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Lien Releases

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.

Often contractors will have waiver and release forms available. If not, sample waivers and releases can usually be obtained from local or state consumer protection organizations. In addition to signed lien releases, those building homes should keep records of what has been paid to contractors, which contractors worked on the job site and when. Unfortunately, unethical contractors can easily file fraudulent liens for incorrect amounts. Accurate record keeping can help the homeowner ensure lien releases from all necessary parties.


Inside Lien Releases