Construction contracts—whether between owner and contractor or contractor and subcontractor—often require that the contractor provide to the owner (or the subcontractor provide to the contractor) a release and waiver of lien (lien waiver) during the course of the project. This document is designed to protect the owner as it is an affirmation by the contractor that it has received payment, releases the owner from claims, and waives any future right to record a mechanic’s lien on the property. However, it is important to recognize that the most ironclad lien waiver may not afford the owner its intended protections.
Section 34 of New York’s Lien Law provides that lien waivers for payments received at or after the contractor received payment are enforceable. Lien waivers that are given after payment is received and which generally cover payments received in a prior pay period are considered “trailing” lien waivers. Lien waivers that are given contemporaneously with payment for the current period are considered “conditional” lien waivers; the release is conditioned on the actual receipt and clearance of funds. Lien waivers are typically provided with each requisition during the course of the project and at final completion of the project.
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