Waivers
- These documents will conditionally waive your right to lien against the monies paid as long as the money paid is posted to your account.
- You agree NOT to lien for the money waived if payment was successful.
- Unconditional Lien Waivers
- These documents will UNCONDITIONALLY waive your right to lien against the money stated on the waiver.
- If a check gets lost in the mail, does not clear the bank, is returned, or is refused, you STILL have no right to lien for that amount. It means you have waived that money regardless of payment.
There are several nuances and pitfalls that can be leveraged or avoided with knowledge and additional discussion. If you’d like to learn more, please contact us and we’ll be happy to help.