Lien waivers are used between contractors and property owners as a quid-pro-quo arrangement to induce payment from an owner, in return for the contractor waiving some or all available mechanic's lien rights. If the appropriate waivers are used, they offer advantages for both the contractor and the owner.

In Virginia, any right to file or enforce any mechanics' lien may be waived in whole or in part at any time by any person entitled to such lien, except that a subcontractor, lower-tier subcontractor, or material supplier may not waive or diminish his lien rights in a contract in advance of furnishing any labor, services, or materials. Va. Code 43-3(C). A provision that waives or diminishes a subcontractor's, lower-tier subcontractor's, or material supplier's lien rights in a contract executed prior to providing any labor, services, or materials is null and void. Id.

The Virginia legislature does not mandate a required form of a lien waiver, so common law principles of contract allow for the parties to use any form that clearly spells out their intentions. Note that it is a felony for any person to knowingly present a waiver form to an owner, his agent, contractor, lender, or title company for the purpose of obtaining funds or title insurance if the person forges or signs the form without authority. Va. Code. 43-13.1.

Waivers fall under two broad categories of "conditional" and "unconditional," and there are two subcategories of waivers for a "partial" or "final" payment. Each type comes with benefits and risks, so take care to use the correct form for the situation.

An unconditional waiver becomes effective when presented to the owner or other party, regardless of whether or not the payment is valid. If you unconditionally waive a lien, you can still sue on a breach of contract or other legal theory, but that is no substitute for the protections and ease of a mechanic's lien in recovering any money owed. An unconditional waiver gives an owner more protection while taking away some rights from the contractor.

Use a partial payment waiver when an owner or agent makes a payment on the amount owed, but still leaves a balance due. This waiver provides notice that the previous lien has been adjusted and the claimant agrees to relinquish rights up to the agreed-upon date and dollar amount.

So, when used properly, waivers can facilitate the flow of business and encourage prompt payment without any unnecessary holdups.

This article is provided for informational purposes only and should not be relied upon a substitute for the advice of an attorney. For any questions about Virginia lien waivers, please speak with a lawyer.

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