If you’ve been in the construction industry long enough, you know how useful the lien waiver is. Still, many construction companies can find it intimidating starting out.

That apprehension can create problems through inefficient cash flow, work delays, and an overall lack of trust among professionals. In the following article, we seek to demystify this document and why it’s fundamental to your business. Let’s begin! 

When Is a Lien Waivers Used?

So, what is a lien waiver? A lien waiver form is used between the owner/general contractor and the subcontractors on a job. It is signed by the sub with the acknowledgment they are waiving the right to a lien on the property in exchange for accompanying payment. 

Lien Waiver Protect the Payer

One job of the lien waiver is to protect the payer. That is the general contractor or property owner. Until the waiver is signed, the payer does not have to part with any funds. Obtaining the lien waiver also prevents any future claim the subcontractor might have on the property as it pertains to the work that was performed.

They Speed Up Payment for the Payee

Signing the conditional lien waiver and pairing it with an invoice for services rendered offers a major benefit to the subcontractor as well. It gets them paid faster! 

Subcontractors encounter labor and materials costs when they work on a job. The sooner they can cash flow, the better. It results in quicker payments so they don’t have to shoulder the financial burden. 

They Afford Peace of Mind about Lien Waiver     

The final waiver of the lien allows all parties to work with peace of mind. The contractor knows they’re getting what they paid for. The property owner knows the work is being performed.

The subcontractor is able to cover expenses and move onto the next job because they have the financial resources to do so. If there is a dispute over payment terms, it gives the subcontractor legal protection by being able to file a lien on the property.

They Can Set the Stage for Ongoing Working Relationships

Ultimately, lien waivers are good for everyone involved, not just with the deal at hand but also with forming ongoing relationships. Once bonds are established between owners, contractors, subcontractors, and even sub-subcontractors, everyone knows how to proceed.

The process of finding and selecting vendors becomes faster and more efficient on subsequent jobs. And with how far technology has come in being able to track it all, the red tape is kept to a minimum. For more on the fundamentals of it, the different types, and state laws governing them, Getbuild getbuilt.com. 

Construction Projects Can Be Complicated

The moving parts to a construction process can get all parties bogged down in red tape. That’s where the concept of a lien waiver really helps. By offering legal protection for everyone, it speeds up payment, trust, and efficiency. For more real estate and construction tips and information, check out some of our additional posts! 

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