# Can customer require lien waivers from my subcontractors?



## ecocontractor (Mar 21, 2011)

Man i like this forum ...very informative


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## Anti-wingnut (Mar 12, 2009)

HiHo said:


> Is this required by law? I may have trouble either tracking down some of these subs or getting the sub that I didn't pay to sign a waiver. I can understand why the customer would be worried that the first sub will put a lien on his house. I know the sub only has 20 days to file a lien but we do not have any paperwork that proves when work actually started or stopped. He can theoretically file a lien 100 days after, correct?


Lien laws vary by state as to the window when the action may be taken.

As to wether or not it is a requirement by law, that isn't even a possible answer. A lien release is a statement by a contractor, sub or otherwise, that he has been paid and no longer has any legal interest or justification in filing a lien against a piece of property.

So it should be impossible to get a sub who has not been paid to sign a lien release. He would be releasing his rightful claims for redress in the case of non-payment, before he has been paid!

As far as tracking down the subs, if there is a window, and you have proof of payment, this may be sufficient to satisfy your HO that any claims that these subs may have are settled.

On another item, if I understand things correctly, you have not paid a sub because his work is under contention. Thereby, this subs ability to lien is still under effect. Because even if he only has 20 days after he finishes work to lien, you are claiming he is not done. Make sense?


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## HiHo (Mar 22, 2011)

Anti-wingnut said:


> On another item, if I understand things correctly, you have not paid a sub because his work is under contention. Thereby, this subs ability to lien is still under effect. Because even if he only has 20 days after he finishes work to lien, you are claiming he is not done. Make sense?


Makes sense. Any suggestions how I can resolve this? Customer wont pay until he get assurance that the unpaid sub wont file a lien.


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## Anti-wingnut (Mar 12, 2009)

No, you got a problem. Cause the HO shouldn't pay you until all work is completed, and the unpaid sub isn't done yet.

Get the sub done. By force of legal action, and pay him off


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## PaintSub (Feb 22, 2011)

*Talk to a Lawyer*



mikeswoods said:


> That's a standard practice----go to any office supply store and get the forms.
> 
> Talk to your attorney (if you have one) and get the details.


As suggested I would talk to an attorney. You don't want to make a mistake and you will be able to learn from the attorney. Yes, costs a few bucks but that is part of your overhead expenses.


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## HiHo (Mar 22, 2011)

I do not have an attorney yet because I am still small time but I will look into it. Is a project still considered incomplete if you have not provided the lien waiver forms to the customer even though the work in the house is complete?


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## DBBII (Aug 28, 2008)

Florida has a form called Contractors Final Affidavit. In it, you as the GC list everyone who is owed money, and how much. This gives the Owner the option/ability to cut joint checks payable to you (GC) and the individual sub. 

This way the Owner is assured all the subs are paid. How does he know you won't take the final payment and run?


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## thom (Nov 3, 2006)

adding just a bit to DBBI's comments

A contractors affadavit attests that the listed suppliers, subs, and employees are the only ones who provided labor or materials for the project, and it lists the $ amount of their work. If you lie, you are guilty of Fraud. Fraud is both a civil and a criminal offense. You could go to jail, you could be fined, you will most certainly spend big bucks defending your illegal actions. 

The customer may demand a contractors affidavit and waivers of lien for each supplier and sub contractor as well as a waiver for your work including your employees at the time of final payment. 

It was your job to pay all the people who worked on the job and all the suppliers. It was not your customers job to finance you. It was your job to hire and schedule appropriate and competent subs and suppliers. Apparently you failed. 

If you cannot provide the required paperwork, you are probably out of luck. You should have known this, it is part of the coursework required for licensing in states that require licenses. It appears you may be SOL. If you're not properly licensed and insured yourself or if you didn't provide the required permits, you are completely SOL. In my state, if you worked outside the scope of your license or if you didn't have the required license the customer could demand the return of all payments made already.


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## HiHo (Mar 22, 2011)

The contractors affidavit looks like a good form to provide. So if the customer asks for this form, I am required by law to provide this in California? It has to be notarized too right?


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## thom (Nov 3, 2006)

HiHo said:


> The contractors affidavit looks like a good form to provide. So if the customer asks for this form, I am required by law to provide this in California? It has to be notarized too right?


I don't know CA law but I know a contractors affidavit is a standard document. Of course, it must be accompanied with waivers for every entity listed.


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## olligator (Nov 23, 2007)

DBBII said:


> Florida has a form called Contractors Final Affidavit. In it, you as the GC list everyone who is owed money, and how much. This gives the Owner the option/ability to cut joint checks payable to you (GC) and the individual sub.
> 
> This way the Owner is assured all the subs are paid. How does he know you won't take the final payment and run?


 
^^^ This is one of the things that I like about our state. Protects everyone involved in the deal.


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## tbronson (Feb 22, 2010)

The HO is asking for a Conditional Waiver and Release from your subs for work performed to date and he is within his rights to ask for it and withhold payment until he gets it because your contract is too vague and he is the home owner while you are the "professional" which means in court and with the CSLB you are the guy who should have known better.

Regarding the sub you didn't pay for work, do you have a contract with him? Scope of work? Etc? If not you are going to end up paying him for the same reason cited above. You as the General should know what you want and should have told the sub the scope of the work and you didn't have the paperwork to back up your claim that his work was substandard and thus didn't meet criteria for payment and you didn't give him the opportunity to correct the mistakes.

Track down the subs get them to sign a Conditional and provide it to the HO. Then when you are at substantial completion go back and get an Unconditional Waiver for each sub and provide one yourself. This is going to be what the guy asks for at that point since he is asking for a Conditional now. Both forms can be found with a Google search and are free.

Ca sucks for a business owner since the courts and the law favors the "citizen" so much.


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## CGallagher (Apr 20, 2010)

You could contact the sub and negotiate a settlement agreement for the lien waiver. Obviously, if he did not perform, he should accept a reduced payment. Make sure it is a notorized form. 

Otherwise, send a letter certified mail to the sub stating that the work was unsatisfactory and that he is no longer allowed to commence working as of 3-24-2011. That will be the start date for the 20 day lien waiver deadline. So then, 20 days from now, you will have adequate paperwork that the sub has no rightful lien claim. Then collect your payment from the HO.


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## HiHo (Mar 22, 2011)

Since the customer has paid about 70% so far he is asking for an "Unconditional" for the items that his payments have covered so far. He wants me to provide this before he makes the final payment. Total work is about 95% complete. Only minor work remains. Is the customer allowed to do this in CA?


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## Seven-Delta-FortyOne (Mar 5, 2011)

HiHo said:


> Since the customer has paid about 70% so far he is asking for an "Unconditional" for the items that his payments have covered so far. He wants me to provide this before he makes the final payment. Total work is about 95% complete. Only minor work remains. Is the customer allowed to do this in CA?


 
Yes, he can. He has paid x amount of money for x amount of work. He wants to be sure that at some future date, he is not going to be required to pay more. Look at it from the HO perspective. Unfortunately, this is your problem, not the HO. I'm not saying you are at fault, I'm saying this is between you and your sub, and the HO wants to protect himself, which he has every right to do. By the way, a sub has 60 days to file a lien after FINAL COMPLETION, or 30 days if you file a notice of completion. Good luck on sorting this out.


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## HiHo (Mar 22, 2011)

A.T.C. said:


> Yes, he can. He has paid x amount of money for x amount of work. He wants to be sure that at some future date, he is not going to be required to pay more. Look at it from the HO perspective. Unfortunately, this is your problem, not the HO. I'm not saying you are at fault, I'm saying this is between you and your sub, and the HO wants to protect himself, which he has every right to do. By the way, a sub has 60 days to file a lien after FINAL COMPLETION, or 30 days if you file a notice of completion. Good luck on sorting this out.


So even if we go in and complete that last 5% of remaining work, the customer can still withhold payment until I provide the Unconditional waivers for the items his payments have covered so far?


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## tbronson (Feb 22, 2010)

HiHo said:


> So even if we go in and complete that last 5% of remaining work, the customer can still withhold payment until I provide the Unconditional waivers for the items his payments have covered so far?


He can. However what you might want to think about doing is offer the following... Mr. HO I will give you the Unconditional's and proof of payment to subs (if he wants that too) when you give me the final payment less HO holdback (10% in Ca). 

So he hands you the Cashier's Check and you hand him the Unconditional's. I believe they are worded as such that it says upon final payment meaning that the Unconditional isn't in effect until the sub/GC is paid so No Tickie No Washie as in he can't weasel out on you at the last minute.


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## jhark123 (Aug 26, 2008)

A.T.C. said:


> Yeah, here in California it's called a "Conditional Waiver and Release". Basically, the Waiver goes into effect if and when the check clears.


 
Bingo,

I had to do those for 10+ subs on the last house I did.


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