What is a subcontractor release of lien?


Quick Answer

A subcontractor release of lien, or subcontractor lien waiver, is a clause in a contract that states that a subcontractor may not place a lien on a property to collect payment owed, according to Angie's List. The contractor must agree to the waiver if it is included in the contract.

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Full Answer

General contractors and subcontractors may place a mechanic's lien, or hold, on a property to satisfy payment or other obligations owed to them for services and materials, reports Angie's List. For home improvement projects, if the contractor does not pay the subcontractor, then the subcontractor may place a lien on the home, and the homeowner would be required to pay.

Homeowners should ensure they are working with contractors who are licensed, bonded and insured. The person contracting remodeling work should request that the contract includes a subcontractor release of lien, states Angie's List. At the end of the project, both the homeowner and the general contractor agree in writing that all obligations have been met, including to subcontractors. If a general contractor doesn't agree to sign off on a subcontractor release of lien, the homeowner may withhold payment until the contractor provides proof of payment to subcontractors. Enforcement of subcontractor lien waivers varies in each municipality, so homeowners should familiarize themselves with their local ordinances.

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