Can I File A Lien on Arizona Owner After Giving Contractor A Lien Release?
Full Question:
Answer:
Typically, if a person hasn't been fully paid, a conditional release form is used. The answer will depend on the type of release form you signed and whether it was a waiver and/or release. I suggest consulting a local attorney who can review all the facts and documents involved.
During the entire work of construction, the owner may obtain lien releases or waivers of lien from each subcontractor and material supplier. Without these waivers or releases the real estate is subject to liens of all the subcontractors, even if the general contractor, though paid in full, fails to pay the subcontractors. Lien claimants who are contractors or subcontractors are protected under this legal doctrine because all their materials and labor are "buried" in the real estate, having become part of it. Unlike mortgage liens, however, the liens of these claimants cannot force a foreclosure. People having a home built can require contractors and subcontractors to provide lien releases or waivers as part of a written project contract. The contract can mandate a lien release be issued before the contractor receives payment for services, in which case it is called a lien waiver. If payments are made to a general contractor in stages for work performed by subcontractors, the homeowner can obtain lien releases from the various subcontractors as their part of the project is completed. Sometimes, construction loan documents drafted by a bank may indicate that the bank will obtain lien releases, but the bank may do this solely for its own benefit. Therefore, the property owner's requiring lien releases should be clearly stated and independent of any agreement made by or with the bank.
Although the terms lien waiver and lien release seem to be interchangeable, a release demonstrates completion and payment, so as to prove any claim has been satisfied, while a waiver demonstrates a relinquishment of a known right. Waivers are typically obtained prior to commencement of any work, whereas releases are subsequently obtained. Waivers of lien must be in writing, give a sufficient description of the real estate, and be signed by the one with authority to file or claim a lien. No payment needs to be made in advance if the subcontractor agrees to release the land from the lien and rely only on the credit of the owner or general contractor for payment of the debt.
A lien waiver is not a general release of claims; it only waives lien rights. A person signing a lien waiver may still have a claim (or multiple claims) against the person with whom it contracted. Therefore, owners may want their contractor to execute a waiver and release of all claims through the date of each pay application in addition to executing a lien waiver.
You are giving up the right to later file a lien only for the amount of the payment. The lien waiver will not necessarily prevent claims for contested change orders, retention, or breach of contract damages (for example — delay damages, impeded productivity, and other consequential damages).
-Interim Lien Waiver. This is used for progress draws or a partial payment. It waives lien rights through a certain date (and not future unpaid bills) and only to the extent of the payment. Many general contractors and owners require these forms to be signed by the person receiving payment before a check is issued.
-An Unconditional Lien Waiver is used after final payment and means just that: fully and finally releases all future lien rights with no later recourse to file a mechanic's lien. It should be signed only if you are assured you have been paid and are satisfied with the amount received.
-A conditional lien waiver is one that you use when submitting a progress invoice on a project, whether it's the first progress payment or the last. It is conditioned upon receipt of payment, and therefore will typically use the words "upon receipt". An unconditional lien waiver is used when payment has been received and cleared the account. Such a lien waiver will typically state that payment has been received.
When a lien waiver takes effect, the right to file a mechanic lien is given up. However, the lien waiver doesn't prevent a contractor from other remedies, such as a claim for breach of contract, etc.
Please see the following AZ statutes:
33-1008. Waiver of lien
A. An owner or contractor by any term of their contract, or otherwise,
may not waive or impair the claims or liens of other persons whether with
or without notice except by their written consent or as prescribed by
section 33-1003. Any term of the contract to that effect shall be void.
Any written consent given by any claimant pursuant to this section is
unenforceable unless the claimant executes and delivers a waiver and
release. This waiver and release is effective to release the property for
the benefit of the owner, the construction lender, the contractor and the
surety on a payment bond from claims and liens only if the waiver and
release follows substantially one of the forms set forth in this section
and is signed by the claimant or his authorized agent, and, in the case
of a conditional release, if there is evidence of payment to the
claimant. Evidence of payment may be by the claimant's endorsement on a
single or joint payee check that has been paid by the bank on which it
was drawn or by written acknowledgment of payment given by the claimant.
B. No oral or written statement purporting to waive, release or otherwise
adversely affect a claim is enforceable or creates any estoppel or
impairment of a claim unless it is pursuant to a waiver and release
prescribed by this section or the claimant had actually received payment in
full for the claim.
C. This section does not affect the enforceability of either an accord
and satisfaction regarding a bona fide dispute or any agreement made in
settlement of an action pending in any court provided the accord and
satisfaction or agreement and settlement make specific reference to the
mechanic's lien or bond claims.
D. The waiver and release given by any claimant is unenforceable unless
it follows substantially the following forms in the following
circumstances:
1. Where the claimant is required to execute a waiver and release in
exchange for or in order to induce the payment of a progress payment and
the claimant is not in fact paid in exchange for the waiver and release or
a single payee check or joint payee check is given in exchange for the
waiver and release, the waiver and release shall follow substantially the
following form:
Conditional waiver and release on progress payment
Project: ______________________
Job No.: ______________________
On receipt by the undersigned of a check from _______________
(maker of check)
in the sum of $______________ payable to ________________________
(amount of check) (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, any
state or federal statutory bond right, any private 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 undersigned's position
that the undersigned has on the job of
___________________________________________________________
(owner)
located at ___________________ to the following
(job description)
extent. This release covers a progress payment for all
labor, services, equipment or materials furnished to the
jobsite or to ______________________________________________,
(person with whom undersigned contracted)
through ___________ only and does not cover any retention,
(date)
pending modifications and changes or items furnished after
that date. Before any recipient of this document relies
on it, that person should verify evidence of payment to
the undersigned.
The undersigned warrants that he either has already paid
or will use the monies he receives from this progress
payment to promptly pay in full all of his 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.
Date: ____________________
_________________________________
(Company name)
By: ____________________________
(Signature)
_________________________________
(Title)
2. Where the claimant is required to execute a waiver and release in
exchange for or in order to induce the payment of a progress payment and
the claimant asserts in the waiver that it has been paid the progress
payment, the waiver and release shall follow substantially the following
form:
Unconditional waiver and release on progress payment
Project: _________________
Job No.: _________________
The undersigned has been paid and has received a progress
payment in the sum of $___________ for all labor,
services, equipment or material furnished to the jobsite
or to _____________________________________________________
(person with whom undersigned contracted)
on the job of _____________________________________________
(owner)
located at ________________________________________________
(job description)
and does hereby release any mechanic's lien, any state or
federal statutory bond right, any private 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 undersigned's position that the
undersigned 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 jobsite or to ______________________________________
(person with whom undersigned contracted)
through ________ only and does not cover any retention,
(date)
pending modifications and changes or items furnished after
that date.
The undersigned warrants that he either has already paid
or will use the monies he receives from this progress
payment to promptly pay in full all of his 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.
Dated: ________________________
_______________________________
(Company name)
By: ___________________________
(Signature)
_______________________________
(Title)
(Each unconditional waiver shall contain the following
language, in type at least as large as the largest type
otherwise on the document:)
Notice: This document waives rights unconditionally and
states that you have been paid for giving up those rights.
This document is enforceable against you if you sign it,
even if you have not been paid. If you have not been
paid, use a conditional release form.
3. Where the claimant is required to execute a waiver and release in
exchange for or in order to induce payment of a final payment and the
claimant is not paid in exchange for the waiver and release or a single
payee check or joint payee check is given in exchange for the waiver and
release, the waiver and release shall follow substantially the following
form:
Conditional waiver and release on final payment
Project: _______________
Job No.: _______________
On receipt by the undersigned of a check from ________________
(maker of check)
in the sum of $_______________ payable to ____________________
(amount of check) (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, any state or
federal statutory bond right, any private 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 undersigned's position, the undersigned has on
the job of ___________________ located at __________________.
(owner) (job description)
This release covers the final payment to the undersigned
for all labor, services, equipment or materials furnished
to the jobsite or to ______________________________________,
(person with whom undersigned contracted)
except for disputed claims in the amount of $_________.
Before any recipient of this document relies on it, the
person should verify evidence of payment to the
undersigned.
The undersigned warrants that he either has already paid
or will use the monies he receives from this final payment
to promptly pay in full all his 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.
Dated: _________________________
________________________________
(Company name)
By: ____________________________
(Signature)
________________________________
(Title)
4. Where the claimant is required to execute a waiver and release in
exchange for or in order to induce payment of a final payment and the
claimant asserts in the waiver that it has been paid the final payment, the
waiver and release shall follow substantially the following form:
Unconditional waiver and release on final payment
Project: _______________
Job No.: _______________
The undersigned has been paid in full for all labor,
services, equipment or material furnished to the jobsite
or to ______________________________________________________,
(person with whom undersigned contracted)
on the job of ____________ located at _______________________
(owner) (job description)
and does hereby waive and release any right to mechanic's
lien, any state or federal statutory bond right, any
private 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 undersigned's
position, except for disputed claims for extra work in the
amount of $__________.
The undersigned warrants that he either has already paid
or will use the monies he receives from this final payment
to promptly pay in full all of his laborers,
subcontractors, materialmen and suppliers for all work,
materials, equipment or services provided for or to the
above referenced project.
Dated: _________________________
________________________________
(Company name)
By: ____________________________
(Signature)
________________________________
(Title)
(Each unconditional waiver shall contain the following language in type
at least as large as the largest type otherwise on the document:)
Notice:
This document waives rights unconditionally and states that you have been
paid for giving up those rights. This document is enforceable against you
if you sign it, even if you have not been paid. If you have not been paid,
use a conditional release form.
