Updated June 2025 | All statutory references are to the (Arkansas Code, Title 18, Chapter 44)
Arkansas lien waivers are critical documents used to waive a subcontractor’s or supplier’s right to file a mechanics lien once payment is made. These waivers are typically requested at key points in the payment process to ensure transparency and protect the financial interests of all parties involved. Understanding when and how to use lien waivers under Arkansas lien law is essential to safeguarding your payment rights.
A Critical Distinction: “lien Waiver” Vs. “satisfaction of Lien”
Before proceeding, it is crucial to understand that a lien waiver and a Satisfaction of Lien (or lien release) are two entirely different documents under Arkansas law.
- A Lien Waiver is a contractual document used to give up the right to file a lien in the future, often in exchange for payment. The form and content of waivers are not regulated by Arkansas statutes.
- A Satisfaction of Lien is a statutory document filed with the court to cancel a lien that has already been filed. This process is strictly governed by A.C.A. § 18-44-131.
This guide focuses on the practice and significant risks associated with contractual lien waivers.
What Are Lien Waivers in Arkansas?
A lien waiver is a document that confirms payment has been received and waives the right to file a lien for that amount. Lien waivers help subcontractors and suppliers secure timely payments while offering property owners and contractors assurance against future claims.
Lien waivers are often issued or requested during the following:
- Progress Payments: To release lien rights for materials or labor provided during a specific phase of the project.
- Final Payments: To confirm no further claims will be filed after the project is completed and fully paid.
- Partial Payments or Retainage: To address payments made for specific milestones or withheld amounts, ensuring lien rights are waived only after funds are cleared.
The content and format can vary since Arkansas does not regulate lien waiver forms. Subcontractors and suppliers must review these documents carefully to ensure they align with payment status and do not waive more rights than intended.
Types of Arkansas Lien Waivers (Industry Practice, Not Law)
While not defined or recognized in the Arkansas Code, the construction industry recognizes two primary types of lien waivers, each suited to different payment situations:
1. Conditional Lien Waiver: This waiver is valid only after payment is received and cleared. Conditional waivers are commonly used for progress payments to protect lien rights until the invoice is settled. This is the safest waiver type for a subcontractor or supplier.
2. Unconditional Lien Waiver: This waiver is effective immediately upon signing, even if payment hasn’t been made. It’s commonly used for final payments, like when a subcontractor finishes their work and submits an unconditional waiver to ensure no future claims will occur. Signing this document before payment has cleared your bank is extremely risky.
Using the correct waiver type ensures lien rights are waived appropriately and prevents misunderstandings during the payment process.
Common Scenarios for Arkansas Lien Waivers
Subcontractors and suppliers regularly encounter lien waivers in various stages of construction projects. Here’s how and when these documents are typically used:
- During Progress Payments: Conditional lien waivers are issued when a partial payment is made for ongoing work or materials. For example, a material supplier might sign a conditional waiver confirming lien rights will be released once the payment for that delivery clears.
- At Project Milestones: Contractors or property owners may request lien waivers at key milestones, such as the completion of a specific phase of construction. This helps ensure no claims are tied to that portion of the work.
- Upon Final Payment: Unconditional waivers are commonly requested when the final payment is made. After a lien has already been filed and paid, a formal Satisfaction of Lien must be filed with the court to finalize the cancellation of the claim.
These scenarios illustrate how lien waivers facilitate a smoother payment process while protecting the interests of all parties.
Legal Framework for Arkansas Lien Waivers
The right to file a mechanics lien and the use of lien waivers in Arkansas are governed by Arkansas lien law under Title 18, Chapter 44 of the Arkansas Code. Key points include:
- The Greatest Risk: Waivers Before Work Begins. Arkansas law does not prevent a party from contractually waiving their future lien rights before any work has commenced. This means a “no-lien clause” in your initial contract can be enforceable, potentially eliminating your ability to file a lien even if you are not paid.
- No Statutory Forms: Arkansas lien waivers do not follow a specific statutory format, giving parties flexibility. However, the waiver must clearly define its terms to avoid disputes. The waiver’s power comes from contract law, not statutory compliance.
Penalties for Failing to Release a Filed Lien
While the law is silent on waiver forms, it is very strict about canceling a lien that has already been filed and subsequently paid.
- Under A.C.A. § 18-44-131, a creditor who has been paid must enter a Satisfaction of Lien within ten (10) days of a request, or they become liable for any damages and costs.
- Under A.C.A. § 18-44-132, a contractor or subcontractor who knowingly uses payment proceeds for any purpose other than to settle the lien can be found guilty of a felony.
Understanding these legal nuances helps subcontractors and suppliers ensure lien waivers are used correctly in payment negotiations.
Best Practices for Using Arkansas Lien Waivers
To protect your rights and streamline the payment process, follow these best practices when issuing or signing lien waivers:
- Scrutinize Your Initial Contract for “No-Lien Clauses.” This is the most critical step. Before signing any contract, look for language where you waive future lien rights. Negotiate to have this removed.
- Match the Waiver to the Payment Situation.
Always use a conditional waiver for progress payments or partial payments to maintain lien rights until the funds are cleared. For final payments, confirm payment before signing an unconditional waiver. - Verify All Details.
Ensure the waiver specifies the payment amount, project details, and the applicable timeframe. Read every word to ensure you are not waiving rights for retainage, unapproved change orders, or future work.
Conclusion
Arkansas lien waivers are indispensable tools for subcontractors and suppliers to secure payments and ensure smooth project operations. By understanding that waiver forms are unregulated contracts, being aware of the significant risk of waiving rights before work begins, and the legal framework that governs them, you can protect your payment rights and minimize risks. Whether it’s a progress payment, a project milestone, or final payment, using lien waivers appropriately can streamline your construction payment processes and maintain positive relationships with project stakeholders.