Lien waivers are some of the most important and most commonly used documents in construction. Owners typically request construction parties to submit waivers in exchange for payment. Construction parties, on the other hand, sign lien waivers to give up their lien rights if they get paid.
There are four general types of lien waivers, and this guide discusses one of them: the Conditional Waiver and Release Upon Progress Payment as used in the state of Ohio.
- When do you use an Ohio Conditional Waiver and Release Upon Progress Payment?
- How to sign an Ohio Conditional Waiver and Release Upon Progress Payment
- Best practices before signing an Ohio Conditional Waiver and Release Upon Progress Payment
When do you use an Ohio Conditional Waiver and Release Upon Progress Payment?
You should sign an Ohio Conditional Waiver upon Progress Payment when the two situations apply:
- You are still expecting future payments for the project.
This is a progress payment waiver, so it is effective for progress payments. This means you should sign this waiver when your work for a project is still in progress. Whatever payment you receive or are expecting to receive for signing this waiver, it should be partial and not yet your final payment for the entire project.
- You are still waiting for your payment to go through.
This is a conditional lien waiver, so it only takes effect on the condition that you actually get paid. This means you should sign this waiver when you do not have your payment on hand. It could be because you have not cashed out a check yet, or you are still waiting for a pending credit card transaction payment to go through.
If you are unsure which type of lien waiver to sign, it is best to go with the conditional lien waiver upon progress payment. It is a conditional lien waiver so you will not lose your lien rights if a payment falls through, and it is also a progress payment waiver so you can specify the coverage of the lien waiver.
How to sign an Ohio Conditional Waiver and Release Upon Progress Payment
Note that Ohio does not have statutory lien waiver forms. It will be difficult to tell if you are signing the right lien waiver because there are no mandatory titles and statements written on a lien waiver form.
Before you sign any type of lien waiver, keep in mind the following steps:
1. Ensure that you are signing the correct lien waiver
To know that you are signing a Conditional Waiver and Release Upon Progress Payment, the following should apply:
- The lien waiver has a conditional statement
This means that the waiver you are signing explicitly states that you will only lose your lien rights on the condition that you get paid. If you do not find a statement that declares this conditional provision, you may be holding an Ohio unconditional lien waiver.
- The lien waiver requires a “Through Date”
The “Through Date” determines the coverage of the lien waiver. All the services you performed up until the “Through Date” would no longer be lienable once the lien waiver takes effect. This “Through Date” tells you that you are signing a progress payment waiver because it allows you to retain your lien rights for services that you are yet to provide.
2. Ensure that important details are included
Since Ohio does not have mandatory forms for lien waives, a lien waiver in Ohio should ideally include 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 furnishing to the project
- The amount of payment you are expecting to receive for signing the waiver
- The amount of payment you have already received
- A list of the lien waivers that you have signed, if applicable
- The Through Date that covers the progress payment you are receiving
Make sure that the Through Date aligns with the amount of payment on your lien waiver. You should be paid for all the services you provided up until the Through Date. Also make sure that the lien waiver has a conditional statement: it should explicitly say that the waiver will only take effect on the condition that you get paid.
Best practices before signing an Ohio Conditional Waiver and Release Upon Progress Payment
1. Use a conditional lien waiver upon progress payment whenever possible
The conditional waiver upon progress payment is the best lien waiver to use because 1) it only takes effect when you actually get paid, and 2) it allows you to give up your lien rights partially. If possible, you should never sign an unconditional lien waiver in Ohio. Be wary of lien waivers that say they are “effective immediately.”
2. Do not leave blanks in an Ohio lien waiver form
If you are given a lien waiver to sign, be sure that all blanks are filled in. If an item is not applicable, indicate so. Lien waivers are powerful because they let you give up your lien rights in exchange for payment. You do not want other parties to tamper with your signed lien waiver form.
3. Read and understand an Ohio lien waiver before signing
This should be obvious, but you should always read and understand everything that’s written on a lien waiver before signing it. Ohio does not have statutory forms, so your clients may bury provisions that will put you at a disadvantage. If certain statements are confusing, do not be afraid to verify with your client or consult an expert.