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A brief guide to conditional and unconditional lien releases

On Behalf of | Jan 21, 2025 | Firm News

A lien release, also known as a waiver of lien, is a legal document that waives a contractor’s right to place a lien on a property for work completed or materials supplied. Florida law provides specific guidelines for lien releases, including standardized forms for both progress payment and final payment waivers.

It’s important to note that contractors and material suppliers cannot waive lien rights in advance – they can only waive them for labor, services or materials already furnished. This protects them from inadvertently giving up future rights.

Conditional lien releases

A conditional lien release is a type of release that becomes effective only when the contractor meets a specific condition, typically the receipt of payment. They’re commonly used for progress payments throughout a project. The release only takes effect when the contractor receives and clears the specified payment. Because of this, it can serve as a safety net for contractors in case of payment issues or disputes.

Unconditional lien releases

An unconditional lien release, in contrast, takes effect immediately upon signing. This means the contractor gives up their right to file a lien as soon as they sign, regardless of any future issues. Ideally, contractors sign these when they have already received and confirmed payment. If they sign it before they receive or confirm their payment, it carries a risk of losing their lien rights without getting paid.

What issues can come up?

Even with Florida’s protective laws, several issues can still come up:

  • Scope misunderstandings: Parties may disagree about what work or time period a release covers.
  • Payment disputes: Issues can arise if there’s a discrepancy between the amount paid and the amount stated in the release.
  • Conditional vs. unconditional releases: Contractors need to be careful about when to use each type, especially when dealing with final payments.
  • Timing of releases: While the law protects against waiving future lien rights, contractors still need to be mindful of when they’re releasing lien rights for completed work.

While lien releases seem straightforward, they are not just simple forms – they involve waiving important legal rights and can have a major financial impact on your business.

Protect your interests, minimize your risks

Lien releases play a vital role in securing payments and protecting your rights as a contractor. If you’re unsure about which type of release to use or when to sign them, it’s crucial to seek professional legal guidance.