Lien Waiver

See: Lien.

A “lien waiver” is a document that releases our right to file a lien. We see these most commonly in the world of commercial construction, so let’s strap on our hard hats and head out to the job site to see how it works.

To totally oversimplify things, there are three major entities involved in major construction projects. First we’ve got the owner of the project. If we’re building a new college dorm building, for example, the project’s owner is the university. They’re the ones paying for this thing to get built. Then we’ve got the contractor, who manages the project and makes sure it gets done.

Then we’ve got the subcontractors: the folks hired by the contractor to actually put the work in place. We’re talking electricians, plumbers, window installers, etc. The owner gives money to the contractor, and the contractor uses that money to pay the subcontractors and cover their own fee.

So how do lien waivers figure into all this? Well, when we the contractor pay subcontractors for their work, we also give them a lien waiver, which is basically a promise that we’re not going to file a lien against them for the value of the work they’ve already completed. How lienient of us.