I finished up a rehab and about to pay the final payment to general contractor. I want to make sure that I get the lien waiver with the corresponding sub contractors he used information in the lien waiver as contractor affidavit. But, the GC says that he will provide the lien waiver from his company including the language that all sub contractors are paid without mentioning the name of the sub contractors.
When I asked him to include the subcontractor information in the lien waiver, he says that he has been doing the same way from past 20 years and he would not do that. How can I enforce him to provide the sub contractor details as specified in the lien waiver form. He also asks me to send the check in mail and then he will send the lien waiver in mail after the amount is cleared in the bank. what is the regular practice to get lien waivers from the GC's? How can enforce him to provide the sub contractor details ? He is adamant about not changing his way like providing sub contractor information. Do I have to go through the route of mediation using attorney generals office?. Any ideas in proceeding in this situation is appreciated.
I work for a large GC in Boston. This is on a bigger scale ($50MM projects), but I deal with partial and final lien waivers all the time. Every month I produce a requisition to the owner for payment which is usually through an AIA G702 form. When I submit the requisition to the owner, it will include all the partial lien waivers from my subs as well as mine. We have a standard form we send out to all our subcontractors that basically says they are waiving their right to put a lien on the property if they are paid X amount of dollars. We WILL NOT pay any subcontractor until they submit a partial lien waiver to us.
Now, when it comes time time to close out the project, we require final lien waivers from all of subcontractors and we submit them to the owner along with ours. How do we get our subcontractors to make sure they submit their final lien waivers? One word: Retainage. You should be holding retainage on your GC. You should check with your local laws on how much you can hold (In Massachusetts we are allowed to hold 10% retainage on all requisitions, or 5% retainage if the prime contract value is over $3MM). So basically if the project was worth $100,000 and he has billed the entire contract out, you should still be holding $10,000 of his money. Retainage is important. It's the owner's way of making sure you get punch list completed, final lien waivers in, O&M manuals, etc.
You're going to want to get lien waivers from the subcontractors so you know they can't put a lien on the property. It's a single piece of paper from each sub where they fill their name in, put in the contract price, and have it notarized...pretty simple.
So to answer your question, the standard practice is:
1. I submit a requisition with partial lien waivers
2. Owner pays me, less retainage
3. I requisition for final payment, send final lien waivers
4. Owner releases payment and retainage
Thank you for your time and details in your response. I see that Massachusetts has retainage law which applies to private projects above $3Million. I see it does not apply to small private projects and also to 1 to 4 units. Similarly, I see that there is no retainage statute in Illinois for small private construction projects. Also, the problem is GC is saying that he will not provide details of sub contractors.
Anybody enforced issuing the lien waiver from GC along with sub contractor lien waivers ? It will be more helpful if you have done it in Illinois.
@Raj Kumar I am a contractor, not in IL, but as per that standard, state mandated form, the GC is required to identify the subs......so, I would demand it , as it is standard practice and on a state form. If he balms, he doesn't get paid, tough sh$$. If he field a lien, it would be a fraudulent lien, and he already knows that. And, you do Not pay him, then get the release later. What you do, as the payor, is make the check out, send him a Copy......then the check#, acct# and $ amount gets put on the release somewhere, and "this release contingent upon funding of above mentioned check". This way you are both covered. Be aware, just because your gc signs this release does not mean subs and suppliers can't lien your property. As mentioned above, you need final releases from them too.
Updated over 1 year ago
if he "balks", not "balms".
Thank you for your time and response. Can identification of subs be enforced on a non-owner occupying/investment properties?
@Raj Kumar You need to google up and read the lien statutes for your state...shouldn't take more than an hour or so. I can't imagine there any difference for owner occupied, investment, etc. Remember , your only leverage is your check book.
@Raj Kumar Doesn't matter who enforces it, if you hired them (you hold the contract), you can enforce it. I'm with Wayne on this.
@Raj Kumar You should be working with an Attorney who specializes in this area of practice in your City. Then you have some recourse. There's little recourse on an article you find on BP or Google, if there's a problem.
I believe you can have the GC indemnify you from all their subs if they won't provide the individual lien waivers. But get that Attorney to do it!
Sounds like the project went well if you're at the final payment. You may not want to mess this up taunting the GC! Get that Attorney, go to the GCs office, don't leave until you're all satisfied! Get going on the next Project.
We don't need to see any more legal issue questions, just let us know you "get er done!" and what's the next project;-) IMHO of course...
indemnity does not prevent lien filings. You don't need an attorney for this, the law and state board for contractors consumer dept has all the info you need, all you need is pickup the phone.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.