Should you send a lien waiver before accepting payment?
In the world of construction and real estate, liens are a common concern for both contractors and property owners. A lien is a legal claim against property that ensures a contractor or supplier is paid for work performed or materials provided. While liens can be a powerful tool to protect the interests of those involved in a project, they can also create uncertainty and delay payments. This raises the question: should you send a lien waiver before accepting payment?
A lien waiver is a document that releases a property from any liens that may have been placed against it. It is typically used to ensure that a contractor or supplier is paid for their work before any liens are filed. Here are some factors to consider when deciding whether to send a lien waiver before accepting payment:
1. Contractual Requirements: Check your contract to see if it specifies the requirement of a lien waiver before payment. If the contract stipulates that a lien waiver must be provided before payment is released, it is essential to comply with these terms to avoid any legal disputes.
2. Project Stages: Consider the stage of the project when deciding whether to send a lien waiver. If you are at the beginning of a project, it may be prudent to send a lien waiver before starting work to ensure that you will be paid for your services. Conversely, if you are near the end of the project, sending a lien waiver after completion may be more appropriate.
3. Payment Schedule: If your contract includes a payment schedule with specific milestones, it may be beneficial to send a lien waiver after each milestone is reached. This helps to ensure that you are paid for work completed before moving on to the next phase of the project.
4. Legal Protection: Sending a lien waiver before accepting payment can provide legal protection for both parties. It ensures that the property owner is aware of any liens that may have been placed and gives them the opportunity to resolve any payment disputes before the lien is filed.
5. Communication with Clients: Maintaining open communication with your clients is crucial in the construction industry. By discussing the use of lien waivers and the importance of timely payments, you can build trust and foster a positive working relationship.
In conclusion, whether or not you should send a lien waiver before accepting payment depends on various factors, including contractual requirements, project stages, payment schedules, legal protection, and communication with clients. It is essential to carefully review your contract and consult with legal professionals to determine the best course of action for your specific situation. By doing so, you can minimize the risk of liens and ensure that your business continues to thrive.
