Waiving rights, releasing rights… it can be easy to mix up these concepts. But when it comes to lien rights, it is extremely important to understand the distinctions. Lien waivers and lien releases are completely different. Here is a super-simple breakdown.
A lien waiver is used to preemptively waive lien rights. Generally the party making payment will request that a subcontractor, supplier, or other party they have hired, sign a lien waiver in exchange for payment.
Lien waivers work like a receipt: a party receives $1000 in payment, they waive $1000 of lien rights. This process happens before a lien is actually filed.
There are several types of lien waiver. Unconditional lien waivers go into effect immediately upon signature, conditional lien waivers depend upon the fulfillment of a specified condition (generally actual receipt of payment). Waivers can also apply to the entire dollar amount specified in a contract, or to just a portion of the total sum.
For more information on lien waivers, check out our simple guide to lien waivers.
A lien release is used to cancel a lien that has been filed. If the claimant receives payment and wishes to cancel a previously filed lien, generally he or she will file a lien release (also known as a release of lien or cancellation of lien). This action releases the claim of lien from the property in question.
There you have it: lien waiver vs lien release. Any more questions? Be sure to let us know.