Texas laws are very strict not only when it comes to filing a mechanics lien, but also when it comes to surrendering your lien rights. In Texas, issuing a lien waiver requires construction participants to follow the rules to a tee for the document to be enforceable.
One of these rules concerns using the statutory lien waiver form. Texas requires construction professionals to use the lien waiver forms specified under Texas Property Code Sec. 53-284. A Texas lien waiver must also be notarized to be considered valid.
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This guide will discuss in detail everything you need to know about one of the four lien waivers in Texas: the Texas Unconditional Waiver and Release on Final Payment.
- When do you use a Texas Unconditional Waiver and Release on Final Payment?
- How to fill out a Texas Unconditional Waiver and Release on Final Payment
- Best practices before signing a Texas Unconditional Waiver and Release on Final Payment
When do you use a Texas Unconditional Waiver and Release on Final Payment?
Generally, there are two conditions that must apply to your situation before you sign a Texas Unconditional Waiver and Release on Final Payment:
1. You have received your payment.
It is very important that you have your payment on hand before you sign any unconditional lien waiver. An unconditional lien waiver takes effect right away, so you could lose your lien rights without getting paid if, say, a cheque bounces or a credit card payment gets rejected. You have to make sure that your payment is all cleared before you sign this Texas lien waiver.
2. You have received your final payment for the project.
This is a Texas lien waiver and release on final payment, so you should have received your last payment on a project before you sign this document. If your work on the project is still in progress and you are expecting more payment in the future, consider signing a Texas Unconditional Waiver and Release on Progress Payment.
If neither or only one of the two situations applies to you, consider signing a different type of Texas lien waiver.
How to fill out a Texas Unconditional Waiver and Release on Final Payment
The first step is to first make sure that your Texas Unconditional Waiver and Release on Final Payment is exactly the same as what is specified in the Texas Property Code:
“This document waives rights unconditionally and states that you have been paid for giving up those rights. It is prohibited for a person to require you to sign this document if you have not been paid the payment amount set forth below. If you have not been paid, use a conditional release form.”
“UNCONDITIONAL WAIVER AND RELEASE ON FINAL PAYMENT
“Job No. ___________________
“The signer of this document has been paid in full for all labor, services, equipment, or materials furnished to the property or to ___________________ (person with whom signer contracted) on the property of ______________________ (owner) located at ______________________ (location) to the following extent: ______________________ (job description). The signer therefore waives and releases 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.
“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)
Note that the Notice statement at the very top of the document must be written in bold type and must be at least 10-point in size. The Notice also has to be as large as the largest type in the entire lien waiver document.
Filling out the rest of the form should be as straightforward as providing the required information in the appropriate blanks:
This is the official name of your project. A project can have a clear identifiable name; if yours does not have one, you can write a description of the project that includes the project address.
2. Job No.
This is your project number or contract number.
3. Person with whom signer contracted
This is the name of the party who hired or 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.
6. Job description
This is a description of the work that you have furnished to the project.
This is the date when you sign the lien waiver.
8. Company name, Signature, Title
This is your or your agent’s information, including signature and official title.
Must the Texas Unconditional Waiver and Release on Final Payment be notarized?
Yes, you need to have your lien waiver notarized. A lien waiver that is not notarized is not enforceable in Texas even if it is signed.
Best practices before signing a Texas Unconditional Waiver and Release on Final Payment
1. Make sure that you are using the correct lien waiver form
You cannot just use any lien waiver template in Texas. Your lien waiver must be exactly the same as the template provided under the Texas Property Code. This is actually better for you because you do not have to worry about sneaky provisions in a waiver, and you can just copy and paste what the Texas laws prescribe. Make sure that you also follow the formatting rules, such as writing the Notice statement in bold type.
2. Have your Texas lien waiver notarized
There are only three states that require lien waivers to be notarized, so construction parties may miss this very important requirement. You have to be diligent in preparing your lien waiver, from filling out the correct Texas lien waiver template all the way to having it notarized before handing it to your client. Remember that failing to follow the rules in Texas will result in an invalid lien waiver.
3. Ensure that you have your payment on hand
The Texas Unconditional Waiver on Final Payment takes effect as soon as you sign it. If payment does not go through and you have already signed your lien waiver, you have effectively lost your lien rights without assurance of payment. You must make sure that you have already received the money and that it has been cleared in the bank before you sign any Texas unconditional lien waiver.
If possible, consider signing a Texas Conditional Waiver and Release on Final Payment to protect yourself from potential non-payment.