A release of lien is used to indicate that a general contractor, subcontractor, or supplier has been paid for the work or materials provided for a construction project and therefore waives their right to file a mechanic’s lien against the property. Unfortunately, many construction professionals do not understand the legal significance of the release and make mistakes they can easily avoid with the help of an Orlando construction lawyer.
We’ll share four mistakes we see when exchanging releases for payment.
Failing to negotiate the Form of Release used in the contract. If a contractor chooses a particular form and you do not object to the form selected, that form is what both parties will abide by over the course of the project. You are bound by the release form used in the contract.
Having the wrong “through date” or no through date at all. The through date in the release should match the amount of money you are expecting. If there is no through date in the release, the release is effective as of the date you signed the release. Without this date, you risk giving up more rights beyond the check you are to receive.
Failing to use conditional language. A conditional release of lien can be partial or final. The language of either release should reflect that the waiver and release is conditional once payment has been received by the undersigned party. After payment is received, the lien waiver is void.
Failing to create exceptions to the release. Most releases are broader than the statute which means you are likely releasing claims for delay, unapproved change orders, cost, and expenses. Failing to preserve your claim will cause you to lose them when you sign the release. You can preserve your claims by using language to exclude those claims you want to preserve.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.