Recently, I wrote a legal memorandum for a client requesting information about Texas lien waivers. This is great information for anyone working on a construction project in Texas. See below the redacted version of that legal memorandum.
CLIENT signs lien waivers as part of its business operations; CLIENT receives constant requests to sign lien waiver forms that do not comply with the required Texas lien waiver forms. CLIENT has the following questions regarding these situations:
- What law requires standard lien waivers in Texas?
- What is the effect of signing a lien waiver that does not comply with the standard forms?
- What is the effect of signing a standard unconditional lien waiver if the CLIENT has not been paid?
Question Presented: What law requires standard lien waivers in Texas?
Law
Subchapter L of Chapter 53 of the Texas Property Code
Brief Answer
Effective January 1, 2012, Texas requires that standard forms be used for all lien waivers. The statute provides four specific forms to be used:
- Conditional Waiver and Release on Progress payment.
- Unconditional Waiver and Release on Progress payment.
- Conditional Waiver and Release on Final Payment.
- Unconditional Waiver and Release on Final Payment.
These standard forms are attached to this memo. Under the law, conditional waivers are used when a payment is requested, and unconditional waivers are used when payment has already been received in good funds.
Question Presented: What is the effect of signing a lien waiver that does not comply with the standard forms?
Law
- 53.281, Texas Property Code
Brief Answer
The law states explicitly that unless the standard lien waiver is used, the document will not be effective in waiving or releasing lien or bond claims. Thus, if a lien/bond claimant signs a document waiving or releasing their claims that does not comply with the standard form, it will not be enforceable.
Question Presented: What is the effect of signing a standard unconditional lien waiver if CLIENT has not been paid?
Law
- 53.282, Texas Property Code
Brief Answer
The above statute states that for a lien waiver to be effective, it must be the standard form, and the lien/bond claimant must have received payment. This means that even if you signed the standard unconditional waiver if you have not been paid, it will not be effective to waive/release your right to payment. However, I recommend not signing an unconditional lien waiver unless you have been paid.
CONDITIONAL WAIVER AND RELEASE ON PROGRESS PAYMENT
Project ___________________
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).
Date ____________________________
_________________________________ (Company name)
By ______________________________ (Signature)
_________________________________ (Title)
NOTICE:
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 PROGRESS PAYMENT
Project ___________________
Job No. ___________________
The signer of this document has been paid and has received a progress payment in the sum of $___________ 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 that the signer has on the above referenced project to the following extent:
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.
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).
Date ____________________________
_________________________________ (Company name)
By ______________________________ (Signature)
_________________________________ (Title)
CONDITIONAL WAIVER AND RELEASE ON FINAL PAYMENT
Project ___________________
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 the final payment to the signer for all labor, services, equipment, or materials furnished to the property or to __________________ (person with whom the signer contracted).
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 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.
Date ____________________________
_________________________________ (Company name)
By ______________________________ (Signature)
_________________________________ (Title)
NOTICE:
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
Project ___________________
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 the 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.
Date ____________________________
_________________________________ (Company name)
By ______________________________ (Signature)
_________________________________ (Title)
