Chances are good that most homeowners don’t know what a lien waiver is, but remodelers would do well to tell them. Subcontractors can file a mechanic’s lien on property they work on in the event of a dispute over payment, but asking subs to sign a waiver ensures that won’t happen.
Mechanic’s liens aren’t common, says Steven Silverberg, a construction lawyer and partner in Silverberg Zalantis, White Plains, N.Y., but they can hurt general contractors by hurting their clients.
Contractors often fail to secure waivers, particularly on small jobs, and Silverberg says that’s a mistake.
“There are all kinds of areas where you can get into disputes in construction contracts,” he says. “It could be a situation where the subcontractor did something and thinks he’s entitled to additional money above the base contract, and the general contractor disagrees.” Even if the remodeler is ultimately right, Silverberg notes, the sub might file a lien anyway, in addition to suing to collect on the lien.
“Even if it’s not a black and white situation but the sub wants to protect himself, he might file a lien to put pressure on the general contractor because he knows the GC’s going to get yelled at by the homeowner because this is affecting their property. So it squeezes the GC from both ends.”
Because lien waivers offer protection not only for contractors but for clients, too, the service is one that remodelers can tout when pitching the company to prospects.
“Frankly, there are a lot of contractors who don’t offer to do it,” Silverberg says. “The fact that a contractor would volunteer that this is something they do certainly is a good thing from the standpoint of a homeowner.”