The Expert Podcast

so what is a lien waiver and how does it affect your construction projects. so if you're a property owner or you're or a construction manager made heard of lien waivers obviously if you're in the construction industry you know what they are. but if you are a home owner or a property developer you want to make sure that you're getting a lien waivers from all your subs and from your general . in the way it works is very simplistically if a general contractor works on your job and they hire subs electrical plumbing HVAC framers each one of those subs in almost every state has an automatic a lien on your property until their invoice is paid. if the general contractor doesn't pay the invoice let's say to the electrician the electrician can have a lien on your property for their work and their workmanship. it doesn't matter if you pay the general contractor or not if the subcontractor didn't get paid for whatever reason they still have a claim against your property. for that reason you want to make sure that all of the subcontractors are identified in your getting lien waivers from each one of them individually and that you have a good surety bond from your general contractor to cover you of one of them doesn't get paid. so the worst case scenario you probably seen this in the news is a homeowner hires a general contractor to build a house or to do a remodel or addition they pay in full for that remodel. and then the general contractor goes out of business or has financial problems and doesn't pay the subs. well now all of a sudden the subcontractor files a lien on the property for work that the owner paid for in full. and there's really no solution other than to either claim against the surety bond of the G. C. or to pay the subcontractor. this is an example of a generic lien release you wanna make sure it's an unconditional lien release so there's no way that they can come back and add it later. you want to make sure that you know who all the subs are and keep track of even companies that deliver products and materials. for example if the general contractor has lumber delivered by a lumber yard that lumber yard may have a lien on the property. sometimes it depends upon if they delivered it or if the general contractor picked up the materials but if the lumber yard delivered materials to the job site in most states they have a materials lien against the property.
by the same token if the general contractor rents equipment they rent let's say an excavator or some other type of mechanical equipment. if equipment is delivered to the job site by a rental company rental agency the rental agency may have a lien against the property for any unpaid rental fees for mini excavators or trenchers or other material. so it's important to make sure you have a list of all the subcontractors on the job the other reason that this comes in handy is to make sure that all the subcontractors have insurance declarations that name the general contractor and you a property owner as additional insureds. so if something happens they have work comp insurance they have liability insurance and you're not gonna be liable for those types of things. but a lien waiver at the end of your project is an important thing to obtain and your bank is probably gonna require if you have financing for the project. the only way you're going to know that you have all of your proper lien waivers is you have a full listing or survey of all of the subs that worked on the project. and if you don't have that type of census of all the different work additions or product delivery to your project you may not be able to get the the complete lien waiver directory that you need to clear your property and make sure that your final payment clears any obligation to have for payments. and that be one of the ways to make sure that you get this is to have any final payment to the general contractor be contingent upon getting lien waivers from all the subs.