Lien waivers are commonly exchanged throughout the course of a construction project. By letting construction parties waive their lien rights upon payment, lien waivers protect property owners from fraudulent mechanics lien claims.
However, construction participants must be very careful before they sign away their right to filing a mechanics lien. In states like Delaware, there are no statutory lien waiver forms, so you must make sure that you understand the contents of a lien waiver before signing it.
This guide explains the tips and tricks when signing an unconditional waiver and release upon final payment in Delaware.
- When do you use a Delaware Unconditional Waiver and Release Upon Final Payment?
- How to sign a Delaware Unconditional Waiver and Release Upon Final Payment?
- Best practices before signing a Delaware Unconditional Waiver and Release Upon Final Payment
When do you use a Delaware Unconditional Waiver and Release Upon Final Payment?
Before singing the Delaware Unconditional Waiver and Release Upon Final Payment, ask yourself if the following situations apply to your case:
- You are finished working on a project.Since this is a final payment waiver, you should have already received your final payment for a project before you sign this lien waiver. You should not be expecting any more future payments other than what you have received, and you should not be doing any more work as you are already done with all your contract obligations.
- You have already received your payment.This is also an unconditional lien waiver, so the waiver takes effect as soon as it is signed. This means that you should already have the payment on hand before you sign this lien waiver. Otherwise, you will lose your lien rights regardless if your client releases your payment or not.
You should note that credit card transactions that are still pending do not count as payments until they are approved in the bank. The same applies to cheques. Unless the cheque has been cleared in the bank, you still do not have the payment on hand.
Remember that if a client is asking for a lien waiver before paying up, you should sign a conditional lien waiver upon final payment instead. A conditional lien waiver takes effect on the condition that you actually get paid. An unconditional lien waiver, on the other hand, will be considered binding regardless if you receive your payment or not.
How to sign a Delaware Unconditional Waiver and Release Upon Final Payment?
Take note of the following steps before signing an unconditional lien waiver upon final payment.
Verify that you are signing the correct type of lien waiver
Since Delaware does not have statutory lien waivers, you cannot expect lien waivers to have explicit labels and warning statements. To know that you are signing an unconditional waiver and release upon final payment, note the following:
- The waiver does not have a conditional statement.A conditional statement is a statement that declares the waiver will not take effect until payment is made. If a waiver is effective “immediately” or if it does not have a clarification that payment must be made before your lien rights are waived, you are signing an unconditional lien waiver.
- The waiver does not ask for a “through date.”A through date is the date that specifies the coverage of your lien waiver. All the work you performed up to this date may not be subjected to a mechanics lien once the waiver is signed. This date is not normally asked when you are signing a final payment lien waiver.
Make sure that important details are included in the lien waiver form
Delaware does not have a statutory lien waiver form but, in general, an unconditional final payment lien waiver asks for the following 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
Make sure that the above details are included on your lien waiver if you are preparing the lien waiver yourself. If you are handed a lien waiver form to sign, make sure that you provide all the required details without leaving any item blank. Other parties may tamper with your lien waiver form, so make sure everything in the form is filled out.
Best practices before signing a Delaware Unconditional Waiver and Release Upon Final Payment
Use a conditional lien waiver form instead
If possible, always use a conditional lien waiver form instead of an unconditional lien waiver form. When preparing your own Delaware lien waiver form, always include a statement that the lien waiver will only take effect once payment is actually made. When handed a lien waiver form to sign and the form does not contain a conditional statement, ask for payment first before signing the lien waiver.
Verify that you have the payment on hand
Before signing an unconditional final payment lien waiver, make sure that you have the payment in the bank. Pending credit card transactions must be approved, and cheques must be cleared. Keep in mind that an unconditional lien waiver takes effect the moment you sign it. If a payment fails to go through and you have already signed an unconditional lien waiver, you are not likely to gain your lien rights back.
Make sure that you understand all statements in a lien waiver before signing
Since Delaware does not have statutory lien waiver forms, a lien waiver may contain statements that let you waive not just your lien rights but your other rights as well. To ensure that you are only waiving your lien rights and nothing else, make sure that you carefully go through all the statements in a Delaware lien waiver before signing it for your client.