Lien waivers allow a construction participant to waive their right to file a mechanics lien, typically in exchange for payment. Property owners and other higher-tier parties usually require a lien waiver to be signed to protect themselves from having to deal with a mechanics lien once they have already paid up.
In states like Delaware, lien waivers are not regulated by state lien laws, therefore there are no strict rules that must be followed before lien waivers can be exchanged. This can be tricky, especially since there are no statutory lien waiver forms that come with warning statements. Construction parties in Delaware must be very diligent before they sign a lien waiver in the state.
This guide discusses when and how to sign a specific type of lien waiver: the Delaware conditional waiver and release upon final payment.
- When do you use a Delaware Conditional Waiver and Release upon Final Payment?
- How to sign a Delaware Conditional Waiver and Release upon Final Payment?
- Best practices before signing a Delaware Conditional Waiver and Release upon Final Payment
When do you use a Delaware Conditional Waiver and Release upon Final Payment?
The Delaware Conditional Waiver and Release upon Final Payment should be used when the following scenarios apply:
- You are done working on a project.
This is a final payment waiver, so you should use it when your work on a project is all done. You should not be expecting any more future payments from your client, except the final payment that you are receiving in exchange for submitting this Delaware lien waiver.
- You are still awaiting payment.
This is a conditional lien waiver, so it only takes effect on the condition that you actually receive your payment. You should use this waiver if you are still awaiting payment or if you do not yet have the payment on hand. If a property owner asks for a signed lien waiver before releasing payment, always make sure that you use a conditional lien waiver.
- Keep in mind that uncleared checks and pending credit card transactions do not yet count as payment until they are approved in the bank. Checks may bounce and credit card transactions may not go through. Unless you have verified that you have the payment on hand, use a conditional lien waiver in Delaware.
How to sign a Delaware Conditional Waiver and Release upon Final Payment?
When signing a conditional lien waiver upon final payment, remember the following steps:
Verify that you are signing the correct lien waiver
Delaware does not have statutory lien waiver forms, which means no specific format or warning statements are necessary for a lien waiver to take effect. To know that you are signing a conditional lien waiver, always look for a conditional statement that says the lien waiver will only take effect upon payment.
You should also look for statements that declare the lien waiver as a waiver for final payment. A final payment lien waiver typically does not include a “through date,” or a date that specifies which services are covered by the waiver. This “through date” is typically found in lien waivers upon progress payment.Also note that while Delaware does not have statutory lien waiver forms, a lien waiver will only be binding if there is clear and explicit intention stated in the document.
Ensure that necessary details are included in the lien waiver form
A conditional lien waiver upon final payment in Delaware should generally contain the following pieces of information:
- The name of the property owner
- The name of the hiring party
- Your name, address, and signature
- A description of the property location
- A description of the services you furnished to the project
- The amount of payment you are expecting to receive for signing the waiver
- A list of the lien waivers that you have signed, if applicable
Remember that the lien waiver must also include a clear statement declaring that you intend to waive your right to file a Delaware mechanics lien upon payment. The conditional statement that states the lien waiver will only be binding once payment is made should also be included in the lien waiver form. You can also generate and sign a conditional waiver and release form for Delaware on Handle.com.
- If you are handed a lien waiver form to sign, be sure to fill out all details that are being asked. Do not leave any of the items blank, as other parties may tamper with the lien waiver after you have already signed it.
Best practices before signing a Delaware Conditional Waiver and Release upon Final Payment
Never use an unconditional lien waiver
A lien waiver may be unconditional or conditional. While Delaware also allows the use of an unconditional lien waiver upon final payment, it is always better to use a conditional lien waiver so you can protect yourself against non-payment. If a delinquent client fails to pay up after you have already signed a lien waiver, a conditional waiver ensures that your lien rights are still preserved.
Always look for the conditional statement
To verify that you are indeed signing a Delaware conditional lien waiver upon final payment, look for a statement that says the lien waiver will only take effect pursuant to payment or once payment is made. This condition is necessary to ensure that you do not lose your lien rights in case a client does not end up giving you your hard-earned payment.
Clarify with your client or a lawyer if there are vague items in the lien waiver form
Since there are no statutory lien waiver forms in Delaware, it is important that you read through all the documents and waivers that you sign. Some questionable provisions may be buried in legal-speak, so make sure that you clarify with your client or you consult lien experts if there are items in the lien waiver document that you do not understand. If you are preparing your own lien waiver, be clear with your intentions to waive your right to lien only when you receive your payment.