The law to impose a contractor’s lien varies by jurisdiction. Some jurisdictions require that the person filing a contractor’s lien be a licensed contractor for the lien to be valid. Before filing a contractor’s lien, many jurisdictions require that the contractor provide notice to the property owner.
Lien waivers are routinely exchanged by parties on construction projects. First, when a state statute requires use of a statutory lien waiver form, the statute almost universally invalidates any document used by the parties that does not “substantially” conform to the law. Subcontractors and suppliers have a huge problem when it comes to lien waivers: 38 states don’t have statutory waiver forms. Legal document preparations and filings can be time consuming and expensive.
The practice of retainage, aka retention, has a tremendous impact on the construction industry. On the other hand, sometimes a lien is necessary. It’s also important to keep an eye on your timelines.