In this post, we will look at construction lien waivers, how they work on private construction projects, and what lien rights can and cannot be waived. As with most Texas Construction laws, the rules are a bit complicated.
What is a Construction Lien Waiver?
First, let’s get familiar with lien waivers. A lien waiver is a document that waives and forfeits the lien rights of the signing party. Lien waivers are typically signed at the time of payment in full and act as a receipt for payment for the work completed. The lien waiver form in Texas is a state-mandated document and should only be signed by the contractor, subcontractor, or supplier in exchange for actual payment.
Who Issues Lien Waivers?
Just as a mechanics lien protects subcontractors from non-payment on private commercial construction jobs, a lien waiver protects property owners, lenders, and developers from lien filings. These parties will issue a lien waiver form to contractors and suppliers in exchange for payment, which protects the waiver issuer from lien filing after payment has already been issued.
Be Wary of No Lien Clauses
There was a time when contracts for commercial construction jobs included a no lien waiver, thereby banning the contractor, subcontractor, or supplier from filing a mechanics lien before the job even begins. This practice is now prohibited by law in Texas.
Are there different Lien Waiver Forms in Texas?
Yes, there are conditional and unconditional lien waiver forms available in Texas. Conditional lien waivers are signed at the time payment is received, but the payment must clear the bank before the lien rights are actually released. However, unconditional lien waivers mean the lien rights are released when the waiver is signed – whether or not the claimant is paid.
Do I have to file a Lien Waiver form in Texas?
The lien waiver form does not technically need to be filed with the county, as it is an internal document and more of an insurance policy for the project owner, so they know the downstream subcontractors have been paid, but it does need to be notarized. If you sign a lien waiver, be aware that you might lose your right to file a mechanics lien – so it is in your best interest to sign it only upon receiving full payment.
You can find Texas mandated lien waiver forms here.
Are you looking for more information on Texas Mechanic Lien filings and the required form schedules? We have the answers – visit us at https://www.texaseasylien.com/faqs/.