Payment disputes are so common in construction that lien waivers are frequently used. Lien waivers protect property owners from having to pay double by getting potential lien claimants to give up their rights once they get paid.
Unfortunately, lien waivers may also be abused, especially in states like Idaho, where lien waivers are not regulated. There are no statutory lien waiver forms in Idaho, so anyone may write anything on a lien waiver, and a construction participant may end up giving up more than just their lien rights.
If you are a contractor, subcontractor, or material supplier in Idaho, you must make sure that you understand the lien waiver that you are signing. This guide will answer some basic questions about one type of Idaho lien waiver, the Idaho Unconditional Waiver and Release Upon Progress Payment.
- When do you use an Idaho Unconditional Waiver and Release Upon Progress Payment?
- How to sign an Idaho Unconditional Waiver and Release Upon Progress Payment
- Best practices before signing an Idaho Unconditional Waiver and Release Upon Progress Payment
When do you use an Idaho Unconditional Waiver and Release Upon Progress Payment?
If you are asked to sign an Idaho Unconditional Waiver Upon Progress Payment, make sure that the following situations apply to you before signing:
- You have received partial payment
This is an unconditional payment waiver, which means that the waiver takes effect right when you sign it. Whether you get paid or not, your lien rights will be waived. This is why whatever amount that you are promised to receive in exchange for signing this waiver must have already been cleared in the bank.
- You are expecting more payments
This is a progress payment waiver, which means that the payment that you received in exchange for signing this waiver is just partial payment. Your work on a project is still in progress and you are still expecting to receive more payments in the future.
Ideally, you should never sign an unconditional lien waiver unless you are absolutely 100% sure that you already have the money on hand. A check does not count as payment in this case because a check might bounce. A pending credit card transaction also does not count as verified payment until it has gone through.
It is best practice to sign a conditional waiver instead of an unconditional lien waiver in Idaho to protect yourself from bouncing checks and other payment scams.
How to sign an Idaho Unconditional Waiver and Release Upon Progress Payment
1. Ensure that you are signing the correct lien waiver
As mentioned, you should never sign an unconditional lien waiver unless you have the money on hand and you are able to spend that money. Similarly, you must sign an unconditional lien waiver for progress payment when your work is still in progress.
To know that you are being made to sign an unconditional lien waiver for progress payment, watch out for the following details on the document:
- The lien waiver is “effective immediately”
If the lien waiver says that it is “effective immediately” or if it has no conditional statement saying that the waiver will only take effect once payment is made, you are being made to waive your lien rights unconditionally.
- The lien waiver requires a “Through Date”
The “Through Date” is the date that sets the coverage for your lien waiver. Once you sign the lien waiver, you are waiving your lien rights only for the services that you performed through this date. This is to make sure that you are not waiving ALL of your lien rights, and that you still can file a mechanics lien for the work that you will perform on the project in the future.
2. Ensure that important details are included
Idaho has no rules on what information must be included in a lien waiver, regardless of type. However, when preparing or signing an unconditional lien waiver upon progress payment, make sure that it generally has the following information:
- 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 in exchange for signing the lien waiver
- The Through Date that covers the progress payment that you received
Make sure that the Through Date matches the amount of payment that you received. Also make sure that the amount that is specified on the waiver has already been cleared in your bank account.
Best practices before signing an Idaho Unconditional Waiver and Release Upon Progress Payment
1. Consider using a conditional lien waiver instead
A conditional lien waiver is way better than an unconditional lien waiver because it offers you protection in case your client does not pay up. Ideally, you will only sign an unconditional lien waiver once you have gotten your payment, but construction participants often make the mistake of signing away their lien rights just after receiving a check or processing a credit card transaction.
Note that if a check bounces or the transaction gets rejected after a few days, you can no longer gain back your lien rights after signing an unconditional lien waiver.
2. Ensure that the correct Through Date is included
The Through Date is very important in a progress payment waiver because it specifies the coverage for your Idaho lien waiver. Any work that you will do after this date will be fair game – you can still file a mechanics lien if you do not get paid for them – so the Through Date makes sure that you do not give up the entirety of your lien rights.
3. Make sure that you are not giving up your other rights
Idaho does not regulate its lien waivers, so the waivers can have all sorts of statements that cause you to give up more than just your lien rights. Some lien waivers may bury provisions that get you to give up your right to retention pay, and it may also get you to relinquish all of your lien rights when you just want to revoke parts of it. If you are not sure about the statements written on your lien waiver, do not be afraid to clarify with your client or consult an expert.