In California, waiving your lien rights is not as simple as signing just any lien waiver template you find online. California is one of the states in which relinquishing lien rights is strictly regulated, so if you want to waive your right to file a mechanics lien, you have to use the correct statutory forms.
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There are four lien waiver types in California, and it’s very important that you use the correct type when you waive your lien rights. This guide discusses one of the four types: the California Unconditional Waiver and Release on Final Payment.
- When do you use a California Unconditional Waiver and Release on Final Payment?
- How to fill out a California Unconditional Waiver and Release on Final Payment
- Best practices before signing a California Unconditional Waiver and Release on Final Payment
When do you use a California Unconditional Waiver and Release on Final Payment?
Signing a California Unconditional Waiver and Release on Final Payment means that you fulfill the two conditions below:
1. You already have the payment on hand.
Before you sign a California unconditional lien waiver, you must make sure that you already have your payment on hand. This implies that the cheque must have already gone through and been cleared in the bank. Keep in mind that an unconditional lien waiver takes effect as soon as you sign it, so even if a cheque bounces, your lien rights will still get revoked.
2. The payment you received is your final payment for the project.
Since this is a final payment waiver, you must sign it only when you have received your final payment on a project. If your work on a project is still in progress and you are expecting more payments in the future, you should not sign this waiver. You do not want to waive your lien rights over services that you still have not gotten paid for yet.
Since there are four lien waiver types in California, you can consider signing another type of lien waiver if the two conditions above do not fit your specific situation. It is very dangerous to sign an unconditional final payment waiver in California by mistake, so you should be very certain that this is the correct lien waiver that best applies to your case.
How to fill out a California Unconditional Waiver and Release on Final Payment
The first step is to make sure that the lien waiver you are signing is the same as the template specified in Civil Code Section 8138. The lien waiver form specified in this provision of the California Civil Code is the only correct template that is enforceable in the state.
Note that the template for the California Unconditional Waiver and Release on Final Payment has a Notice Statement at the top. The Civil Code requires that this Notice Statement be written using a font size that is as large as the largest text in the entire document. This is to ensure that before you sign a California lien waiver, you are able to read this notice and you understand that it may be enforced against you.
When filling out the rest of the lien waiver form, simply fill in the blanks with the following required information:
1. Name of Claimant
This is your full business name.
2. Name of Customer
This is the name of the party who hired you directly for the project.
3. Job Location
This is the property address (e.g. street address, legal property address).
This is the name(s) of the property owner(s).
5. Disputed claims for extras in the amount of: $
This is the dollar amount of any disputed claim that you might have with the owner. This amount has not been paid yet, and you are not relinquishing your lien rights over this payment.
6. Claimant’s signature and title
This is your signature and job title.
7. Date of signature
This is the date when you sign the lien waiver.
Note that California lien waivers do not have to be notarized, but have to substantially be in the same form as shown above.
Best practices before signing a California Unconditional Waiver and Release on Final Payment
1. Make sure that you are using the statutory lien waiver template
The only correct template for the California Unconditional Waiver and Release on Final Payment is the template that is specified under Section 8138 of the California Civil Code. Every construction participant in the state must sign the correct template. Any customized template is not enforceable in California to ensure that all parties use the same form and no sneaky provisions may be used against anyone.
2. Verify that your payment has been cleared in the bank
This lien waiver is an unconditional lien waiver — your lien rights for the project will be gone as soon as you sign it. You must sign this specific lien waiver type only when you have gotten your payment, and that the money is ready for your disposal. Cheques do not count as payment unless they have been approved in the bank. It is extremely important that you understand this rule.
You can also read the Notice Statement to understand what signing an unconditional lien waiver implies in California.
3. Ensure that it is the lien waiver type that best applies to your situation
The California Unconditional Waiver and Release on Final Payment is signed only when you have received your final payment. You should sign this lien waiver also if your work on a project is complete and that you are not expecting any more payments from the property owner, excluding any disputed claims.
If you are still waiting to receive your payment or if your work on a project is still ongoing, consider signing a different California lien waiver type.