What is the law regarding lien waivers?
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What is the law regarding lien waivers?
My husband is a sole proprietor and is remodeling a home after a fire. The customer’s bank is asking for a lien waiver for the entire amount of the estimate that they were given, yet all the work is not done. My husband has not been paid but a portion of the funds. Is this the proper way to do things? I don’t want my husband losing money if he signs this?
Asked on January 31, 2014 under Real Estate Law, Vermont
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
See the following re lien waivers in Vermont.
§ 1921. Extent of lien; notice
(a) When a contract or agreement is made, whether in writing or not, for erecting, repairing, moving or altering improvements to real property or for furnishing labor or material therefor, the person proceeding in pursuance of such contract or agreement shall have a lien upon such improvements and the lot of land on which the same stand to secure the payment of the same.
(b) A person who by virtue of a contract or agreement, either in writing or parol, with an agent, contractor, or subcontractor of the owner thereof, performs labor or furnishes materials for erecting, repairing, moving, or altering such improvements shall have a lien, to secure the payment of the same upon such improvements and the lot of land upon which the same stand, by giving notice in writing to such owner or his or her agent having charge of such property that he or she shall claim a lien for labor or material. The notice shall include the date that payment is due, if known. Such lien shall extend to the portions of the contract price remaining unpaid at the time such notice is received.
(c) A lien herein provided for shall not continue in force for more than 180 days from the time when payment became due for the last of such labor performed or materials furnished unless a notice of such lien is filed in the office of the town clerk as hereinafter provided.
(d) A lien under this section shall not take precedence over a deed or other conveyance to the extent that consideration therefor has been paid in good faith before record of such lien. Such lien shall not take precedence over a mortgage given by the owner thereof upon such building, property or improvements and the lot of land on which the same stand, as security for the payment of money loaned and to be used by such owner in payment of the expenses of the same, if such mortgage is recorded before such lien is filed in the office of the town clerk as hereinafter provided. If such mortgagee shall receive written notice that any lien hereunder is to be claimed, such lien shall take precedence over such mortgage as to all advances thereafter made under such mortgage to such mortgagor, except such advances as the mortgagee may show were actually expended in completing such improvements to real property.
(e) The lot of land covered by such lien shall be deemed to be all of the land owned or held by the owner and used or designed for use in connection with such improvements, but such lien shall not extend to other adjacent lands used for purposes of profit.
(f) A lien under this section may not be waived in advance of the time such labor is performed or materials are furnished, and any provision calling for such advance waiver shall not be enforceable. (Amended 1985, No. 128 (Adj. Sess.); 2003, No. 144 (Adj. Sess.), § 1.)
§ 1922. Effect of lien
Unless a person has satisfied or paid the claim upon which such lien is founded after the person has received written notice of a lien as provided for in subsection 1921(b) of this title, or unless the lien has not been perfected within the time required under section 1924 of this title, such person shall not deed, mortgage, or otherwise convey property which is subject to a lien as provided herein without disclosing such lien to the vendee or mortgagee in writing or stating the existence of the same in the instrument conveying or mortgaging such property. If the person shall fail so to disclose such lien, he or she shall be liable to the person injured in a civil action on this statute for the damages so sustained. (Amended 2003, No. 144 (Adj. Sess.), § 2.)
§ 1923. Recording notice of lien
A person claiming a lien under section 1921 of this title, shall file for record in the clerk's office of the town where such real estate is situated, a written memorandum, signed by him, asserting his claim, which shall charge such real estate with such lien as of the visible commencement of work or delivery of material to the extent and subject to the exceptions provided in sections 1921 and 1922 of this title. Several such liens, asserted as aforesaid, shall be paid pro rata, if the sum due or to become due from the owner thereof is not sufficient to pay the same in full.
§ 1924. Action to enforce lien
Within 180 days from the time of filing such memorandum, if such payment is due at the time of such filing and within 180 days from the time such payment becomes due, if not due at the time of such filing, such person may commence his or her action for the same and cause such real estate or other property to be attached thereon. If he or she obtains judgment in the action, the record of such judgment shall contain a brief statement of the contract upon which the same is founded. (Amended 2003, No. 144 (Adj. Sess.), § 3.)