Property owners typically ask potential lien claimants to sign a lien waiver in exchange for payment. When a construction participant signs a lien waiver, they sign a document that lets them give up their lien rights because, ideally, they will not need to file a mechanics lien against the project anymore.
Only a few states regulate what can and cannot be included in a lien waiver in order for it to be valid. In Idaho, there are no statutory lien waiver forms so anyone can mistakenly give up their lien rights without first getting paid for their work. This is why potential lien claimants in Idaho must be very careful when signing a lien waiver in the state.
There are four types of lien waivers, but this guide focuses on one specific kind: the Idaho Conditional Waiver and Release Upon Final Payment.
- When do you use an Idaho Conditional Waiver and Release Upon Final Payment?
- How to sign an Idaho Conditional Waiver and Release Upon Final Payment
- Best practices before signing an Idaho Conditional Waiver and Release Upon Final Payment
When do you use an Idaho Conditional Waiver and Release Upon Final Payment?
A Conditional Lien Waiver upon Final Payment is a kind of lien waiver that is used when:
- You have finished your work on a project.
This waiver is a final payment waiver, which means that once you sign this waiver, you will no longer be expecting any more future payments for the project. The payment that you are receiving in exchange for signing this Idaho lien waiver should be your final payment for a project.
- You have not yet received your payment.
This waiver is also a conditional lien waiver, which means that it will only take effect on the condition that you actually receive your payment. This waiver must be used if you do not yet have the payment on hand, including when a credit card transaction has not yet gone through or you have not yet cleared a payment check.
Property owners may demand you to sign a lien waiver prior to releasing payment. This is because they want to make sure that once they give you the payment, you will not be filing a mechanics lien to try to get twice the amount of your pay.
However, you should also be wary about signing a lien waiver without actually receiving payment yet. You do not want to give up your right to file an Idaho mechanics lien and have the owner back out on their promise to pay up. To solve this tricky issue, it is best practice to always sign a conditional type of lien waiver as this waiver allows you to relinquish your lien rights but it only takes effect once you actually receive the money.
How to sign an Idaho Conditional Waiver and Release Upon Final Payment
1. Make sure that you are signing the correct Idaho lien waiver
Since this is an Idaho lien waiver for final payment, you must only use this payment when you are receiving or have received your final payment. If you are not yet finished with your work on a project and you are still expecting to receiving more payments in the future, under no circumstance must you sign this lien waiver.
When reading through an Idaho conditional lien waiver upon final payment, make sure that they include the following:
- An explicit statement saying that the lien waiver will only take effect once payment is made
The lien waiver must have a conditional statement that explicitly explains that you will only lose your right to lien once you actually receive your payment.
- A description of the services for which you are waiving your lien rights
The lien waiver must state the types of services for which you are waiving your right to lien.
Furthermore, you should also read through the entire waiver and verify that you are not waiving anything else other than your lien rights. Watch out for statements that get you to waiver other rights (e.g. your right to your retention pay).
2. Make sure that the lien waiver has all the important information
Since Idaho does not have a statutory lien waiver form, a lien waiver may have as little or as many details as possible. When preparing your Idaho lien waiver, make sure that it generally contains the following details:
- The name of the property owner
- The name of the party who hired you
- Your name, address, and signature
- A description of the property location sufficient for identification
- A description of the services you provided
- The amount of payment you received or are expecting to receive in exchange for signing the lien waiver
- A statement clearly stating that the lien waiver will only take effect once payment is made
Best practices before signing an Idaho Conditional Waiver and Release Upon Final Payment
1. Use a conditional lien waiver
Idaho also allows the use of unconditional lien waivers but, if possible, always choose to sign a conditional lien waiver. A conditional lien waiver protects you from bouncing checks, faulty credit card transactions, and other issues of payment scams from difficult clients. If you sign a conditional lien waiver and you do not receive your payment, you will still be allowed to record an Idaho mechanics lien.
2. Ensure that you have indeed received your final payment
A conditional waiver upon final payment assumes that you are already done with your work on a project – if your work is not yet complete, be sure to sign an Idaho Conditional Waiver and Release upon Progress Payment instead. If you mistakenly sign a final payment waiver when your work is still in progress, you, unfortunately, give up your lien rights over your expected payments.
3. Inspect a lien waiver thoroughly before signing
Before you sign a lien waiver in Idaho, you must be very sure that you understand every statement written on it. If there are any lines that do not quite add up, speak with your client to clarify. Do not just sign a lien waiver because you want to get paid faster – it might cause you a lot more trouble if you end up waiving your legal rights by mistake.