When do you use a Conditional Final vs an Unconditional Final?
1 reply
Sep 17, 2019
The main difference between using conditional and unconditional lien waivers is whether or not the claimant has received payment yet. An unconditional lien waiver is effective immediately upon execution (i.e., when it is signed). If the claimant has yet to be paid and has signed an unconditional waiver, they may have waived mechanics lien rights to that amount of payment.
Also, it's important to note that we mean actual receipt of payment. A check in-hand is not the same thing. Checks can bounce, credit card charges can be challenged, and ACH transfers can be reversed. Claimants shouldn't sign unconditional waivers until they have cash in hand or money deposited in their account.
On the other hand, conditional lien waivers are only effective when the "condition" (payment) occurs. These can still be safely signed by a claimant, and can confidently be accepted by the paying party. That's because nothing is waived until payment is made, and will also be just as valid and effective as an unconditional waiver once payment is made. Conditional waivers are, bar none, the safest option when it comes to lien waivers.
Another important thing to keep in mind is that Nevada is one of the 12 states that provide statutory lien waiver forms. If the waiver isn't in the required form, then the waiver will be invalid. This is incredibly useful because, in other states, lien waivers can contain additional language that can result in waiving more than anticipated.
For further information, these resources should be helpful: (1) Nevada Lien Waivers Guide & FAQs, and (2) The Ultimate Guide to Lien Waivers.