Conditional and Unconditional Lien Waivers: What They Mean and When to Use Them

Signing the wrong lien waiver form at the wrong time can cost you. In some cases, you could unintentionally waive your lien rights before a payment even hits your account.

Lien waivers are standard across construction finance, but they carry serious consequences if misused. The difference between conditional and unconditional lien waivers comes down to timing, risk, and payment verification.

Understanding the difference is important, whether you’re submitting a draw, issuing a payout, or funding a project.

This guide breaks down what each waiver is, when to use them, and how to protect your lien rights. From general contractors to lenders and developers, knowing how to navigate lien waiver forms helps prevent disputes, reduce delays, and maintain project momentum.

What Are Lien Waivers?

A lien waiver is a legally binding document used in construction to confirm that a contractor, subcontractor, or supplier has been paid or will be paid for their work or materials. By signing the form, the party waives the right to file a mechanics lien for that amount, which helps keep funding on track and projects moving forward.

In every U.S. state, contributors to a construction project have the legal right to file a lien if they are not paid. These claims attach to the property title and must be resolved before the asset can be sold or refinanced. A lien waiver form offers a proactive way to manage these rights and reduce the risk of payment disputes.

Functionally, a waiver acts like a receipt. It documents who has been paid, how much was paid, and what the payment covers. These forms are frequently exchanged during draw requests and progress payments, making them essential for compliance, funding, and lien law protection.

There are two main types of waiver of lien: conditional and unconditional. The correct form depends on whether payment has already been received or is still pending.

Conditional vs. Unconditional Lien Waiver: What’s the Difference?

Not all lien waivers carry the same weight.

The difference between a conditional lien waiver and an unconditional lien waiver comes down to when payment is received and what rights you give up as a result. One protects your ability to file a lien until funds clear. The other confirms you’ve already been paid and immediately waives that right.

Understanding this distinction is key to avoiding costly mistakes.

What Is a Conditional Lien Waiver?

A conditional lien waiver is used before payment is received. It says the contractor, subcontractor, or supplier agrees to waive lien rights only after payment has been made. Look for language like “upon receipt of payment” to confirm that it’s conditional.

This type of waiver is typically exchanged during the draw process to reflect what’s owed for a specific billing period. For example, a conditional waiver may state that $5,000 is due for plumbing work completed through January 31. If the amount or date is inaccurate, don’t sign it.

The waiver doesn’t take effect until funds are actually received. It’s a way to maintain lien rights while still assuring the other party that payment is expected. Conditional waivers are often included with invoices or draw requests to set clear expectations.

What Are Unconditional Lien Waivers?

An unconditional lien waiver is used after payment has been made. By signing, the party gives up the right to file a lien for the stated amount and timeframe.

These waivers confirm that payment has been received and that it applies to a specific scope of work. For example, an unconditional waiver might say $12,500 was received for electrical and framing work completed through April 15. If the check hasn’t cleared or the scope isn’t accurate, signing the form too early can expose you to risk.

These forms take effect immediately and should only be used when payment is fully verified.

How to Choose and Review the Right Construction Lien Waiver

Even small mistakes in lien waivers can lead to lost rights, delayed payments, or compliance issues. Before signing, or asking someone else to, check the following:

• Waiver type: Use a conditional waiver if payment hasn’t been received. Use an unconditional waiver only when payment is confirmed. Signing the wrong type at the wrong time can result in lost lien rights.
• Payment amount and scope: The dollar amount and through date should match your invoice. If you’re billing through March 31 for $10,000, the waiver should reflect that exactly. Any mismatch can hold up funding or cause disputes.
• State-specific rules: Some states, like California or Texas, require statutory waiver forms. Using the wrong version or language could invalidate the waiver entirely.

Want to simplify this process? Try our free lien waiver generator to automatically create compliant forms based on your payment type and state.

How Construction Professionals Can Manage Lien Waivers at Scale

Tracking lien waivers across a portfolio is about protecting payments, ensuring compliance, and maintaining project velocity. Here’s how to build a smarter, scalable process.

1. Centralize Tracking and Storage

Consolidate waiver records in one platform to eliminate version control issues, reduce email churn, and improve visibility for all stakeholders.

2. Automate Form Generation and Routing

Use tools that auto-generate the correct waiver based on payment status, draw cycle, and jurisdiction, reducing manual errors and delays.

3. Ensure Legal Accuracy

Confirm amounts, dates, and scope before waivers go out. Mismatched data between the draw and waiver form can create serious funding issues or rights exposure.

4. Account for State-Specific Rules

Some states, like California and Texas, require statutory waiver forms. A smart system flags these variations and ensures compliance.

5. Maintain an Audit-Ready Record Trail

Archived, searchable waiver history supports faster funding, dispute resolution, and project closeout, and reduces your legal exposure.

How Built Simplifies Lien Waivers

Managing lien waivers manually slows down funding and introduces risk. Built automates the entire waiver process, collecting conditional waivers with each draw request and triggering unconditional waivers only after payment is confirmed.

This creates a consistent, compliant, and trackable process across every project.

Builders like Rod Heisler have seen the difference firsthand:

“No more chasing down conditional or unconditional waivers after payment. It’s all part of the process in Built. Our subs enter invoices, sign the waiver, and the system handles the rest.” —Rod Heisler, Heisler Construction

With Built, lien compliance becomes automatic, not a back-office burden. That means fewer delays, cleaner audits, and stronger relationships across the payment chain.

Want to see how it works? Talk to our team to learn how Built streamlines lien waivers for lenders, builders, and borrowers.

Conditional and Unconditional Lien Waivers FAQS

What’s the difference between a lien waiver and a lien release?

A lien waiver is a legal document used during the construction payment process to give up the right to file a lien for a specific payment amount. A lien release, on the other hand, is filed after a lien has already been recorded, confirming the debt has been resolved and the lien removed.

Waivers are proactive tools; releases come after action has been taken.

Can I revoke a signed unconditional lien waiver if I haven’t received payment yet?

No. An unconditional lien waiver takes effect immediately upon signing, even if payment hasn’t cleared your bank account. If you sign too early, you may waive your lien rights permanently.

Always wait for actual receipt of payment before signing an unconditional waiver form.

Do lien waiver requirements vary by state?

Yes. Waiver language and form requirements differ across states. Some, like California and Texas, require strict statutory wording for both conditional and unconditional lien waivers. Using the wrong waiver form can cause compliance issues or render it legally invalid.

Construction professionals should always confirm their state’s rules before submitting a signed waiver.

Written by Mark Murphy

Mark Murphy leads OGC Sales at Built, where he is responsible for accelerating adoption of payments and standalone solutions purpose-built for real estate owners, developers, and general contractors. He brings deep experience across sales, general management, and operations in technology-driven businesses.

Prior to joining Built, Mark served as General Manager at Apex Service Partners and Operating Executive at Alpine Investors. He also spent over six years at Flexport, where he held multiple leadership roles including General Manager for the South and Northeast regions, and Director & Acting General Manager for San Francisco and Northern California. Earlier in his career, Mark was Chief Operating Officer at Oolong, an INC 500-recognized international trading business​.

Mark holds a degree in Mechanical Engineering from Stanford University, where he captained the Varsity Men’s Rowing team​.