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What is a Final Waiver of Lien?

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  • Written By: Autumn Rivers
  • Edited By: Andrew Jones
  • Last Modified Date: 18 November 2016
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    Conjecture Corporation
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Most construction projects require that a lien waiver be included in the contract to ensure that the supplier or subcontractor is paid by the contractor. This way, if the contractor does not pay, a lien can be placed on the property on which work was done. A final waiver of lien is possible only after everyone involved has been paid, and can be used to ensure that a lien is not put on the property once the construction work is done and paid for. Therefore, this form is beneficial to both homeowners and subcontractors.

It is advised that all homeowners request a lien waiver during projects involving their home. This kind of document protects homeowners in the event that their contractor does not pay their supplier or subcontractor, even after they have paid their contractor for the project. This is because if the contractor absconds with the homeowner's money without paying his subcontractor or supplier, the party that has not been paid can send a bill to the homeowner to collect what is due. If the homeowner does not, or cannot, pay, a lien will then be placed on their home.

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Even if it is obvious that the contractor is at-fault, the homeowner will pay the ultimate price because a lien on the home prevents it from being sold, or refinanced, without the construction bill being paid. Essentially, the homeowner has to pay for the project twice if a lien waiver is not used. If one is used properly, at the end of the project, after payment has been submitted to the appropriate parties, the final waiver of lien is signed and filed. This action takes any burden off the homeowner's shoulders.

Some subcontractors or suppliers may sign a final waiver of lien before the process is complete. Unfortunately, if they have not yet been paid, or the check from the contractor has not cleared, they have no recourse for getting the money owed to them since they no longer have the right to go after the homeowner via a lien once the final waiver of lien is signed. Therefore, it is important that this document is signed only once payment has cleared.

The form for a final waiver of lien can typically be found online for free, though it should be noted that many states require different formats. Therefore, talking to a locally based lawyer or asking the local courthouse for further information is advised. Additionally, it is important that only the designated parties sign the form, such as the contractor and subcontractor in charge, or the president of the supply company. It is also advised that all parties involved, including the homeowner, keep a copy of the final waiver of lien.

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