Lien Waivers & Releases Basics

Lien releases can be risky business

In the classic 1976 suspense film, Marathon Man, the villain repeatedly asks a young Dustin Hoffman, is it safe – is it safe? Hoffman didn’t know the answer and as a result suffered some significant unpleasantness.

Contractors and material supply houses might ask the same question when asked to sign lien releases or lien waivers. Is it safe for them to execute such a document in exchange for a progress or final payment? Unlike Hoffman, construction professionals should know the answer – it is safe, but only if the form of lien release or waiver has correct and conditional language. More than one contractor and supply house has signed a release of lien too quickly, only to realize later that the form had an incorrect through date or released work for which he or she had yet to be paid.

Because a lien waiver may actually release rights not intended to be released, one would do well to understand the nuances and differences between a conditional waiver upon a progress or final payment from an unconditional one.

Points to Consider When Releasing Your Lien

A lienor can waive or release its construction lien anytime it wishes to settle its claim. However, to successfully implement either a proper waiver or release and protect itself from a subsequent legal challenge, a lienor would do well to understand the legal ramifications of each.

A waiver is defined as the giving away of a future right, while a release is defined as the giving away of an accrued right. However, in construction claims, the terms waiver and release have generally been used interchangeably.  When it comes to drafting a release or waiver, the most important thing to remember is that the same rules of construction used in interpreting a contract shall be used in construing these documents. It is therefore vital to clearly and unambiguously express the intention of the parties in the instrument itself.  If the language is clear and concise, then there is little or no room for courts to entertain evidence and possibly construe the document in a manner contrary to its plain meaning.

If contract rules apply to releases, are the same defenses also available to avoid a properly executed release? In most jurisdictions, a contract cannot be opened, changed or set aside without the assent of the parties in the absence of fraud, mutual mistake, or actual absence of consent. But what happens in those jurisdictions that follow the minority rule, permitting a contract to be set aside on the basis of a unilateral mistake? Can one party avoid being bound by a release simply by alleging that they made a mistake? The answer is “no” if the terms of the release are unambiguous. It is well established that a court cannot interpret a release if the language of the release is clear on its face.

Suppose a release contains limiting language that merely releases all liens, claims or demands against premises?  These situations may cause disputes between the parties as the person obtaining the release will likely believe that they are free from all causes of action. However, if amounts are still due on a contract or account the person who is releasing its lien rights will disagree.

What Happens if There is a Dispute?

In this situation, a court of law will at the onset examine the plain language of the release. If the language is found to be unambiguous, the court will refrain from asserting its own interpretation. Thus, the release should be limited in scope to the property.  The law usually holds that lien rights are cumulative to other rights, such as contract rights and equitable claims. Therefore, if you release only your lien rights, you may still proceed on a cause of action under one of your other rights, such as an action for breach of contract.  Although the lienor can not maintain an action and foreclose on the property, it shall still be able to sue for damages under a breach of contract theory.

It should be noted that a lien cannot be waived in advance. One cannot waive his right to a claim of lien for labor, services or materials that are to be furnished in the future. Similarly, a release of liability never applies to causes of action arising after execution of that release unless the instrument specifically provides for the limitation or elimination of liability for any further negligent actions by the releasee.

Finally, a waiver or release will be effective only as to the property and/or parties listed in the release or waiver. There are cases where a release was given to a municipality and failed to specifically mention parties who worked on the project, such as the architect. In such cases, the other parties who performed work on the project were not bound by the release.  Therefore, one should carefully consider those parties to whom he may be liable before tendering funds for a release that he expects will globally exculpate him from liability.

Many of the disputes that unfold surrounding waivers and releases of liens can be eliminated by careful and deliberate drafting. The old saying “better safe than sorry” truly applies here. Take time to draft a detailed Release of Lien and protect yourself from litigation down the road.

Avoidable Release Mistakes

As construction lawyers here in Florida, we are often asked about releases, specifically about these three release mistakes.

Using the wrong form of release when exchanging money for a release

The form of partial and final waiver of release that you should use depends primarily on where you are in the chain of contracts. Are you the general contractor? Are you a subcontractor? Are you a sub-subcontractor or a supplier? The general rule is this.­ Try to give the narrowest release possible when you are the one being paid. That is, giving away the fewest amount of rights when you are receiving a check. If the role is reversed and you are giving a check, you should try to get the broadest release that you can possibly obtain when you hand over that check.

Let’s look at some forms of releases so that you can understand the language that distinguishes a narrow release from a broad release.

Let’s break down each of the component parts. The first part says $10 (I will shed more light on this later in this article). Notice the rights that are being given away in this release. In exchange for some amount of money you are releasing any and all claims, change orders, works, materials, delays, fees costs, losses, expenses or damages. This is effectively a very broad release. It releases any and all rights that you may have. If you are the party that is presenting a check in exchange for a release, you’ll want to obtain a release that releases all rights. This ensures that even if the job went long, a claim for extended general conditions could not be filed against you. Conversely, if you have claims against the contractor, make sure that when you receive the check (and you want to preserve those rights), you are not giving them away.

This release has a through date as well. So, just like the release issued upon progress payment, the amount of money and the through date have to match. It also has some language at the bottom about certain representations, warranties and about people being paid for the work being done. This comes in handy for contractors. As a contractor, you would like to ensure your subs have paid all their bills. The same is true in reverse; if you are signing this release as a sub and you haven’t paid all your bills, then you have to be careful about representing that you have when the release has language to the contrary. We generally find that most sophisticated contractors, (and most contractors are pretty sophisticated these days), have broad releases like this that they expect you to sign.

If you agree to a form of release in your contract – let’s say your contract with the contractor says you would agree to provide a form that is acceptable to the contractor – then you may be bound to that form. That means when you are negotiating your contract with the contractor or if you are a sub-sub and you are negotiating with the subcontractor, you need to make sure that you look at those exhibits. What form of release is the contractor expecting you to sign? If you have any issue, you need to deal with it before you sign the contract. Don’t wait until after you sign the contract or agree to the form to object.

Not Using a Conditional Release

What happens when you are given a release that says you have been paid when you haven’t been paid. That release goes from you as the sub-subcontractor to the subcontractor who hands it to the contractor who then hands it to the owner. If the release is not conditioned on you actually receiving the money and the owner hands the check to the contractor and the contractor pays the subcontractor who never pays you, you would have no lien rights.  This means that you need to make sure that if you are not getting a check at the time you are giving your release, your release must be conditional.  How Can I Make My Release Conditioned Upon Getting Paid? You can add language to make your release conditional. Here is a simple sentence that you can add. “Notwithstanding anything to the contrary, this waiver and release is conditioned upon and not effective until the undersigned receives payment funds of $________.”

Watch out for releases that are titled conditional but are not. Some say they are conditional, but when you read them, they’re actually not conditional at all. Also, you need to indicate the amount of money to satisfy the conditions. If you’re expecting a $25,000 check, it has to say that it’s expressly conditioned upon your receipt of the $25,000.  As a general contractor if you receive a conditional release from a sub-subcontractor or supply house that you are not actually paying directly, you have to be careful. If you pay the contractor and he doesn’t pay the supply house, this conditional release that you received as the GC from the supply house is now no good because the supply house never got the money. You can deal with this by requesting an unconditional release or by issuing a joint check. A joint check is a check payable to two parties. This check requires the endorsement of both parties, and with this, you will know that the condition of the conditional release has been satisfied.

Using the Wrong Through Date

The through date is the effective date of the release. Every release is different, and it may have a through date written in different places and slightly different ways. The through date is the end date that the release is effective.  For example, I can sign a release in February for the work that I did through the end of January. That case, the through date would be the last day in January. The most important thing you need to remember is that the through date will control over the payment amount. If you pick up a check that is a reduced amount and your release for that payment has a through date later than you’ve actually been paid, then you have a problem. You need to make sure that the through date and the payment match. For example, if you are expecting $100,000 which gets you to the end of the month but you are only receiving $75,000, then you need to change the through date to whatever date matches the $75,000.  Maybe that’s the 13th of the month or 28th of the month. It depends on the situation in that month and the work or the materials you supplied. Just make sure that whatever amount you are receiving matches and represents the through date in the document. If they don’t, you have to change them to match.

Why Does the Release Say $10?

There are typically two very common reasons why a contractor may demand a $10 release.

When you gave a notice to owner, but you are not owed during the period

When the contractor does not want to disclose to the owner how much the subs and the vendors are being paid

The $10 is valid if you receive any type or amount of consideration even if that consideration is not exclusively money. If you are receiving money, try to include how much you are receiving. On the contrary, if you are giving money, try to make the release ‘$10’. Never condition a release on $10. If you want to issue a conditional release, always state the actual amount you are expecting during that period.

Lien Release Pitfalls

Many folks don’t understand how important it is and why legally it is essential that you read and understand what your lien release says. We’re going to discuss some very specific things you can do to increase your chances of protecting yourself when you exchange your release for payment.

The Legal Significance of a Lien Release

A lien release is a document that releases certain rights. Most of the time, these rights are lien rights but depending on the document itself, they could be more. When we deal with a construction case, one of the first things we do is to look at the releases. The reason is that when we can line up the releases, we can extinguish certain claims through the date of those releases. So, it’s important that you understand what the release is doing when you’re exchanging it for payment. This will ensure you don’t give up more rights than the check that you’re receiving.

In construction, almost every release is called a lien release or a lien waiver. And depending on the language of the document, you may be releasing rights far in excess of just your lien rights. That means if you sign one of those releases characteristically known to have lots of fine print, you are probably releasing rights far in excess of your lien rights. The document probably says that you are releasing any claims for change orders, delays, costs, and many other things. This may not be a problem if you don’t actually have any of those claims, but if you have those claims and you wish to assert them later, when you sign a release with that language, then you’re giving away those rights. Here is a practical example. We had a client who was a contractor and was making partial payments to a subcontractor. The term of the release that the subcontractor was signing every month was a broad release (this releases more than just lien rights).  While the document itself was titled lien release, it was effectively broad, and as a result, that subcontractor was releasing all of his rights every month. When a dispute arose, the first thing we did is to show the subcontractor that he has been releasing all these claims that he thought he now had every month. He signed a release – a good thing for our client, the contractor.

Finally, remember that the perspective that you have on a release is dependent on whether you’re giving a release or getting a release. If you are giving a release in exchange for payment, ensure that you are protected. But if you are expecting a release from somebody, make sure that you get the broadest release possible.

Pitfall #1: Not Negotiating the Form of Release at the Time of Contract

Florida statutes have a basic form of release, and the law says that no one can make you sign a release form other than the form that’s in the statute. However, what is important to know is that if you sign a contract and that contract says that you will use the form of release prescribed by the owner or the contractor or that the sample form that you’re going to use is part of the contract, then you are bound to use that form. Therefore, when you are negotiating and reviewing your contract don’t skip over the exhibits, you need to look at all of them and make sure that the release that you agree to provide every month is consistent with the release that you’re willing to give. If your contract requires a specific form, then that’s the form you have to use. To avoid this problem, you need to negotiate the form of release you prefer to use at the time of contract. Whenever your contract is silent on the issue, but the contractor demands that you use his form, what do you do? This is called the Golden Rule which says he who has the gold makes the rules. That means you have to make a business decision unfortunately on whether or not you’re going to give up your rights in order to get a check. It’s not that the contractor has the right to demand a release other than the statutory form, it’s just that you have to decide whether you’re going to keep waiting in order to get paid or you’re going to sign the release and work out some compromise. The best way to avoid this in the future is to have an understanding at the beginning of the contract on what the release forms are going to look like.

Pitfall #2:   Having the Wrong Through Date (or no Through Date)

The text above is a sample of a basic release form. This form says that this release is effective for the materials furnished through a date certain. The effective date of this release is the date that’s inserted there. Make sure that the through date in the release matches the amount of money that you’re expecting.

This release also has a spot where you can put in the amount. If you’re expecting a check for $25,000, make sure that the date that you are putting as the through date in the release is the equivalent of the check that you’ll receive. If there is no through date in the release, then the release legally speaking is effective as of the date that you signed it. That means that if you are expecting a check for the work through the end of April and you sign the release in June, but it has no through date, the legal impact of that document is that it’s a release as of June.

Pitfall #3: Not Using Conditional Release Language

A conditional release is a release with conditional language. Here’s the language for a conditional release “this waiver and release is expressly conditioned upon the undersigned actual receipt of the above referenced amount in paid funds. Otherwise, this waiver and release is void.” If you are giving a release before you are actually receiving payment, you should use conditional language in your release. It’s also important that when you use conditional language, you don’t use the normal recitation of consideration of $10. Use the amount that you’re actually expecting to receive. So, if you’re giving a release in exchange for $25,000, the release should say $25,000 and not $10. This is because obviously, the condition isn’t receipt of $10, it’s receipt of the $25,000.

Something we hear a lot is that “but I kept the original release, isn’t that enough?” The short answer is no. The fact that you have an original and someone else has a copy (that is, in fact, a true copy and not a forgery) doesn’t give you any leverage. Sometimes people want the originals but legally speaking a copy is as good as the original.

One of the things that we recommend to speed up and increase the use of conditional language is to make a stamp with the conditional language stated above. So that every time you give a release, you can just stamp it and make that release conditional.

Pitfall #4: Not creating exceptions to the release

The two most common exception that we see are claims for delay or claims for unexcused or not fully approved change orders.

Keep in mind that if you sign a release and that release has a broader language then the standard form that’s in the statute (most releases that people sign are usually broader than the statute), it probably says that you’re releasing claims for cost, expenses, unexecuted change orders or delays. It probably has a long list of items that you’re releasing. If you don’t preserve your claim, you will lose it by signing those types of releases. So, the question is how do you protect yourself. Here’s a sentence you can use. You can add to the documents, and you can handwrite it or make a stamp that says “Notwithstanding the foregoing this waiver and release specifically excludes _______. (This is where you’re going to insert what you don’t want to release)

The next thing to remember is that you have to do it month after month. If you do it in the first month but forget to do it in the second month and you sign a release. That releases everything from that date back. You’ve lost those rights. So, you need to make sure that if you have exceptions to the release that you carry them forward month after month.

Common Lien Release Issues

We have seen a lot of mistakes folks make when it comes to issuing lien releases. In this article, we are going to discuss the three most common lien release issues and how you should approach each.

What form of partial and final waiver should I use?

The first thing you need to be aware of is where you are in the pecking order of any particular construction project. If you are the general contractor, you are going to be looking for something  different than if you are one of the subcontractors. Generally speaking, you want to give a narrow release when you are receiving a check. When someone is handing you a check for a release, you only release the fewest number of rights possible and you preserve the greatest number of rights. The converse is true if you’re giving a check to somebody. You want them to release anything and everything under the sun, so you don’t have to worry about those things being an issue later in the course of the construction project.

The basic form of release

The basic form of release is the release that’s found in Florida Statutes chapter 713. It is a form of both partial lien release upon progress payment and final waiver upon final payment. It releases contractor or subcontractor lien rights through a certain day for partial releases and through the time specifically stated on final releases. The component parts of the partial release upon progress payment include the amount of money that you’re getting and the through date which is the date through which the release rights are effective. Note that this release form does not cover any retention or labor, services, or material furnished after the through date specified. The final lien release, however, has only one major part, and that is the amount of money you are receiving. The final release form doesn’t have a through date. The most important thing you need to know is that this release form only releases the contractor’s lien rights. It releases no other rights that the contractor may have against you or the property.

Custom form of release

This release looks very different from the basic release form. This form is not found in the statute. The first thing you’ll notice in a custom form of release is that it has a lot more words. You need to read this type of release form carefully because you are giving up on a lot of other things, not just lien rights. The statutory release form only releases your lien rights. This form is releasing anything and everything that you may have as a possible claim. This include delays, change orders, any work done, and it’s all effective prior to and including the through dates. If you are a general contractor, this is the form of release that you should be getting from your subcontractors. With this, every time you give your subcontractors or suppliers a check effective through the through dates, all their rights go away. If you are a subcontractor and you’re receiving a check and having to give a release like this, you need to understand what rights you’re giving away. If you agree to a form of release in your contract, then that’s the form that you are bound to accept during the course of the project. So, if the general contractor or owner attaches a form of release to your contract, or they make a reference to the fact that you agree to use whatever release form they deem fit, you need to review it as you negotiate your contract. Negotiate the form of release just like you negotiate other components of the contract.

Not using a conditional release form when you’re giving a release without receiving a check

You need to condition your release upon payment of money. You can achieve this by issuing what’s called a conditional release whenever you’re giving a release without receiving a check. A conditional release is a release that is expressly conditioned upon payment. It is not effective until you receive the payment that’s recited in the document. A conditional release will say something like, “Notwithstanding anything to the contrary, this waiver and release is conditioned upon and not effective until the undersigned receives paid funds of XXXX.”  You are expected to put whatever amount you’re expecting to receive in the blank space. Statements like this makes the release expressly contingent on actually getting the money.

As a supplier, it is important you only provide releases that are contingent on actually receiving money. Let’s say as an electrical supply house, you provide an unconditional release to the electrician who gives it to the contractor, who gives it to the owner. But you never got your money. You only received an e-mail copy or fax copy of the check you were promised was coming. But that check never arrived. Your options to collect on the debt are severely limited because the release you issued is now effective to all the parties up the chain since they have no reason to know that you didn’t receive your money.

We have a client right now who’s a drywall contractor. He has a contract with a general contractor who has a contract with an owner. He was promised a check and based on his long-time relationship with this contractor, he gave an unconditional release based on the promise of a check which never arrived. We have now been forced to send a letter to the contractor and the owner saying “You have received the release but our client never received consideration for that release. Therefore, the release is void and unenforceable.” We are still waiting to hear back. But they have already funded the contractor based on our client’s release. We are going to be in a tough spot to suggest that the owner didn’t have the right to rely on that release. So, it’s absolutely critical that if you are giving a release without actually getting a check that you make it conditional.

Also, watch out for releases that are titled conditional but are not. Sometimes, we see releases that say conditional partial release and then when you read the document, they’re not conditioned. Conditional releases need to specifically spell out the condition – they’re effective once you receive the money you’re owed. The fact that the title says conditional means nothing if the body of the release does not actually contain conditional language.

Another thing you need to know about a conditional release is that it must correctly indicate the amount of money that you’re expecting to receive. Don’t just put in $10 as the condition. If you do and you receive $10, the condition is satisfied.

As a general contractor, you need to be careful about receiving and paying against conditional releases from subcontractors and suppliers. If the electrician gives you a conditional release and you give the electrician the money, that release is good because you’ve now satisfied the condition in the release. Right? If there is ever an issue, you would say “well, the release is conditioned on receiving $25,000 and here’s the canceled check for $25,00; condition satisfied and the release is good”. Not necessarily.  If the electrician has to also give you a release from his supplier and that supplier’s release is also a conditional release, you don’t have a direct ability to control that condition. You pay the electrician but the electrician may not pay the supply house, then the supplier can put a lien on the job. To avoid this, you have two options. The first one is to ask the subcontractor to fund the supplier or otherwise give you an unconditional release from the supplier. The other one is to issue a joint check.

Using the wrong “Through Date” on your release

This is another big mistake that we see happen all the time. What “through date” should you use? What if the “through date” and the payment amount do not match? The through date is the effective date of the release. It can be signed today but has the through date of 2 months ago.  That means, you can sign the document today and say that the effective through date of this release is April 5th, March 9th or September 1st. You can make it any day you want. Know that the through date is going to control over the payment amount. For example, you are owed $100,000. If you sign a release in exchange for S75,000 and the through date is the end of the month when you’re expecting a $100,000 check but only got $75,000, you just released $100,000 worth of your rights for $75,000. What you need to know is that if the through date and the payment date don’t match, then you need to change one of them or both of them, but you cannot accept it as it is.

Why does the release say $10?

I’m not getting $10 neither am I giving them $10. So, why do I need to have a release that says $10? $10 releases are valid if you receive any type of consideration and sometimes even if you receive no money. For example, you’re a subcontractor on a job, and you have sent your notice to owner only because you’ve signed the contract, but you really haven’t done any work. Now that the owner and the contractor need a release from you, but you haven’t done anything or submitted any bills. In this case, issuing a $10 release at that point is perfectly fine. If you’re expecting a check, however, let’s say it’s $25,000, you must ensure your release says S25,000 and not $10. If you are a contractor and you are giving money and getting a release, you would always like it to say $10. The reason is that you don’t want any argument later. For instance, if the subcontractor comes to your office to pick up the check or you mail it to him or her, and they say “wait, you only sent me $20,000 it should have been $25,000.” If the release said $20,000 or $25,000, that’s the consideration that was given. And if they’re claiming more money, they may have a basis to say that you shorted the payment. However, if the release says $10, and you gave them $20,000, and they want $25,000. You can say “it doesn’t matter because I gave you consideration that you thought was adequate, I said $10 and I gave you a $20,000 check and the through date is the end of the month, we are done!”

If you are a general contractor, you would like to have all your releases to subcontractors and suppliers say $10. But If you are a sub, I would suggest that you scratch out $10 and put the actual amount that you’re expecting to receive on the check.

The only other time we see that a $10 release is acceptable is when a contractor does not want the owner to know what he or she is paying to the subcontractors. So maybe a contractor has a lump sum contract with an owner, and they don’t want the owner to be able to run through all of the releases, and add the amounts and realize that the contractor is charging so much more than he’s actually paying for the work. Some contractors may want all the releases given to them by the subcontractors and supplies to be $10 so that the owner is unable to add up all of the amounts associated with the project. The way to deal with that if you are a subcontractor is to issue two releases. You would give a release that has the correct amount on it and after you get that money, you will give the contractor a subsequent release, and it would say $10 for the same period.

Don’t Sign That Release Unless It Says This

Exchanging a release for a check – or a check for a release – should be done with careful attention to the wording and meaning behind the document.

Whether you are a general contractor or a subcontractor, what you want to give in a release, and what you want to receive, depends on your position. Generally, when someone is giving you a check, you want to provide as narrow a release as possible, maintaining the ability to come back later to charge for unexecuted change orders or delays. When you’re the one giving the check, obtain as broad a release for as many rights as possible so what you may not have thought of doesn’t come back to bite you.

Which release form do I choose?

The two most familiar release forms used in Florida are found in Chapter 713 of the state code. The progress payment release and the final payment release are almost identical, except for the final release having no through-date.

The progress payment release in effect gives over your lien rights in exchange for being paid a certain amount of money. The through-date on the release creates the period of time that the payment represents. Here’s the wording found in both types of releases.

While these are the basic statutory releases, many other forms can be found attached to contracts. Many are broad-form releases, which have you discharging more than lien rights. The opportunity to bring future claims for delay damages or extended overhead, for example, may be waived in a broad-form release. The longer the release form, the more rights you are likely being asked to waive. By signing the following, for example, you are saying, “I’ve paid all my bills.

Do this with EVERY release

Match the through-date of your release with the amount of money you are getting. Say you submit a release for $100,000, which should get you to the end of a specific month. When you pick up an $80,000 check, you might assume you will be paid $20,000 more. But it’s the through-date of the release, not the dollar figure, that governs its application. You agreed that whatever you got was enough for that through-date. That’s how a court will rule. So carefully match up your dollar amount and date, backing up your date if necessary to allow for the ability to get to full payment.

If you are the payer, asking someone else for a release, it’s good practice to make the release amount $10. The court will assume whatever was paid. If you are receiving a release, put in the amount you are expecting. This will at least give you an argument, albeit a weaker one than the through-date, if you don’t receive full payment.

What about conditional releases?

A conditional release is conditioned upon the payment amount expressed in the release. If this language is inserted into any release, the release then becomes conditional.

This language can be handwritten, typed, or even made into a stamp easily punched on each release. Beware of releases that are titled “Conditional” but without the appropriate language to legally back that up.

As a general contractor, be cautious of conditional releases from people you are not paying directly – like sub-subs or suppliers to your subcontractors. If you accept a conditional release from an electrician and his supplier, and the electrician doesn’t pay the supplier, the release isn’t valid. Accepting this conditional release becomes a business decision based on your trust in the provider. Issuing joint checks can be one way to safeguard releases in this situation.

Overall, any time you are exchanging a release upon the promise of a check, that release should be conditional upon payment – not just a check but a good check going through. Having a piece of paper in hand doesn’t always guarantee there’s money in a bank to back it up.

In conclusion, a release can seem like a good step. But it’s only a good thing if full attention is given to the release’s terms and conditions. Do not unwittingly sign your way out of the right to be fully paid for your work.

Releases Can Be Your Friend

If you understand how releases work, you can use them to your advantage during the course of a construction project. There is the release that you give to someone and there is the one you receive from someone. These two lien-releases look very different and they serve two very different purposes.

So let’s talk about the lien-release that you may present to someone. It’s time for you to pick up a check and you need to exchange a release for that check. Don’t provide more than you have to. Present a release that is as narrow as possible. Typically that release is the release that’s found in the lien statute. This is generally a release for a progress payment that you would typically provide to an owner.

When you are presenting a lien-release in order to pick up a check, you should put the amount of the check in that release. Your release should say what you are expecting. If that is, let’s say, $87,000, you should then write in $87,000. You should not write $10 and other valuable consideration. Remember, you have lots of rights; you have rights for delays, for extra work, for other damages, for change orders, for liens. That’s a bundle of rights. You want the release to specifically state which of these rights you’re releasing. In the above example, it’s not everything; it is just $87,000.

The release should also be contingent upon payment of this amount in cleared funds. If you never actually receive the money, the release is not effective. This is called a conditional-release. And the release should include a through date – a date through which you are releasing your rights.

What about the type you receive from someone – a sub or supplier; what should that say? You’ll want this to be as broad as possible, covering as many of those rights we listed above. And you’ll want this to be unconditional. You want to be sure that you’ll no longer be obligated to the person or company giving it to you.

A smart step would be to negotiate the form of release at the time you are contracting. Not doing so leaves unresolved one of the most important aspects associated with payment. Next make sure the lien-release you sign is expressly conditioned upon a receipt of a sum certain. And as referenced above, always include a “through date” . You don’t want to give up rights in excess of the monies that you may be receiving.

Releases, properly crafted, can be your friend. They can bring a level of certainty to an often uncertain business.