Understanding Lien Waivers for Contractors – Inside and Out

For contractors and subcontractors in New York, Mechanic’s Lien Waivers are a part of life, but the potential risks to the contractor in waiving more than intended or understanding of the terms are not always as common. Owners (and often their lender) require that the project be kept lien free through progression of the work to final completion. This means that, as a contractor or subcontractor, you will undoubtedly be asked to execute a Mechanic’s Lien Waiver at some time or another, often in conjunction with applying for payment. If you do so however without paying attention to the specific language of the Waiver, you might lose more than you bargained for. Within this article, we share two examples of Lien Waivers. A Contractor’s Final Waiver and a Contractor’s Partial Waiver.

 

CONTRACTOR’S FINAL WAIVER AND RELEASE

OF ALL LIENS AND CLAIMS

 

The undersigned, being of lawful age, under oath does hereby swear that the following statements are true:

 

  1. 1. I am the Managing Member of Business Name, LLC (“Contractor”), and have personal knowledge of the truthfulness of all statements made herein.  I am duly authorized to make such statements on behalf of the Contractor and to execute and deliver this Final Waiver and Release of All Liens and Claims by and on its behalf.

 

  1. 2. Pursuant to that certain contract (the “Contract”) dated __________, between Contractor and ____________________________ (“Owners”), Contractor has directly and through subcontractors and/or suppliers performed labor and/or furnished materials to the Owner for the certain improvements of the interior build out of 1000 Street Name, New York New York (“Project”).

 

  1. 3. Contractor hereby acknowledges receipt of final payment in connection with the Project in the amount of $___________________or if payment has not been made then this waiver and release is expressly conditioned upon receipt of final payment in such amount. Contractor further acknowledges that it has been paid in full or otherwise satisfied for all amounts due and owing to it from the Owners in connection with work performed on the Project.

 

  1. 4. Contractor further represents that it has paid or with the payment herein, satisfy its indebtedness to all its subcontractors and suppliers associated with the Project, including, without limitation, all persons and entities, including, but not limited to, subcontractors, sub-subcontractors, materialmen and suppliers (collectively, “Subcontractors”) which have furnished labor, materials and/or equipment to Contractor in connection with the Project.

 

  1. 5. In consideration of the payment received, Contractor hereby:

 

.1         Waives and releases all rights to file liens. and demands against the Owners and the Project on account of services performed and reimbursable expenses accrued by Contractor in connection with the Project.

 

.2         Waives and releases all rights to file any mechanic’s, material men or similar liens against the Owners and the Project arising in connection with said Project.

 

.3         Agrees to pay promptly or otherwise discharge and release all mechanic’s materialmen liens filed by Contractor’s Subcontractors in connection with the Project which may now or in the future be filed.

 

.4         Agrees to provide the Owners with similar Final Waiver and Release of Liens and Claims forms signed by all Subcontractors.

 

.5         Agrees to indemnify, hold harmless and defend the Owners from any and all liability, cost or expense (including reasonable attorneys’ fees) arising out of any mechanic’s liens (including any Subcontractor liens) related to work performed in connection with the Project.

 

CONTRACTOR’S PARTIAL WAIVER AND RELEASE OF LIEN

 

I, ____________________, on behalf of Business Name, LLC (“Contractor” herein), upon payment of the sum set forth herein does hereby waive and release, its mechanic’s lien claims and demands against ________________________________ (the “Owners”), in connection with services performed and expenses accrued in connection with the project known as the interior build out of 1000 Street Name, New York New York (the “Project”) and covered by the Application for Payment No. __, dated __________ in the amount of $______________.

 

To the extent that it has received payment in the amount referenced above for Work performed, Contractor agrees to:

 

  1. Waive its rights to file any mechanic’s, materialmen or like liens against the Owner and/or the premises where the Project is located, arising out of the work performed and expenses accrued;
  1. Pay promptly all mechanics, materialmen, and like in connection with the Project arising out of the Work performed or the materials supplied;
  1. In the event of lien claims asserted by subcontractors or suppliers, indemnify and save harmless the Owner from any and all liability, cost or expense (including reasonable attorney’s fees) arising out of any such liens.