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Lien waiver

September 7,  2021
Lien waiver
          We have done jobs recently for an electrical contractor that we do a lot of work for and is a good customer. These jobs ended up having multiple additions and change orders. The electrical contractor sent over Lien Waivers and the jobs are not completely finished nor are they paid for, [in addition to the retainage].
          If I sign these, am I representing that the jobs are paid in full?
          You are asked to sign a lien waiver before you get paid.  Should you sign it?  Is it a ploy to screw you out of your money? 
          Request for lien waiver can come from the owner directly or by a contractor who hires you as subcontractor.
          If you are being asked to sign a lien waiver you most likely have already agreed that you will sign it as a condition of getting paid.  I am frequently asked to review Vendor Agreements [contract provided by your customer or its agent] or Subcontractor Agreements [contract provided by the other party to your arrangement] and they are pages and pages of fine print long.  I’m usually tasked with explaining the indemnity provision and I pay no attention to the “getting paid” provisions, though I will typically caution my client to carefully read those provisions.  If the contract engaging you provides for approval of your work and your requisition by the owner, architect, engineer, AHJ or anyone else or have any other conditions to payment, don’t expect to get paid until you have met these requirements, properly called “condition precedents” to getting paid.  If you let the horse out of the barn it’s a little late to ask me if I closed the corral gate. 
          You can safely sign the lien waiver before getting paid.  A lien waiver will not be effective unless payment is made.  I am leaving out a lot that can be discussed on this topic, but we can simplify it for the alarm industry.  Most of the work you do is not lienable because it does not “improve real property”, generally a requirement for a Mechanic Lien.  Also, you have been asked to sign the lien waiver when you haven’t filed a lien [otherwise you’d be asked to provide a lien release or satisfaction]. 
          I have been involved in situations where my contractor client didn’t trust the contractor who hired it [or could have been a general contractor] and insisted on an exchange of payment for the lien release.  We got the exchange but only because the party paying had to get the lien waiver to satisfy some immediate issue, so they agreed to the exchange.  They probably could have just not paid – I think they needed cooperation with the AHJ for an inspection if I recall].    In the construction industry lien waivers as a condition of getting paid are common.  Not so much in the alarm industry.
          By the way, if you've managed to get the All in One agreement signed and included in your paperwork you can file a UCC-1 and perfect a security interest.  That will be much easier to foreclose than a Mechanic Lien and won't be affected by the Mechanic Lien waiver.

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301