Lien waivers allow construction participants to relinquish their lien rights, usually in exchange for payment. Once a lien waiver is signed and all its terms are met, a construction participant may no longer record a mechanics lien as they have already waived their right to file a lien.
In Virginia, lower-tier participants such as subcontractors and material suppliers are not allowed to waive their lien rights before furnishing labor or materials to a project. General contractors are not covered by the rule, which means that GCs can sign a contract with a lien waiver clause even before working on a project.
Virginia also does not have strict categories for their lien waivers since the state does not have statutory lien waiver forms. In general, the typical four lien waiver types can still be applied in the state. This guide discusses how and when to use a conditional waiver and release upon progress payment in Virginia.
- When do you use a Virginia Conditional Waiver and Release Upon Progress Payment?
- How to sign a Virginia Conditional Waiver and Release Upon Progress Payment?
- Best practices before signing a Virginia Conditional Waiver and Release Upon Progress Payment
When do you use a Virginia Conditional Waiver and Release Upon Progress Payment?
A Conditional Lien Waiver upon Progress Payment is the best waiver to use, regardless of your situation. It is a conditional waiver, so it will only be binding once payment is made, and it is also applicable to progress payment so you can set the date and the coverage of the lien waiver.
Ideally, you will use a conditional lien waiver for progress payment when you meet the following conditions:
You are not yet done working on a project.
A progress payment waiver only applies to partial payment. You use this lien waiver if you are expecting more payments in the future and you do not want to waive your lien rights over the services that you are still yet to furnish.
Note that Since lower-tier contractors in Virginia are prohibited from waiving their lien rights before performing the service, any lien waiver that lets you give up your lien rights over future payments will be deemed invalid.
You are still waiting for payment.
A conditional lien waiver is a waiver that only takes effect under certain conditions, typically when payment is actually made. If, for instance, your client is asking you to sign a lien waiver before they give you the payment, you would want to sign a conditional lien waiver to protect yourself in case your client fails to release the payment even after you have waived your lien rights.
Note that payments made through credit card or bank cheques must first be cleared on the bank before you waive your lien rights. If payment is still pending in your account, sign a conditional lien waiver in case the payment gets rejected.
How to sign a Virginia Conditional Waiver and Release Upon Progress Payment?
Look for a conditional statement and a through date
Virginia has no statutory lien waiver forms and they have no strict categories for lien waivers either. If you want to make sure that you are signing a conditional lien waiver for progress payment, you should look for a conditional statement and a “through date.”
A conditional statement is the statement that says the waiver will only be binding upon payment or if payment is actually received. If the lien waiver says it is “effective immediately” or if there is no statement at all regarding its effectivity, you are most likely signing an unconditional lien waiver which will not protect you in case you do not end up receiving your money.
A “through date,” on the other hand, is the date that determines the coverage of your lien waiver. All the services you performed up until the “through date” will be covered by the lien waiver, and you may therefore not file a mechanics lien to claim payment for those services once the waiver takes effect.
Make sure these two key pieces of information are in your conditional lien waiver and release upon progress payment.
Verify that the important details are included in the lien waiver form
As mentioned, Virginia does not have statutory forms for lien waivers, which means there is no exact list of what details must be included in your lien waiver document. In general, however, the following details are usually found in a Virginia conditional waiver and release upon progress payment:
- 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 furnished to the project
- The amount of payment you are expecting to receive for signing the waiver
- The “through date”
- A conditional statement saying that the lien waiver will only take effect upon payment
The conditional statement and the “through date” are the most important details, while the rest of the information provides context to your Virginia lien waiver.
Best practices before signing a Virginia Conditional Waiver and Release Upon Progress Payment
Look for the conditional statement
When preparing your own Virginia lien waiver form or when signing a lien waiver form that has been handed to you by your client, it is best to always look for the conditional statement. This statement determines whether your lien waiver will be binding immediately or only when you receive the payment. You want to protect yourself from delinquent clients, so always look for a statement that says the Virginia lien waiver will only be effective upon payment.
Verify the accuracy of the “through date”
All the services you perform prior to the “through date” will no longer be lienable once the lien waiver takes effect, so you must be very careful when determining what this date should be. Cross-check your invoices with your expected payment, and make sure the date is accurate.
Read your contracts thoroughly, especially for general contractors.
Virginia does not allow waiving your lien rights before you furnish your services, but this rule only applies to subcontractors and materialmen. General contractors may still unknowingly waive their lien rights through hidden no-lien provisions in your contracts, so make sure to study your contracts diligently to avoid any issues.