General Inquiries

Conditional Final Releases

  • 1.  Conditional Final Releases

    Posted 04-25-2019 16:06
    We have received conditional finals from our subcontractors.  My question is, once the check has cleared (same amount as noted on the final) are lien rights null?  Or do we have to follow up with an unconditional final?  I am getting conflicting answers.

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    Rosemarie Palmer
    Controller
    Dana B. Kenyon Co
    Jacksonville FL
    (904) 394-8245
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  • 2.  RE: Conditional Final Releases

    Posted 04-26-2019 07:06
    The waiver is a legal document and so your attorney would be your best resource for the answer regarding the specific language your subs are signing.  That said, my experience has been to consider the conditional waiver as if it were unconditional once the condition (payment) was met.

    Once the final money has been received by the sub, the largest impetus for a sub to sign any documentation for you has been removed.  Subs who expect to work for you on future jobs will likely comply, but some of those who do not may not respond, in my experience.  So, just be sure to write the conditional final so that it stands on its own if you don't ever receive anything else.

    If required to submit final unconditional waivers to the owner, then come to an understanding with each sub before sending final payment about how you'll get that document.

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    Steve Hunt CPA
    Cfo
    Alto Construction Company, Inc.
    Tampa FL
    (813) 241-2586
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  • 3.  RE: Conditional Final Releases

    Posted 04-26-2019 07:29
    i think there are 2 different issues that have to be considered.  What is the purpose of the conversation?  Are you trying to argue the case legally?  Are you trying to passify a general contractor that wants conditional and unconditional?  I am not an attorney but from what I understand, legally it could be accepted and documented if you have that language in the waiver.  But we have general contractors that would not stop at conditional waivers.  They will require unconditional all day long.   Getting unconditional waivers in Texas is very much an accepted practice.

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    Tammye Brown
    Controller
    Airco Mechanical Ltd
    Round Rock TX
    (512) 837-2917
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  • 4.  RE: Conditional Final Releases

    Posted 04-26-2019 08:12
    Conditional final lien waivers are perfected upon payment (and the check clears.)  That is the purpose of a conditional - no one wants to give up their lien rights before receiving payment and no one wants to pay in full with no guarantee they will get an unconditional lien waiver after the check is cashed.  The conditional lien waiver facilitates final payment​ and everyone is happy.

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    Susan Milner
    Corporate Controller
    Eldeco Inc.
    Greenville SC
    (864) 312-9896
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  • 5.  RE: Conditional Final Releases

    Posted 04-26-2019 10:18

    You do not have to obtain the Unconditional. However it is a good practice to do so, just to close the loop. I believe waivers in your state have a statement that displays "This documents waives the claimants .....effective on receipt of payment"

     

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    (O) 480-237-0765
    1736 S. Nevada Way, Mesa AZ 85204

     

     

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  • 6.  RE: Conditional Final Releases

    Posted 04-27-2019 17:27
      |   view attached
    Hello Rosemarie,

    We research this point for a WEB application that we developed for a client (a sub-contractor in California).  Steve is correct, the language in the conditional lien release and owner's requirements are the main decision factors.  I, also would recommend consulting with your attorney.

    With an Unconditional Lien Release (progress or final) the sub confirms that they have been "paid in full" (i.e. check has been cleared and the funds are in the claimant's account).  There is a possibility that a check may clear before funds are deposited into an account.

    With a conditional lien release, the burden of proof will probably be yours.  You will need to show that the funds were actually deposited into your subs account.

    Some subs are reluctant to issue a "Unconditional Waiver And Release On Final Payment" due to C/O payments that may be outstanding.  The forms in California have an exception clause for disputed amounts (See Attached).

    Good Luck,
    Varoujan Adamian
    Principal Consultant
    Noravand
    Burbank, CA
    (818) 201-5111
    vadamian@noravand.com

    Attachment(s)

    pdf
    CIV_8138.pdf   88K 1 version


  • 7.  RE: Conditional Final Releases

    Posted 04-29-2019 10:04

    Rosemarie,

     

    If the conditional waiver states that lien rights are waived upon payment, and there is no added conditions, then the lien rights are sufficiently waived when paid and all you really need to prove that lien rights were waived is the conditional waiver and the proof of payment.

     

    It is sometimes hard to make a sub do anything without a motivation for them to do it, so once you have paid the sub, it may be difficult to get them to sign an unconditional...unless other money is still owed. So, as far as the law is concerned, you only need the conditional waiver and proof that the conditions of the waiver were met...they were paid.

     

    Your owner may have a different requirement though because they are not in possession of the proof of the conditions being met and anything you provide is really only your word... The owner may want unbiased proof that you paid the sub so they might request an unconditional.

     

     

    Eileen Cigala | DPR Construction | www.dpr.com
    222 N. 44th Street | Phoenix, AZ | 85034
    o: 602.808.0500 | m: 480.721.8066
    We Exist to Build Great Things.®

     






  • 8.  RE: Conditional Final Releases

    Posted 04-29-2019 10:08
    The biggest thing you need to consider is what state you are working in; different states have different regulations - there is no universal answer.  In addition, it depends on what your contract says - some owners require Unconditional by contract and in that case you have no choice.  The best way to get the right answer (short of checking with an attorney in your state) is to purchase the CFMA - CFM's Guide to State Tax Law - Florida - for $25 it is a cheap investment in getting the right answer!

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    Lynne Pace BS
    Chief Financial Officer
    Kinkaid Civil Construction
    Mesa AZ
    (480) 646-4438
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