Lien waiver tracking: a simple system for every pay application

Conditional and unconditional, progress and final

A common pattern is to collect a conditional progress waiver with each pay application, then the unconditional waiver for that amount with the next one.

• Conditional waiver: takes effect only when the payment it describes is actually received. Safe for the sub to sign before payment.
• Unconditional waiver: effective when signed. Typically collected after the payment has cleared.
• Progress waiver: covers a payment through a specific date.
• Final waiver: covers the final payment on the subcontract.

State forms can be mandatory

Some states prescribe the wording. In Texas, for example, a waiver and release of a lien or payment bond claim is unenforceable unless it substantially complies with the forms in the Property Code, is signed by the claimant or their authorized agent, and, for a conditional release, there is evidence of payment. Check the rules for the state where the project is located before you build your template.

What to match on every waiver

1. Project name and address.
2. Sub’s legal name, matching the subcontract and W-9.
3. Amount and the “through” date, matching the pay application you are paying.
4. Type: conditional or unconditional, progress or final.
5. Signature (and notarization if your state form or contract requires it).
6. For lower-tier suppliers your contract covers, their waivers too.

A tracker that works

Keep one row per sub per pay period with: amount requested, amount paid, conditional waiver received, unconditional waiver received, and date. Don’t release the next payment until last period’s unconditional waiver is in. Texas also requires anyone furnishing labor or materials to provide, on request and as a condition of payment, an affidavit that they have paid their own subs and suppliers, or to list what is still owed. A bills-paid affidavit is worth collecting where it applies.