Texas is a state with very strict, not to mention complicated, mechanics lien rules. The state has complex requirements for filing a Texas mechanics lien, and it regulates even the use of lien waivers.
In Texas, a party cannot just use any lien waiver template. A valid Texas lien waiver must be the same as the statutory form described in Texas Property Code Sec. 53-284; otherwise, the lien waiver will not be enforceable. On top of that, Texas also requires construction parties to have their lien waivers notarized.
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This guide talks about the Texas Conditional Waiver and Release on Final Payment. Note that this specific lien waiver is only one of the four Texas lien waiver types.
- When do you use a Texas Conditional Waiver and Release on Final Payment?
- How to fill out a Texas Conditional Waiver and Release on Final Payment
- Best practices before signing a Texas Conditional Waiver and Release on Final Payment
When do you use a Texas Conditional Waiver and Release on Final Payment?
Use a Texas Conditional Waiver and Release on Final Payment if the following scenarios apply:
1. You are still waiting for your payment.
If you are asked to sign a lien waiver before you receive your payment, or if you have already received a cheque but you are not yet sure if the payment has already been cleared in the bank, you have to use a conditional lien waiver. A conditional lien waiver takes effect only after you get paid, so you get an assurance that your lien rights will be preserved in case your payment check bounces.
2. Your work on a project is all done.
This waiver is a final payment waiver. It means that whatever payment you have received or are expecting to receive for signing this lien waiver must be your final one. Use a final payment lien waiver when you are no longer expecting regular payments in the future for a given project.
Signing a conditional lien waiver is generally a better idea than signing an unconditional lien waiver. As mentioned, a conditional lien waiver protects you in case payments do not go through.
However, signing a final payment waiver when your work on a project is not yet complete is very dangerous. You may end up losing your lien rights for the entire project, even if you are only receiving (or have received) a portion of your full payment.
It is very important that you sign this specific Texas lien waiver only when your work on the project is done.
How to fill out a Texas Conditional Waiver and Release on Final Payment
The first step to ensure that your Texas Conditional Waiver and Release on Final Payment is the same as the template provided under Texas Property Code Sec. 53-284:
“CONDITIONAL WAIVER AND RELEASE ON FINAL PAYMENT
“Job No. ___________________
“On receipt by the signer of this document of a check from ________________ (maker of check) in the sum of $____________ payable to _____________________ (payee or payees of check) and when the check has been properly endorsed and has been paid by the bank on which it is drawn, this document becomes effective to release any mechanic’s lien right, any right arising from a payment bond that complies with a state or federal statute, any common law payment bond right, any claim for payment, and any rights under any similar ordinance, rule, or statute related to claim or payment rights for persons in the signer’s position that the signer has on the property of _____________________ (owner) located at ______________________ (location) to the following extent: ______________________ (job description).
“This release covers the final payment to the signer for all labor, services, equipment, or materials furnished to the property or to __________________ (person with whom signer contracted).
“Before any recipient of this document relies on this document, the recipient should verify evidence of payment to the signer.
“The signer warrants that the signer has already paid or will use the funds received from this final payment to promptly pay in full all of the signer’s laborers, subcontractors, materialmen, and suppliers for all work, materials, equipment, or services provided for or to the above referenced project up to the date of this waiver and release.
“_________________________________ (Company name)
“By ______________________________ (Signature)
When you have the correct lien waiver form, all you need to do is fill in the blanks with the following information:
Write the name of your project.
2. Job No.
Write your project number.
3. Maker of check
Write the name of the person who issues the check.
Write the amount found on the check.
5. Payee(s) of check
Write the name(s) of the party or parties to whom that check is issued.
6. Person with whom signer contracted
Write the name of the person who hired you for the project.
Write the name(s) of the owner(s) of the property.
Write the project address. Make sure to include the zip code and the county.
9. Job description
Write a description of the services that you provided to the project.
Write the date when you sign the lien waiver.
11. Company name, Signature, Title
Write your name, signature, and job title. Note that this part may be filled by your designated agent.
Must the Texas Conditional Waiver and Release on Final Payment be notarized?
Yes, Texas is one of the states that require construction participants to have lien waivers notarized before handing them to their clients. Make sure that you sign your lien waiver when you are in the presence of a notary officer.
Best practices before signing a Texas Conditional Waiver and Release on Final Payment
1. Verify that this is the lien waiver that applies to your situation
Before signing this lien waiver, ask yourself whether you are receiving or have received your final payment for the project. If your answer is yes, then this Texas lien waiver is a safe lien waiver to sign. If you are unsure, or if your work on a project is still in progress and you are therefore expecting to receive regular payments in the future, then consider signing a Texas Conditional Waiver and Release on Progress Payment.
2. Use the statutory template as required by Texas laws
You cannot make your own lien waiver in Texas, nor can your client require you to sign a lien waiver that is different from the statutory template. Texas recognizes only lien waivers that follow the statutory forms, so signing a customized lien waiver will not work and will not be unenforceable.
3. Have your Texas lien waiver notarized
Only a few states require lien waivers to be notarized before they can be enforced. Some construction participants may miss this step, so be sure to make a trip to the notary officer part of your business practice when signing a Texas lien waiver.