What is a lien waiver, and when should you sign one?

The paper that trades your right to file a lien for a payment. Here's what each kind gives up, which one to sign when, and the mistake that costs contractors money.

3 min read

The short answer

What is a lien waiver? It's a signed document in which a contractor, sub or supplier gives up the right to file a lien on a property for a payment. Owners and general contractors ask for one before or after they pay, so they know nobody will put a lien on the job for work that's been paid. The safe rule: sign a conditional waiver before the money clears, and an unconditional one only after it has.

On this page

The four kinds of lien waivers
Conditional lien waiver vs unconditional
A lien waiver template you can start from
Is a lien waiver proof of payment?
Keeping waivers and payments in step

The four kinds of lien waivers

Every lien waiver answers two questions: is it for part of the job or all of it, and does it count before the money arrives or only after?

Conditional progress. Waives your lien rights for one payment on a job still going, but only once that payment actually clears.
Unconditional progress. Waives your rights for that payment right away, whether or not the check clears.
Conditional final. Waives all your rights on the job once the final payment clears.
Unconditional final. Waives all your rights on the job, starting the moment you sign.

Conditional lien waiver vs unconditional

This is the part that costs contractors money. An unconditional waiver works even if the check bounces or never shows up. Sign one before you're paid and you may have given away your best way to collect. A conditional waiver protects both sides: the customer knows you'll drop your lien rights, and you only drop them when the money is really in your account.

Signing an unconditional waiver to get a check released
Signing a final waiver while change orders are still unpaid
Signing a waiver that lists a bigger amount than you received

A lien waiver template you can start from

Several states have their own required lien waiver forms, and in those states you must use the state's wording. Check your state's rules first, or ask a local construction attorney. Where your state has no form, a simple conditional waiver looks like this.

Conditional waiver and release on progress payment

Job: [Project name], [property address]
Owner: [Property owner]
Paid by: [Who is paying you: owner or general contractor]
Claimant: [Your business name]
Payment: [amount], check or transfer [number], for work through [date]

When this payment clears, [your business name] waives its lien rights for the work and materials covered by it, through [date].

This waiver does not cover: retainage, unpaid change orders, extra work after [date], or any payment that does not clear.

Signed: [name], [title], [date]

Is a lien waiver proof of payment?

Not by itself. An unconditional waiver is strong evidence you were paid, which is why you shouldn't sign one early. A conditional waiver only says what happens once you're paid. Keep the waiver together with the payment record, the invoice it covers and the date the money cleared.

Keeping waivers and payments in step

On a job with draws, every payment request needs its waiver, and every waiver needs the payment that matches it. The trouble starts when the paperwork runs ahead of the money. Keep one list per job: what you billed, what came in, and which waiver went out for it. Or have that list kept for you, with the next waiver filled in and waiting for your signature.

By hand5 steps

Dig up the last pay request
Check what actually cleared
Find the right state form
Fill in the amounts and dates
Email it with the pay request

For every draw, on every job.

Set up onceWaiting on you

Draw 3 on the Oak St job goes out Friday. Here's the pay request with a conditional waiver filled in.

Hi Terry, attached is our pay request for work through the 15th on 210 Oak St, with a conditional progress waiver for that amount. Change order 2 is billed separately. Thanks, Walt

Every draw matched to its waiver and payment. You sign it and send it.

See the overdue invoices job →

NextReminders ready for every late invoiceSee how the overdue invoices job keeps it friendly first and firmer later.

Questions about lien waivers

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Owners and general contractors want proof that nobody who worked on the job can put a lien on the property for work that's been paid. Lenders often won't release the next draw without one. For you, a conditional waiver is a way to get paid without giving up your rights early.

Not on its own. An unconditional waiver is strong evidence that you were paid, which is why you sign it only after the money clears. A conditional waiver just says what happens once you're paid. Keep each waiver with the matching invoice and payment record.

A conditional waiver only takes effect once the payment actually clears. An unconditional waiver takes effect the moment you sign it, paid or not. Sign conditional waivers with your pay requests, and unconditional ones only for money already in your account.

In some states, yes: they set the exact wording, and a different form may not count. Other states let you use your own. Check your state's rules or ask a local construction attorney before you rely on any template, including the one above.

Keep one list per job of each pay request, the waiver that went with it and the date the money cleared. In a Commonhouse setup, AI keeps that list from your invoices and drafts the next pay request with its waiver, and a person on your team checks, signs and sends it.