What is the point of a lien?

A lien serves to guarantee an underlying obligation, such as the repayment of a loan. If the underlying obligation is not satisfied, the creditor may be able to seize the asset that is the subject of the lien. There are many types of liens that are used to secure assets.

Can a general contractor sign a lien waiver?

In some cases, it is the general contractor who hands a lien waiver for the subcontractor to sign, but it is also possible for a subcontractor to send a signed conditional lien waiver together with the invoice. When can you submit a lien waiver?

How to get a lien release from a contractor?

To get a lien release and avoid unexpected fees, homeowners should first ensure that they’re working with contractors who are licensed, bonded and insured, and then consider always including a lien waiver or subcontractor lien waiver clause in the project’s contract.

Do you have to have a contract for a lien?

The lien law does not mandate that a contract be in writing, or signed, for it to be valid and enforceable. The same law, however, requires that the owner have a contract with anyone who is a contractor. At the upper level of the construction process, a contractor is considered anyone with a direct contract with the owner.

Which is an example of a construction lien waiver?

Here’s an example of a construction lien waiver in action: A general contractor pays a subcontractor $100k and sends a waiver for the subcontractor to sign. The subcontractor then waives $100k worth of lien rights by signing the waiver. It’s as simple as that.

How does a general contractor sign a lien waiver?

The goal for the general contractor is to extinguish the subcontractor’s lien rights and that is achieved by having the subcontractor sign the document entitled “lien waiver.” Once the lien waiver is signed, the subcontractor no longer has lien rights for its work performed for that period of time that is stated in the lien waiver itself.

When does a contractor put a lien on your home?

When a contractor files a mechanics’ (construction) lien on your home, the lien makes your home into what’s called “security” for an outstanding debt, which the contractor claims is due and unpaid for services or materials.

Can a subcontractor be subject to a lien?

Therefore, during the entire work of construction, the owner must obtain lien releases or waivers of lien from each subcontractor and material supplier. Without these waivers or releases, the real estate is subject to liens of all the subcontractors, even if the general contractor (though paid in full) fails to pay the subcontractors.