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Can a general contractor require a subcontractor's supplier to provide a lien waiver on the general contractor's supplied form and not on any other form?

TennesseeLien Waivers

General contractor is requiring supplier lien waivers before releasing payment to us, their subcontractor. Our supplier provide a lien waiver but not on the form that general contractor supplied to us. The general contractor rejected it and said it had to be on their form. The supplier is not willing to provide the lien waiver on the general contractor's form. So the general contractor is withholding payment and there is nothing we can do to meet their requirements to release it.

1 reply

Feb 8, 2019

That's a great question, and it's one we get fairly often at the Construction Legal Center and at zlien. By and large, most states don't have many laws on the books regarding lien waivers. There are 12 states that set out statutory lien waiver forms, but for the rest of the country, lien waivers aren't very well regulated. That means, in the 38 states without some version of required forms, the parties who request lien waivers will have a lot of control over what lien waiver forms are used. Looking to Tennessee's laws on mechanics lien waivers, they're controlled (loosely) by § 66-11-124 of the Tennessee mechanics lien statute. However, that section is silent to what forms must be used between a contractor and their subs, as well as between a sub and their suppliers. So, ultimately, what waiver forms can be utilized is up to the party requesting the waivers. If they've made the receipt of a waiver a condition to releasing payment, and if they'll only accept a specific lien waiver form, a subcontractor and/or supplier might not have much choice other than to utilize the waiver provided in order to release payments down the chain. If the contract is silent as to lien waivers, or if no specific lien waiver form is designated in the agreement, a subcontractor might be able to push back - but again, when dealing with the construction payment chain, most of the power lies atop the payment chain with the money. Granted, it's always a good idea to look out for unfair language stuffed into lien waivers - and where possible, it's best practices to use a waiver without extraneous language. Of course, before taking a hard stance one way or the other, it might be helpful to attempt to talk it out with a contractor - to sit down (be it literally or figuratively) and discuss concerns in the waiver. Often, the a contractor wants to use their forms simply because that's the way they've always done it or because they're just more comfortable - not because they want to pull one over on their subcontractors or their sub's suppliers. For more on lien waivers, this is a great resource: The Ultimate Guide to Lien Waivers. For more on Tennessee's (few) lien waiver rules, this resource should be helpful: Tennessee Lien Waiver FAQs.

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