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How do we know if a lien waiver is conditional or unconditional?

How do we know if a lien waiver is conditional or unconditional? I have a waiver that says the following that a customer insists we sign BEFORE paying us here in Indiana. I think their corporate office is In Michigan. They are talking about us doing work for them in several other states. ------------- THE UNDERSIGNED DOES HEREBY WAIVE AND RELEASE ALL BOND CLAIMS, LIENS, OR CLAIMS OR RIGHT OF LIEN, STATUTORY OR OTHERWISE AGAINST THE PROPERTY PROJECT OWNER AND ANY SURETIES, FOR LABOR , SERVICES, MATERIAL OR EQUIPMENT, AS PROVIDED BY THE UNDERSIGNED, BUT ONLY TO THE EXTENT OF PAYMENT RECEIVED, AS INDICATED AND AS LIMITED BELOW. The undersigned acknowledges receipt of payment in the amount of [$XXXX.XX] for labor, services, materials or equipment as described herein, and does hereby grant this release unconditionally. ------------ Sincerely, Chris

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Oct 23, 2019

Indiana does not have statutory lien waiver forms, therefore parties should carefully review all of the language before signing. From the looks of the language provided, this appears to be an unconditional lien waiver. Specifically the provision, "The undersigned hereby acknowledges receipt of payment in the amount of [$XXX.XX] for labor, services, materials, or equipment as described herein, and does hereby grant this release unconditionally." Unconditional waivers before receiving payment is a dangerous proposition, as they become valid upon execution (i.e., signing). However, in addition to that, unconditional waivers before payment are unenforceable in some states. Indiana in particular, specifically prohibits the waiver of a right to file a mechanics lien prior to payment for labor or materials already furnished. So even executing this waiver may be ineffective to waive lien rights to begin with. See our Indiana lien waiver FAQs. If, after reaching out to the paying party, they refuse to change the language, a claimant can always just fill out, sign, and send a conditional lien waiver. These are just as valid as unconditional waivers, but are not enforceable until payment is actually received. We provide free, downloadable lien waiver forms on our Indiana Construction Payment Resources page. As for taking on more work in other states, we have an interactive lien waiver map that shows which states allow waivers before payment and more here. For more information, here are two articles you may find helpful:

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Oct 23, 2019

Thank you so much for your answer Alex! Do you believe it is unlawful for a company with a corporate office in Michigan and a location in Indiana (we did the work in Indiana) to refuse to pay us until we sign the waiver with the wording I sent you? Sincerely, Chris

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Oct 23, 2019

Unfortunately I can't give you any specific legal advice or opinions, solely offer legal information that can help you determine your options. But the question of Do I Have to Sign a Lien Waiver to Get Paid? does come up a lot. In such situations, we've found that the best practice to resolve such a standoff is open communication. An explanation of Indiana lien waiver law coupled with an explanation of how conditional waivers are still valid; may be enough to induce payment. Also, at the end of the day, a mechanics lien may still be an option to secure any unpaid amounts due. Here's another article you may find helpful: How to File an Indiana Mechanics Lien

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