As a contractor in Arizona, your lien rights are essential to ensure payment for goods and services rendered. That said, homeowners and clients also have the right to protect their property when they have paid what they owe for your services.
Lien waivers can provide peace of mind for all parties involved in a transaction. However, they should not be taken lightly, as these legally binding documents can be dangerous if you’re not careful.
What do you need to know about lien waivers in Arizona?
Titan Lien Services is not a law firm, and this article is not a substitute for the advice of an attorney. We hope to provide you with some general information about these lien waivers in Arizona, including conditional, unconditional, and other terms you’ll encounter during the process.
Lien Release vs. Lien Waiver and Release
Before we dive in, we’d like to clarify the difference between a “lien release” and a “lien waiver and release.” Since both have “release” in the name, it can lead to confusion between these documents and the purpose they serve.
To set the record straight, these are different documents with different purposes.
A “lien waiver and release,” sometimes referred to as simply a lien waiver, is a document that waives and releases your lien rights.
A “lien release” releases your recorded mechanics lien. This occurs only after you have recorded a mechanics lien at the county recorder where your project is located.
What is a Lien Waiver and Release?
Contractors tend to have a lot of anxiety around lien waivers, and with good reason. As a legally binding document, it can be dangerous! Waiving your rights to file a lien can have consequences if not done with proper care and attention.
In Arizona, these documents waive and release your lien rights according to the language in the document. This document is used when you have received payment or are about to receive payment.
If you send a preliminary notice (which you should!), your client or general contractor may send you a lien waiver and release request. If they request a lien waiver, you are required to provide a lien waiver and release. If you aren’t asked for a waiver, you don’t need to provide one.
Lien Waiver and Release Forms in Arizona
In Arizona, there are 4 different types of lien waiver and release forms. These are statutory, meaning the state has outlined specific language and templates that must be used in these forms.
You can find the most up-to-date legislation in ARS 33-1008, which is Arizona’s waiver of lien statute.
Every state has different requirements when it comes to lien waivers. If you don’t live in Arizona, be sure to research the rules for your state.
It’s also worth noting that you must use Arizona’s statutory forms if the project is located in Arizona. Out-of-state clients or contractors may send you their state’s waiver, but you must complete an Arizona waiver instead.
Types of Lien Waiver in Arizona
Here are different scenarios for when you should provide each of the 4 Arizona Statutory Waivers.
- Conditional waiver and release on progress payment
- The contractor is still on the job and is waiting for a payment for a specific time period.
- Unconditional waiver and release on progress payment
- The contractor is still on the job and has been paid for services and materials for a certain time period.
- Conditional waiver and release on final payment
- The contractor is complete with the job and is waiting for the final payment due.
- Unconditional waiver and release on final payment
- The contractor is complete with the job and has been paid in full for the entire project.
If your client sends you a lien waiver form that is already partially filled in, be sure to carefully review the document before signing anything.
Confirm that it’s one of Arizona’s statutory waivers (rather than an out-of-state waiver with different requirements). Review the language, figures, and dates to ensure that everything is accurate and specific.
Completing one of these documents means you are giving up your lien rights. Even if you discover later on that the form had an incorrect dollar amount or timeframe, you have already waived your lien rights, and the completed document is enforceable against you.
It’s worth noting that any money you are owed may still be recovered through other means, but you will have to work with your attorney to determine the best path forward.
What is a Lien Release?
A lien release is a document that releases a recorded mechanics lien. Depending on the state, you may also hear this called a cancellation of lien, release of lien, satisfaction of lien, or lien cancellation.
This document occurs only after you have recorded a mechanics lien at the county recorder where your project is located. A lien release removes the lien and should be filed promptly after final payment.
You still may have lien rights after filing a lien release.
Manage Your Lien Rights with Titan Lien Services
Your lien rights are incredibly important, and protecting those rights starts with understanding the forms you will encounter while working with clients and other contractors. Choosing the wrong type of lien waiver or completing a form with incorrect information could be incredibly dangerous.
For more information and example scenarios, we recommend you watch our free webinar on Arizona lien waivers. The webinar is completely free and a must-watch for contractors in Arizona.
Titan Lien Services is a premier mechanics lien processing and filing services company founded in 2000. We specialize in helping you manage your lien rights from start to finish! Reach out to us to learn more about how we can support your business, or sign up today!