In the construction industry, any instance of payment being exchanged from one party to another is typically accompanied by a lien waiver. Lien waivers document the receipt of funds and waive the mechanics lien rights of the party receiving payment. This document is typically issued to a contractor, subcontractor, materials supplier, or equipment lessor. It finalizes the payment and eliminates the possibility of a lien being issued against the party providing payment once a contract or part of a contract has been completed.
Contractors commonly utilize lien waivers, but the inconsistencies in their regulation can lead to confusion. Fortunately, a Houston construction lien attorney can assist you with any lien waiver disputes that arise whether you are trying to finalize payment from the owner or between yourself and your subcontractors. Now, our Houston construction lien attorneys will answer some common questions about Texas lien waivers.
Does Texas Require a Particular Statutory Lien Waiver Form?
The State of Texas requires any construction professionals who plan to issue or utilize a lien waiver to fill out a particular statutory form. Utilizing the wrong form or failing to use a form at all when issuing a lien waiver will result in a document that is not legally binding. In other words, a subcontractor could still file a lien against you if they signed off on a non-binding lien waiver form. Texans should consult a Houston construction lien attorney to ensure that they are utilizing the correct forms when issuing lien waivers to paid workers.
What are the Requirements for a Binding Texas Lien Waiver?
In order to ensure that your lien waiver is binding, it must be delivered and completed in accordance with Texas statutory requirements and the information outlined in the statutory form. Contractors who wish to issue a lien waiver to a compensated contractor must provide evidence of payment for a conditional waiver and a physical receipt for an unconditional release.
An unconditional waiver (Unconditional Waiver and Release Upon Progress Payment) waives all claimant rights after a particular date with no caveats. In other words, you’re off the hook. On the other hand, a conditional waiver (Conditional Waiver and Release Upon Progress Payment) acts similarly except this waiver confirms that payments have been received and processed.
Are Unconditional Lien Waivers Prohibited in Texas?
The laws regarding unconditional lien waivers vary from state to state, but in Texas there is no statutory interdiction of these waivers. As long as you have the correct forms, you can utilize both unconditional and conditional lien waivers. This is crucial, as Texas is only one of twelve states with prescribed lien waiver forms.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.