Lien Waivers A lien waiver is a document which waives, either conditionally or unconditionally, a claimant's right to record a mechanic's lien, file a stop notice or make a claim against a payment bond. There are four types of lien waivers and all four types must follow substantially the form set forth in Civil Code §3262. Lien waivers have been the subject of a great deal of legislation and court action in the past decade. The most recent changes to the forms went into effect January 1, 1994 with the adoption of new forms of lien waivers. Please call me for the form currently in use as to each of the following: Conditional Waiver and Release Upon Progress Payment; Unconditional Waiver and Release Upon Progress Payment; Conditional Waiver and Release Upon Final Payment; and Unconditional Waiver and Release Upon Final Payment. The Contractor's State License Board's Website includes an article regarding lien waivers at: 
http://www.cslb.ca.gov/forms/lienreleaseforms.asp The forms were established by the Legislature to be used in a very particular pattern. The lien waivers to be used with progress payments were intended to be used in tandem. For example, let's say that a project is going to take three months. Each month the owner is going to make one progress payment to the contractor. At the time the contractor submits his billing at the end of the first month, he should submit a Conditional Waiver and Release Upon Progress Payment. The owner should then release a check to the contractor. At the end of the second month, if the owner's check has cleared the bank, the contractor should deliver to the owner an Unconditional Waiver and Release Upon Progress Payment for the first progress payment and a Conditional Waiver and Release Upon Progress Payment for the second month's billing to the owner. As you can see, with a large project where there are hundreds of contractors, material suppliers, equipment lessors and others, the paper trail could become quite burdensome. The only time a final payment lien waiver is used is at the very end of a project. Most construction contracts provide that the owner will retain 10% of each monthly progress payment until the completion of the project. Final payment lien waivers should only be used at the time the claimant bills for retention. It was the intent of the Legislature that they be used in tandem. At the time of billing the retention, the contractor should deliver a Conditional Waiver and Release Upon Final Payment. The owner should then release the retention to the contractor and, when the retention check clears the bank, the contractor should deliver an Unconditional Waiver and Release Upon Final Payment. In 1992, a California court found that the language of a conditional lien waiver effected a release of all lien rights, even for materials and services that had been completed but for which no billing had been made. The court said that the lien waiver released all rights through the date on the lien waiver, including unresolved claims for extra work and claims. In response, in 1993 the legislature acted to broaden the language of conditional lien waivers to circumvent the effect of the case. Those changes went into effect January 1, 1994. Owner's representatives have made several proposals for the use of forms of release to be used in addition to the statutory forms that might be used to reverse the effects of the legislation. We have almost certainly not heard the end of this issue, so please consult with an attorney with expertise in construction law before choosing forms of conditional lien waivers for your company. Claimants should be very hesitant to sign unconditional waivers of any sort. Both unconditional waivers say in boldface type that "This Document Waives Rights Unconditionally and States That You Have Been Paid...If You have not Been Paid, Use A Conditional Release Form." Even when you have a check in hand, the use of an Unconditional Waiver and Release is risky since the check has not been negotiated. Disclaimer: The foregoing is not intended as legal advice. The facts and circumstances of any case requires the review of an attorney familiar with real estate and/or construction law. Before taking any action, please consult with your counsel.http://www.cslb.ca.gov/forms/lienreleaseforms.aspshapeimage_2_link_0