Property owners typically require construction participants to sign a lien waiver before they release payment. This is one way of making sure that they will not be dealing with surprise mechanics liens so long as they pay up.
Some states have strict regulations governing lien waivers. Texas is one of those that require construction professionals to use specific lien waiver forms and to have the documents notarized or signed under oath.
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There are four lien waiver types in Texas. This guide explains everything you must know about one of the four Texas lien waivers: the Texas Conditional Waiver and Release on Progress Payment.
- When do you use a Texas Conditional Waiver and Release on Progress Payment?
- How to fill out a Texas Conditional Waiver and Release on Progress Payment
- Best practices before signing a Texas Conditional Waiver and Release on Progress Payment
When do you use a Texas Conditional Waiver and Release on Progress Payment?
A Texas Conditional Waiver and Release on Progress Payment may be used when you meet the following conditions:
1. You still have not received payment.
Signing a lien waiver is usually a prerequisite for receiving your payment, so if you are still waiting to receive your compensation, you should sign this conditional lien waiver. A conditional lien waiver takes effect only when you get paid. In the event that your client fails to pay up, you will still have your lien rights intact even if you already signed this waiver.
2. Your work on a project is ongoing.
You should use this Texas lien waiver when your work on a project is still in progress. It means that the payment that you will be receiving in exchange for signing this lien waiver is only a portion of your full payment and is not yet your final payment.
Generally, signing a conditional waiver and release on progress payment is a safe bet, especially if you are not sure whether or not you meet both of the conditions above. A conditional lien waiver protects you in case payment does not go through (e.g. bouncing cheques), and a progress payment waiver may be effective even if you meant to sign a final payment lien waiver.
The other three Texas lien waivers are not as “fool-proof” so talking to an expert if you are in doubt can be a good idea.
How to fill out a Texas Conditional Waiver and Release on Progress Payment
First, you have to make sure that your Texas Conditional Waiver and Release on Progress Payment is the same form as described in Texas Property Code Sec. 53-284. Texas is one of the states that do not allow construction parties to customize their own lien waivers.
You must absolutely stick with the lien waiver form required by the state, which appears below:
“CONDITIONAL WAIVER AND RELEASE ON PROGRESS 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 a progress payment for all labor, services, equipment, or materials furnished to the property or to __________________ (person with whom signer contracted) as indicated in the attached statement(s) or progress payment request(s), except for unpaid retention, pending modifications and changes, or other items furnished.
“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 progress 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 in regard to the attached statement(s) or progress payment request(s).
“_________________________________ (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:
A project usually has a designated name, so you can write such in this part. If not, you may use a brief project description that includes the project address.
2. Job No.
This is the project number.
3. Maker of check
This is the name of the party who issues the check.
This is the amount listed on the check.
5. Payee(s) of check
This is the name of the party to whom that check is issued.
6. Person with whom signer contracted
This is the name of the party who contracted you for the project.
This is the name(s) of the property owner(s).
This is the project address, including the zip code and the name of the county.
9. Job description
This is a description of the services that you furnished to the project.
This is the date when you sign the lien waiver.
11. Company name, signature, title
This is your or your agent’s information, including signature and official title.
Must the Texas Conditional Waiver and Release on Progress Payment be notarized?
Yes, you are required to have your Texas lien waiver notarized. Make sure that you sign your Texas Conditional Waiver and Release on Progress Payment while in the presence of a notary officer.
Best practices before signing a Texas Conditional Waiver and Release on Progress Payment
1. Use the Texas Conditional Waiver on Progress Payment when in doubt
As mentioned earlier, this is probably the safest type of Texas lien waiver that you can sign. It is a conditional lien waiver, so you do not have to worry in case a cheque bounces or if your client bails on their responsibilities — your lien rights will be intact. It is also a progress payment waiver, so there is no harm in signing it even if you are done working on a project.
Note that the other way around — signing a final payment waiver when you meant to sign a progress payment waiver — is not a good idea as you will lose your lien rights even if you only wanted to waive a portion of it.
2. Remember to have your lien waiver notarized
You must sign your Texas lien waivers only when you are in the presence of an authorized notary officer. This is because lien waivers in Texas must be notarized in order for them to be enforceable. Keep this step in mind to ensure that you meet all the requirements in properly signing a lien waiver in Texas.
3. Ensure that you are using the correct statutory lien waiver template
In Texas, you cannot create your own lien waiver. Your lien waivers must be exactly the same as the statutory templates, not only with respect to the information provided but also when it comes to all the statements and provisions included. This may seem a little tedious but it actually isn’t. This way you will not have to worry about sneaky provisions that can cause you to lose more than just your lien rights.