Exchanging lien waivers in California is regulated by the state. This means that California requires construction participants to use statutory lien waiver templates in relinquishing their rights to file a mechanics lien.
Consequently, you may not use just any lien waiver template or customize your own. It actually works in your favor, because then you won’t have to worry about how to write your waiver or how to spot sneaky clauses that may be buried in the lien waiver forms handed to you by your clients.
In this guide, we will discuss one of the four California lien waiver types: the California Conditional Waiver and Release on Progress Payment.
When do you use a California Conditional Waiver and Release on Progress Payment?
When signing a Conditional Waiver on Progress Payment in California, be sure that these two conditions apply to you:
1. You are still waiting to receive your payment.
A conditional lien waiver takes effect only when you get paid, so it is best to sign this California lien waiver if you are still waiting for your payment to get cleared in the bank. Note that cheques may bounce, so unless you are certain that you have the money on hand, always choose to sign a conditional lien waiver.
2. Your work on a project is still in progress.
A progress payment waiver means that you are only waiving a portion of your lien rights and that your work on a project is not yet over. Sign this waiver if you are waiting for partial payment on a project that you are still working on.
Among all four lien waivers in California, this is arguably the safest to sign if you are unsure which lien waiver type applies best to your situation. It is a conditional lien waiver, so it can protect you in case a cheque bounces or your client does not fulfill their end of the deal. It is also a progress payment waiver, which means that you get to determine the date until which your lien rights will be waived.
How to fill out a California Conditional Waiver and Release on Progress Payment
California strictly requires you to use the statutory Conditional Waiver and Release on Progress Payment form specified under Civil Code Section 8132. Using any other template for a conditional progress payment lien waiver will not work in California.
All statements shown above must be included in your California Conditional Waiver and Release on Progress Payment, including the Notice at the very top. Also, make sure to write them in all caps, as described in the form.
When you have the correct template for the conditional progress payment waiver, simply fill in the required information:
1. Name of Claimant
Write your full business name.
2. Name of Customer
Write the full name of the party who hired you.
3. Job Location
Write the street address or an identifiable description of the property location.
Write the name of the property owner. You may write multiple names if known.
5. Through Date
Write the date covered by this lien waiver. Your services rendered before this date will no longer be lienable so long as you get paid the correct amount.
6. Maker of Check
Write the name of the party who is issuing the check.
7. Amount of Check $
Write the amount written on the check.
8. Check Payable to
Write the name of the party to whom the check is issued.
Write any additional amount over which you are not relinquishing your lien rights. These are default items, including retention and extras. If there are previous conditional waivers that you signed but still did not get paid for, specify the dates and amounts associated with those waivers.
10. Claimant’s signature and title
Sign and write your job title.
11. Date of signature
Write the date when you sign the lien waiver.
Remember that California lien waivers do not have to be notarized.
Best practices before signing a California Conditional Waiver and Release on Progress Payment
1. Sign a conditional progress payment lien waiver if you’re unsure which waiver to sign
The Conditional Waiver and Release on Progress Payment is a safe waiver in the sense that it will protect you from losing your lien rights without getting paid first. It also asks you to specify the Through Date and ensures that the lien rights will be waived only when you receive your payment.
2. Ensure that you write the correct amount and through date
Your services up until the Through Date will not be lienable once you get paid the amount that you write on your lien waiver. Pay extra attention to verifying the accuracy of these details because writing the incorrect date or an incorrect amount could cause you to give up your lien rights over the wrong duration or the wrong payment value.
3. Make sure that you are using the California statutory lien waiver template
It is best to check out California Civil Code Section 8132 to see if the lien waiver you are signing is substantially the same as the template specified in the state law. Any lien waiver in California that is not the same as the statutory forms will not be enforced, so always ensure that you are using the correct lien waiver form.