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Tin You Waive Lien Rights Before Starting Work?

Can you waive your right to file a mechanics lien or bond merits earlier y'all fifty-fifty brainstorm working on a project?  Attempts to brand subcontractors and suppliers waive lien rights at the start of a projection — so-called "No Lien Clauses" — are void and unenforceable in most states. All the same, the law on whether or not y'all tin can waive lien rights before work is not articulate everywhere.

Which States Prohibit Waiving Lien Rights In Construction Contracts

The above color-coded national map demonstrates where the law is clearly in favor of and against these practices. Everywhere else falls into an ambiguous stew of silence on the topic. This article addresses the concept of no lien clauses, and the corner cases that frame the issue nationwide.

No Lien Clauses And Waiving Lien Rights In Your Contract – Breakdown of Land Rules

A "No Lien Clause" is just a clause within a structure contract, or a lien waiver document signed before the furnishing of work, whereby a subcontractor or supplier agrees to non file a lien or bond claim on the project. In other words, the subcontractor or supplier agrees to perform the work without the security of a potential merits if unpaid.

Every bit a full general rule, these types of agreements are unenforceable.  As explained in "No Lien Clauses" — Are They Valid, United States law allows parties to contract between themselves still they wish…but, contracts must e'er be consequent with the state's public policy.  You can't contract to murder someone, for instance. Likewise, y'all tin't contract around the state's interests in protecting subs and suppliers against non-payment.

Many states have expressly stated within their lien laws that such "No Lien Clauses" are invalid. These states are highlighted in ruby in the above chart.  Other states, still, are silent on the issue (the gray states).  It'south rubber to say that many of these grayness states would follow the blood-red states, disallowing these clauses.

In Virginia, a 2016 law change made it impossible for "subcontractor, lower-tier subcontractor, or material supplier" to waive lien rights prior to providing labor or materials to a project in the state. General Contractors in Virginia, nonetheless, are not prohibited from waiving lien rights in accelerate of payment.

Only two states break from the pack to expressly allow "No Lien Clauses:" Colorado and Nebraska. Be conscientious in these jurisdictions.

  • States that expressly prohibit "No Lien Clauses:" Alaska, Arizona, California, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Michigan, Minnesota, Mississippi, Montana, Nevada, Westward Virginia, Wyoming, New Jersey, New York, North Carolina, Pennsylvania, S Carolina, Tennessee, Texas, Utah, Virginia, Vermont
  • States that expressly permit "No Lien Clauses:" Colorado, Massachusetts, and Nebraska
  • States with conflicting laws nigh "No Lien Clauses:" Missouri, Wisconsin
  • States with no explicit constabulary prohibiting "No Lien Clauses:" Alabama, Arkansas, Hawaii, Idaho, Iowa, Louisiana, Maine, New Hampshire, New United mexican states, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, Due south Dakota, Washington

Substantial Consequences To Those Who Violate Brake in Some States

Most states are quite serious near the rule against no lien clauses. Accept, for instance, the police in Tennessee, where TCA § 66-11-124(b) makes it possible for a contractor to lose their license if they make an endeavor to violate the brake:

(one) Whatsoever contract provision that purports to waive whatever right of lien nether this affiliate is void and unenforceable as confronting the public policy of this state.

(2)(A) If a contractor solicits any person to sign a contract requiring the person to waive a right of lien in violation of this section, the person shall notify the state board for licensing contractors of that fact…(B) If the contractor does non delete the waiver of lien provision, so the executive managing director shall schedule a hearing for appropriate action past the board. If the board finds after a hearing that the contracts of the contractor are in violation of this department, the contractor's license shall be immediately revoked.

Similar protections are plant in other state laws, and sometimes, they can issue in criminal charges. That is the instance in Illinois, for instance, where § 60/21.01 provides that its a Course A misdemeanor if a contractor has a subcontractor execute and evangelize a waiver of lien if the contractor fails to pay the subcontractor money received from the work waived within 30 days.

The Weird Instance in Wisconsin

The solitary yellow state in the chart is Wisconsin, wherein we report that the "law is alien."  While it is nice to think of our legislatures existence super efficient at writing laws, it is not uncommon for laws to conflict with one another and overlap. That seems to be the case in Wisconsin equally it relates to the no lien clause.

For case, WSA § 779.03 provides that "No agreement by anyone other than claimant may invalidate lien. Discipline to § 779.05, a lien claimant may waive the lien…by a writing signed by the lien claimant, but no action by nor agreement between whatever other persons shall invalidate the lien."

The referenced §779.05 looks bad for lien claimants, and seems to suggest that Wisconsin is like Colorado and Nevada, in that claimants are allowed to waive their lien rights earlier work and/or before receiving payment. Meet this quote from the provision:

(1) Any document signed by a lien claimant or potential claimant and purporting to be a waiver of construction lien rights under this subchapter, is valid and binding as a waiver whether or not consideration was paid therefor and whether the document was signed before or afterwards the labor, services, materials, plans, or specifications were performed, furnished, or procured, or contracted for. Whatever ambiguity in such document shall be construed confronting the person signing information technology.

But, this is challenged by some other Wisconsin statute, governing construction contracts, § 779.135, which provides:

The following provisions in contracts for the improvement of land in this state are void:

(ane) Provisions requiring any person entitled to a construction lien to waive his or her correct to a structure lien or to a claim against a payment bond before he or she has been paid for the labor , services, materials , plans, or specifications that he or she performed, furnished, or procured.

At that place are a lot of nuances betwixt these two statutes that could produce legal arguments on both sides of the no lien clause question. If y'all're lucky (or smart) y'all volition avoid these arguments, considering they are expensive arguments to make, and the court's resolution of it will be unpredictable.

Related article: Ultimate Guide to Lien Waivers

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