California’s “Conditional Waiver and Release Upon Progress Payment”: A Detailed Guide

California’s “Conditional Waiver and Release Upon Progress Payment”: A Detailed Guide

September 27, 2019

Lien waivers are some of the most commonly used construction documents in California. Once signed, lien waivers allow construction participants to voluntarily revoke their lien rights, which in turn gives property owners peace of mind.

 There are two major categories for lien waivers in California: conditional vs. unconditional, and for progress payment vs. partial payment. A conditional lien waiver upon progress payment implies that you are waiving your lien rights only on the condition that you get paid, and only for a certain part of your total expected paycheck from a project.

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Renouncing your lien rights by signing these unconditional and conditional lien waivers is a serious matter, especially in California where the government has strict requirements on what forms to use and how to fill them out. If you sign the wrong lien waiver or you used the wrong form, you may end up not getting paid altogether.

This guide will focus on one of the four statutory lien waivers in California: the Conditional Waiver and Release Upon Progress Payment. Read on to learn when to use this waiver, how to fill it out correctly, and find the answers to other frequently asked questions regarding California lien waivers.

What is a Conditional Waiver and Release Upon Progress Payment in California?

There are two parts to the definition of the conditional waiver upon progress payment.

First, it is a conditional waiver, which implies that you will only be waiving your rights if a condition is met (i.e. you receive the payment).

Second, it is a waiver for progress or partial payment, which implies that you are not expecting to receive the full payment for your participation in this project. Either you will continue to provide labor or materials to the ongoing project or you are simply receiving the partial amount of the total payment.

When do you use a Conditional Waiver and Release Upon Progress Payment?

The Conditional Waiver and Release Upon Progress Payment is used when these two criteria are met:

  • You have not yet received payment for the services that you’ve rendered
  • You are expecting to receive partial payment from the client

Let’s understand these criteria better by illustrating scenarios.

Scenario 1: Exchanging payment and lien waiver at the same time

You’re a contractor, subcontractor, or material supplier for a project and your client wants you to hand a signed waiver before giving you the check. The client insists that the payment and the waiver should be exchanged at the same time.

If this is the case, you must always to choose to sign a conditional waiver because you are still yet to receive payment. Even if the check gets handed to you at the same time while you are signing the waiver, you are not certain whether that check would get cleared in the bank.

California Conditional Waiver (1)

Scenario 2: Receiving partial payment after completing work on a project

You’re a contractor, subcontractor, or material supplier for a project and your client has been going through some financial difficulty so they can only afford to pay you part of the full contract amount. You have already finished working on the project.

In this case, it is wise to sign a conditional waiver for progress payment because you meet the two criteria mentioned above. You are counting on your client’s words that they are going to pay you only the partial amount, even if your work on the project is done. As long as you have not received final payment, you must choose to sign the conditional waiver for progress payment.

California Conditional Waiver Tip

A Detailed Guide on Filling Out the Conditional Waiver and Release Upon Progress Payment Form

Once you have determined that this particular waiver is the best waiver for you, the next step is to fill out the form.

California conditional waiver 2

  • Name of Claimant. This is the name of the party accepting the payment and looking to issue the waiver.
    • If you’re working as an individual, write your full name.
    • If you’re representing a business, write the full legally registered name of your business including the proper designations like Inc., DBA, etc. Misspelling the claimant’s name may invalidate the waiver so make sure that this item is filled accurately.
  • Name of Customer. This is the official name of the party that hired the claimant, which in most cases is the same party that makes the payment.
    • In certain cases the “Name of Customer” does not necessarily issue the payment (i.e. if the property owner pays a subcontractor directly, the “Customer” will be general contractor and not the owner).
  • Job Location. This is just the physical address where the project is located.
    • The rules are fairly lenient on this item; you just have to make sure that you are identifying the correct project location. A supplier, for example, must write the address of the project site on which the materials are being used, not the location where the materials were initially shipped.
  • Owner. This is the name(s) of the property owner.
    • If there are multiple owners, make sure that the names of all owners are included. If the work is being done for a tenant, also include the name of the tenant together with the owners’ names.
    • The names of construction managers need not to be included.
    • In the case of publicly funded projects, identify the name of the government agency that ordered the project. For public-private partnerships, identify the project developers.
  • Through Date. This item marks the “cut-off date” through which you are waiving your lien rights.
    • You are essentially declaring that all the services you have provided until this “Through Date” will be compensated, therefore your lien rights until that date may be relinquished once you receive payment.
    • This entry is arguably the most important item in this form and is also specific to “progress payment” waivers. You must carefully decide on the date that accurately reflects the payment that you will receive.
  • Maker of the Check. This is the name of the party who is making the payment.
    • The name should be written on the check, if payment is being made by check.
    • If other methods are used (i.e. credit card, ACH, cash), you may use your best judgment and write the name of the party who is issuing the payment.
  • Amount of the Check. This is basically the dollar amount of the payment you will receive.
    • This should be straightforward and may be taken directly from the check, credit card transaction, or ACH record.
  • Check Payable To. This is the name of the party who is receiving the payment.
    • If the payment is issued through a joint check, write all the names of the recipients listed on the check.
    • If the payment is issued through cash, write the name of the party who will accept the payment.
    • Otherwise, use your best judgment and write the name of the party who will be accepting the payment.
  • Exceptions. This is a pre-filled list of waiver exceptions that are legally mandated by California lien laws.
    • “Retentions,” “contract rights,” and “extras for which the claimant has not yet been paid” are legally exempted from being waived. If you have other things in mind that you wish to exempt from being waived, you may add them to the list.
      • Date(s) of Waiver and Release. This refers to previously signed waivers on the same project that are yet to be paid.
        • If all previous waivers have been paid or if this is the first waiver that you are signing for this project, write “N/A”.
      • Amount(s) of Unpaid Progress Payment(s). This  is the amount corresponding to the previously signed waivers that have not been paid yet.
        • Write “N/A” if this does not apply to your case.
  • Claimant’s Signature. This is the signature of the agent that is authorized to represent and act on behalf of the claimant.
  • Claimant’s Title. This is the job title of the claimant’s agent who is signing the waiver.
  • Date of Signature. This is the date when the claimant’s agent signs the waiver.
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Best practices when using a California Conditional Waiver and Release Upon Progress Payment Form

1. Make sure that you are signing the correct waiver.

California has very strict rules regarding lien waivers, so you must be absolutely certain that a Conditional Waiver and Release Upon Progress Payment is the waiver that you need. Remember that conditional waivers are signed whenever you are yet to receive your payment.

 Also note that a “progress payment” waiver applies only if you will be receiving partial payment, which means that you are still expecting to receive more payments in the future. 

If you are done working on a project and you will be receiving your final paycheck, consider signing a conditional waiver upon final payment instead.

2. Make sure that you got your dates correctly.

Since California is fairly strict with the enforcement of lien waivers, you must be very careful when filling out your lien waiver forms, especially when it comes to dates.

The ‘Through Date” listed on the Conditional Waiver and Release Upon Progress Payment form must refer to the date until which you are renouncing your lien rights. If you write “September 1” as a Through Date, for example, you are waiving your lien rights for the work you’ve done until September 1.

Make sure that you get this date right and that the lien amount you are waiving agrees with this date. Double- and triple-check your invoices and calculations before you renounce your lien rights up to a certain date.

3. Make sure that you fill out the lien waiver form accordingly.

You must be diligent when filling out a California lien waiver on your own. Watch out for spelling errors and make sure that you know the official name(s) and address(es) of every property owner and higher-tier party in your project.

Construction parties often make mistakes in spelling the business names of companies. Remember to add the correct suffixes, such as Inc., Ltd., and LLC. Using the wrong suffix is a small error but it can invalidate your lien waiver.

Spotting small errors and mistakes may be done if you are not rushing through the process of filling out your waiver. You are highly encouraged to fill out your waivers and other lien-related forms as early as you can.

Frequently Asked Questions about Conditional Waivers in California

Can you send an unconditional lien waiver and release online?

Yes, you can.

Filing lien waiver forms online and sending them via the Handle app will not only save you time but will also ensure that the information you enter are correct. California has very strict requirements when it comes to the accuracy of lien waivers, so it is highly encouraged that you seek the help of professionals to ensure that you are not waiving your lien rights for nothing.

Handle can also help you with the whole lien process, from protecting your lien rights to making sure that you don’t miss any deadlines.

Do lien waivers need to be notarized in California?

No, they don’t. Having your lien waiver notarized may even do harm as this step is not legally required by the state.

Can I use my own customized lien waiver form?

No, you can’t. California requires all construction professionals looking to waive their lien rights to use the statutory forms. Making the smallest mistakes in formatting can get your lien waiver to be rendered null and void.

 Further reading