Lien Waiver Management Procedure

Document Type: Procedure
Version: 1.0
Last Updated: February 2026
Distribute To: AR Team, AP Team, Project Managers

Purpose

Establish procedures for properly providing and collecting lien waivers to protect both payment rights and property from lien claims.

Understanding Lien Waivers

What is a Lien Waiver?

A lien waiver is a document where a claimant (contractor, sub, supplier) waives their right to file a mechanics lien for work/materials covered by the waiver.

Why Lien Waivers Matter

For Payers (GCs paying subs):

Protection against double payment
Protection against liens on owner's property
Required before owner will pay you

For Payees (Subs receiving payment):

Condition of getting paid
Releases you from lien tracking
Normal course of business

California Statutory Lien Waiver Forms

CRITICAL: California requires use of statutory waiver forms. Using non-compliant forms may result in invalid waivers.

Four Types of Waivers (California Civil Code § 8132-8138)

Type	When Used	Effect
Conditional Waiver for Progress Payment	With pay app (before payment received)	Waiver effective ONLY when check clears
Unconditional Waiver for Progress Payment	After payment received and cleared	Waiver immediately effective
Conditional Waiver for Final Payment	With final pay app (before payment)	Waiver effective ONLY when check clears
Unconditional Waiver for Final Payment	After final payment received	Waiver immediately effective

Waiver Flow - Normal Payment Cycle

Progress Payment Cycle:

Day 1:  Sub submits pay app + CONDITIONAL Progress Waiver
Day 20: GC pays sub
Day 25: Check clears → Conditional waiver becomes effective
Day 30: Sub submits UNCONDITIONAL Progress Waiver (for paid period)
        + Next pay app + New CONDITIONAL Waiver

Providing Lien Waivers (AR Function)

With Each Pay Application

Submit:

Conditional Waiver for Progress Payment
- Covers current billing period
- Amount matches pay app amount
- Effective only when paid
Unconditional Waiver for Progress Payment
- Covers PREVIOUS billing period
- Amount matches previous payment received
- Submit after check has cleared

For Final Payment

Submit:

Conditional Waiver for Final Payment (with final pay app)
Unconditional Waiver for Final Payment (after check clears)

Waiver Tracking Log (Providing)

Project	Pay App #	Period	Conditional Sent	Unconditional Sent
Proj A	5	Jan	2/1/26	3/1/26
Proj A	6	Feb	3/1/26	Pending

Collecting Lien Waivers (AP Function)

Before Each Subcontractor Payment

Collect from Sub:

Conditional Waiver for Progress Payment (current period)
Unconditional Waiver for Progress Payment (previous period)

Collect from Sub's Subs and Suppliers (Lower Tiers):

Same waiver pattern
Sub must provide waivers from their subs/suppliers
Verify all parties who sent preliminary notices are covered

Before Final Payment

Collect:

Conditional Waiver for Final Payment
Then after payment: Unconditional Waiver for Final Payment
Lower-tier final waivers for all parties

Waiver Collection Tracking (AP)

Sub	Pay App #	Cond. Waiver	Uncond. (Prior)	Lower Tier
ABC Electric	4	✓	✓	3 of 3
XYZ Plumbing	4	✓	✓	2 of 2
Acme Steel	4	✓	Missing	1 of 2

Critical Rules

NEVER:

❌ Pay without conditional waiver
❌ Sign unconditional before payment clears
❌ Use non-statutory forms in California
❌ Accept waivers with wrong amounts/dates
❌ Forget lower-tier waivers

ALWAYS:

✅ Use California statutory forms
✅ Match waiver amounts to payment amounts
✅ Verify payment cleared before signing unconditional
✅ Collect lower-tier waivers
✅ Keep organized records

California Statutory Waiver Forms

Conditional Waiver and Release on Progress Payment

CONDITIONAL WAIVER AND RELEASE ON PROGRESS PAYMENT
(California Civil Code Section 8132)

NOTICE: THIS DOCUMENT WAIVES THE CLAIMANT'S LIEN, STOP 
PAYMENT NOTICE, AND PAYMENT BOND RIGHTS EFFECTIVE ON 
RECEIPT OF PAYMENT. A PERSON SHOULD NOT RELY ON THIS 
DOCUMENT UNLESS SATISFIED THAT THE CLAIMANT HAS RECEIVED 
PAYMENT.

Identifying Information

Name of Claimant: _________________________________
Name of Customer: _________________________________
Job Location: ____________________________________
Owner: __________________________________________

Conditional Waiver and Release

This document waives and releases lien, stop payment notice, 
and payment bond rights the claimant has for labor and 
service provided, and equipment and material delivered, to 
the customer on this job through the following date:

Through Date: ____________________________________

This document waives and releases only the claimant's lien, 
stop payment notice, and payment bond rights through the 
Through Date and only to the extent of the payment below.

Payment Received: $______________________________

This document is effective only on the claimant's receipt 
of payment from the financial institution on which the 
following check is drawn:

Maker of Check: _________________________________
Amount of Check: $______________________________
Check Payable to: _______________________________

Claimant's Signature: ____________________________
Claimant's Title: ________________________________
Date of Signature: ______________________________

Unconditional Waiver and Release on Progress Payment

UNCONDITIONAL WAIVER AND RELEASE ON PROGRESS PAYMENT
(California Civil Code Section 8134)

NOTICE TO CLAIMANT: THIS DOCUMENT WAIVES AND RELEASES 
LIEN, STOP PAYMENT NOTICE, AND PAYMENT BOND RIGHTS 
UNCONDITIONALLY AND STATES THAT YOU HAVE BEEN PAID FOR 
GIVING UP THOSE RIGHTS. THIS DOCUMENT IS ENFORCEABLE 
AGAINST YOU IF YOU SIGN IT, EVEN IF YOU HAVE NOT BEEN 
PAID. IF YOU HAVE NOT BEEN PAID, USE A CONDITIONAL 
WAIVER AND RELEASE FORM.

Identifying Information

Name of Claimant: _________________________________
Name of Customer: _________________________________
Job Location: ____________________________________
Owner: __________________________________________

Unconditional Waiver and Release

This document waives and releases lien, stop payment 
notice, and payment bond rights the claimant has for labor 
and service provided, and equipment and material delivered, 
to the customer on this job through the following date:

Through Date: ____________________________________

This document waives and releases only the claimant's lien, 
stop payment notice, and payment bond rights through the 
Through Date and only to the extent of the payment below.

Payment Received: $______________________________

Claimant's Signature: ____________________________
Claimant's Title: ________________________________
Date of Signature: ______________________________

Conditional Waiver and Release on Final Payment

CONDITIONAL WAIVER AND RELEASE ON FINAL PAYMENT
(California Civil Code Section 8136)

NOTICE: THIS DOCUMENT WAIVES THE CLAIMANT'S LIEN, STOP 
PAYMENT NOTICE, AND PAYMENT BOND RIGHTS EFFECTIVE ON 
RECEIPT OF PAYMENT. A PERSON SHOULD NOT RELY ON THIS 
DOCUMENT UNLESS SATISFIED THAT THE CLAIMANT HAS RECEIVED 
PAYMENT.

Identifying Information

Name of Claimant: _________________________________
Name of Customer: _________________________________
Job Location: ____________________________________
Owner: __________________________________________

Conditional Waiver and Release

This document waives and releases lien, stop payment notice, 
and payment bond rights the claimant has for all labor and 
service provided, and equipment and material delivered, to 
the customer on this job.

This document is effective only on the claimant's receipt 
of payment from the financial institution on which the 
following check is drawn:

Maker of Check: _________________________________
Amount of Check: $______________________________
Check Payable to: _______________________________

Claimant's Signature: ____________________________
Claimant's Title: ________________________________
Date of Signature: ______________________________

Unconditional Waiver and Release on Final Payment

UNCONDITIONAL WAIVER AND RELEASE ON FINAL PAYMENT
(California Civil Code Section 8138)

NOTICE TO CLAIMANT: THIS DOCUMENT WAIVES AND RELEASES 
LIEN, STOP PAYMENT NOTICE, AND PAYMENT BOND RIGHTS 
UNCONDITIONALLY AND STATES THAT YOU HAVE BEEN PAID FOR 
GIVING UP THOSE RIGHTS. THIS DOCUMENT IS ENFORCEABLE 
AGAINST YOU IF YOU SIGN IT, EVEN IF YOU HAVE NOT BEEN 
PAID. IF YOU HAVE NOT BEEN PAID, USE A CONDITIONAL 
WAIVER AND RELEASE FORM.

Identifying Information

Name of Claimant: _________________________________
Name of Customer: _________________________________
Job Location: ____________________________________
Owner: __________________________________________

Unconditional Waiver and Release

This document waives and releases lien, stop payment 
notice, and payment bond rights the claimant has for all 
labor and service provided, and equipment and material 
delivered, to the customer on this job.

Payment Received: $______________________________

Claimant's Signature: ____________________________
Claimant's Title: ________________________________
Date of Signature: ______________________________

Lower-Tier Waiver Management

Identifying Lower-Tier Claimants

Track all parties who sent preliminary notices:

Sub's subcontractors
Material suppliers
Equipment lessors
Labor providers

Collecting Lower-Tier Waivers

Require from each subcontractor:

List of all their subs and suppliers on project
Waivers from each with every payment
Verification that amounts cover actual payments

Waiver Matrix Example

Sub	Lower Tier	Est. Value	Waived to Date	Current
ABC Electric	Power Supply Co	$15,000	$12,000	$3,000
ABC Electric	Wire Plus	$8,000	$6,000	$2,000
XYZ Plumbing	Pipe World	$22,000	$22,000	Final

Troubleshooting Common Issues

Missing Waiver

Hold payment until received
Contact sub/supplier directly
Set firm deadline
Document communication
Consider joint check if ongoing issue

Wrong Amount on Waiver

Request corrected waiver
Do not accept with wrong amount
Document discrepancy

Non-Statutory Form Received

Reject and request California statutory form
Explain legal requirement
Provide blank forms if needed

Sub Won't Provide Lower-Tier Waivers

Hold payment to sub
Contract likely requires this
Consider joint check to lower tier
Document for potential backcharge

Monthly Waiver Audit

Checklist

All progress waivers current
All unconditional waivers for paid periods
Lower-tier waivers collected
Preliminary notice list reconciled to waivers
Filing organized and accessible

California Statutory Waiver Forms
Preliminary Notice Log
Subcontractor Payment Procedure
Pay Application Procedure

Template provided by support.construction. Verify current law with legal counsel.

Purpose​

Understanding Lien Waivers​

What is a Lien Waiver?​

Why Lien Waivers Matter​

California Statutory Lien Waiver Forms​

Four Types of Waivers (California Civil Code § 8132-8138)​

Waiver Flow - Normal Payment Cycle​

Providing Lien Waivers (AR Function)​

With Each Pay Application​

For Final Payment​

Waiver Tracking Log (Providing)​

Collecting Lien Waivers (AP Function)​

Before Each Subcontractor Payment​

Before Final Payment​

Waiver Collection Tracking (AP)​

Critical Rules​

NEVER:​

ALWAYS:​

California Statutory Waiver Forms​

Conditional Waiver and Release on Progress Payment​

Unconditional Waiver and Release on Progress Payment​

Conditional Waiver and Release on Final Payment​

Unconditional Waiver and Release on Final Payment​

Lower-Tier Waiver Management​

Identifying Lower-Tier Claimants​

Collecting Lower-Tier Waivers​

Waiver Matrix Example​

Troubleshooting Common Issues​

Missing Waiver​

Wrong Amount on Waiver​

Non-Statutory Form Received​

Sub Won't Provide Lower-Tier Waivers​

Monthly Waiver Audit​

Checklist​

Related Documents​