Conditional vs Unconditional
Lien Waiver: What’s the Difference?

If you're a subcontractor or material supplier, you've likely received an email from a General Contractor saying: "Sign this lien waiver so I can process your check."

It's a standard procedure in construction finance. Before a GC or Property Owner cuts a check, they want a guarantee that you won't file a mechanics lien against their property. But here is the critical problem: Not all lien waivers are created equal.

The difference between a conditional vs unconditional lien waiver is the difference between safely getting paid and giving up your legal rights entirely, even if the check bounces.

What is a Conditional Lien Waiver?

A conditional lien waiver is exactly what it sounds like. It waives your right to file a mechanics lien only on the condition that you actually receive the payment.

It essentially tells the property owner: "I promise not to file a lien for the amount on this invoice, but this promise is completely invalid if the money doesn't successfully clear my bank account."

When should you use a Conditional Waiver?

You should almost always use a conditional waiver when submitting a pay application (invoice) or when going to pick up a check. It is the absolute safest way to do business.

• When you are expecting payment in the mail.
• When the GC hands you a check, but it hasn't cleared the bank yet.
• Anytime you do not have the cash physically secured.

What is an Unconditional Lien Waiver?

An unconditional lien waiver is the "Nuclear Option." When you sign an unconditional waiver, you are stating under penalty of perjury that you have been paid in full for the stated amount, and you completely and permanently surrender your right to file a mechanics lien.

When should you use an Unconditional Waiver?

You should only sign an unconditional waiver when the cash is physically in your hand, or the wire transfer has irrevocably cleared your bank account. Do not sign it based on promises.

Comparison Summary

How do Progress vs Final Payments figure into this?

Just to make things slightly more complicated (especially in states like California that highly regulate these forms), these two types of waivers are usually divided again by the type of payment:

• Progress Payments: Used when you expect more checks later on the same project.
• Final Payments: Used at the very end of the job when requesting your final balance and retention.

This means there are usually 4 potential forms you have to choose from. Picking the wrong one can delay your funding for weeks.