Unconditional Waiver / Release Upon Final Payment – Part 5
Once you’ve successfully collected your final payment it’s time to give your customer an “Unconditional Waiver and Release Upon Final Payment” form (#4 release).
This release form will not include a “release through date” because it’s the final payment – it releases your lien rights, stop payment rights, etc. for the entire project.
If you have suppliers include the same forms from them.
Never issue a #4 release form unless you have been successfully paid in full for the entire project. If you do even though you haven’t been paid and you didn’t allow for the exceptions then the courts wouldn’t side with you because unconditional is unconditional – it’s final.
State Requirements For Waiver / Release Forms
Each state has specific requirements for release forms, although many states do have “like” forms.
A #4 release usually requires at least some of the same information as the #3 such as:
- The claimant’s name
- The customer’s name
- The owner’s name and the location of the project
Chances are it will not require the dollar amount of the payment because it’s the final release on the project. It releases your lien rights unconditionally regardless of the dollar amount of the check (so make sure it’s the right amount).
There might also be a required warning to the issuer that they are giving up their lien rights unconditionally and to use a Conditional (#3) release instead if they haven’t been paid.
Some states allow exceptions in the release forms but when it comes to the final release forms the exceptions can be minimal (or even nonexistent).
One exception that seems to be common with at least some states is an exception that allows for disputed claims for extra work performed/materials provided.
Because of that exception, it is possible that “unconditional” no longer means “unconditional”. Check with an attorney in your state to find out if there are exemptions and what they mean.
Don’t Lose Your Lien Rights
It’s very easy to lose, or at the very least risk, your lien rights. Ideas to help reduce that risk:
- Never issue an Unconditional Final if you haven’t been successfully paid in full
- List any disputed claims that might exist (if allowed)
- Make sure the form meets the state’s requirements
A Couple Tips
– Although the #3 Conditional that you issued may become a #4 Unconditional (upon successful payment) your customer might still require an actual #4 release from you.
– If your customer wants you to do more work after you’ve submitted this form to them chances are you’ll need to treat it as a new job and do everything you had to do originally (e.g. new contract; new preliminary notice; etc.).
After the form is completed, and signed and dated by the claimant, make a copy of it for your job files and send the original to your customer.Links
Include releases from suppliers but make copies for your files first.
I hope that you’ve found this five-part series of articles on lien waiver/release forms to be helpful. Please see the first article in this series for definitions and tips.
|Quick links to the rest of the articles in this series on Lien Waivers & Releases:|
This article is an overview of waiver/release forms and is not legal advice. Please contact an attorney in your state with any questions you might have.
About the Author: Diane Dennis – In 1999, after realizing there were so many contractors who were struggling with the day-to-day of their businesses, Diane Dennis – founder of InformedContractors.com – quit contracting (suspended ceilings) so that she could focus on serving contractors.
She now has four construction-related websites and she is rapidly becoming a top advocate for contractors in the United States.
With close to 20 years of experience in the world of construction contracting Diane continues to provide information that contractors need when they need it. Find out more and claim your free gift here: http://www.InformedContractors.com/free-gift.html.
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