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Lien waivers for construction lenders in Colorado and Virginia

Bottom line: Collect a lien waiver from every contractor and supplier paid out of the last draw, for at least what they were paid. Neither Colorado nor Virginia prescribes a statutory waiver form. In Colorado a waiver binds only the parties who signed it (C.R.S. 38-22-119). In Virginia a contractor or supplier cannot waive lien rights in a contract before furnishing work (Va. Code 43-3(C)).

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Guide

Why waivers matter to the lender

Not legal advice; ask a construction attorney in the state. A contractor or supplier who goes unpaid can record a mechanic's lien against the property. A waiver is that party's written statement that it has been paid, in whole or part, and gives up lien rights for that amount. Collecting one from everyone paid out of the last draw is how a lender checks that its money reached the people doing the work.

Guide

Conditional and unconditional, partial and final

  • Conditional: takes effect when the payment clears. Use it when the check has not cleared yet.
  • Unconditional: effective when signed. Ask for it once payment has cleared.
  • Partial (progress): covers payments through a date or amount. Collect these each draw.
  • Final: covers all work on the job. Collect these at the last draw, from the general contractor and every subcontractor and supplier.

Guide

Colorado

  • No statutory waiver form. A waiver agreement binds only the parties to it, not others who did not sign (C.R.S. 38-22-119(1)), so get one from each subcontractor and supplier, not just the general contractor.
  • The waiving party must state that the debts it owes to others for the covered work have been paid or will be timely paid (C.R.S. 38-22-119(2)).
  • Lien statements: within four months after the claimant's last labor or materials, after a notice of intent served at least ten days before filing (C.R.S. 38-22-109).

Guide

Virginia

  • Lien rights may be waived in whole or part at any time, but a general contractor, subcontractor, lower-tier subcontractor or supplier may not waive or reduce them in a contract before furnishing labor or materials; such a clause is null and void (Va. Code 43-3(C)). So collect waivers as payments are made.
  • A memorandum of lien must be recorded within 90 days from the last day of the month of the claimant's last work, and may not cover work more than 150 days before that last day (Va. Code 43-4).

Guide

A per-draw waiver routine

  1. From the last draw, list who was paid and how much.
  2. For each, collect a waiver for at least that amount, signed by that party.
  3. Hold the part of the next release tied to anyone whose waiver is missing.
  4. Keep the waivers in the loan file with the draw.

Draw Desk lists who was paid last draw and flags anyone without a waiver. See also the draw inspection checklist.

Questions

Questions people ask

Does Colorado have a statutory lien waiver form?

No. Colorado prescribes no conditional or unconditional waiver form. C.R.S. 38-22-119 makes a waiver binding only between the parties to it and requires a statement that debts owed to others for the covered work are paid or will be timely paid.

Can a Virginia contractor waive lien rights in advance?

No. Under Va. Code 43-3(C), a general contractor, subcontractor, lower-tier subcontractor or supplier may not waive or reduce lien rights in a contract before furnishing labor or materials; such a provision is null and void. Rights may be waived at any time after that.

Who should sign lien waivers before a construction draw?

Every contractor and supplier paid out of the previous draw, for at least the amount they were paid, not only the general contractor.

What is the difference between a conditional and an unconditional lien waiver?

A conditional waiver takes effect only when the payment clears; an unconditional one is effective when signed. Lenders often take conditional waivers with the draw and unconditional ones once funds clear.

Sources

Where each fact comes from