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Construction glossary · Process and contract terms

What is lien waiverin construction?

A lien waiver is a signed document in which a contractor, subcontractor, or supplier gives up the right to file a mechanics lien against the project property in exchange for a payment. There are four standard types: conditional progress, unconditional progress, conditional final, and unconditional final, exchanged at each pay application and at closeout. On US commercial work, waivers travel with the pay app, and money generally does not move until they are in hand.

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Updated June 2026 · Reviewed by the Ruh construction team

Two types conditional / unconditionalWaives lien rightsTied to each pay app

How a lien waiver clears payment

Sub completes workSub signs waiverGC collects waiversOwner releases paymentTrades waive lien rights for the amount paid
The definition

Lien waiver, explained.

A lien waiver is the payment-side counterpart to the pay application. On a US commercial job, every application for payment travels with waivers: the general contractor collects them from subcontractors and suppliers, and the owner or lender collects them from the general contractor, before money moves. There are four standard types. A conditional progress waiver releases lien rights for one billing period, effective only when the payment actually clears. An unconditional progress waiver releases those rights immediately, paid or not. Conditional final and unconditional final waivers do the same for the full contract value at closeout. The waiver shows up in the subcontract exhibits, in the monthly pay app package, and on the closeout checklist. New estimators make two common mistakes: ignoring waiver requirements when reviewing subcontract terms (some owners require notarized or state-statutory forms, which adds administrative cost), and confusing the waiver amount with the gross billing. The waiver tracks the payment, net of retainage, not the work in place. Estimators should also flag jobs where lower-tier waivers are required, since chasing supplier waivers affects payment timing and the cash flow assumptions behind the bid.

How it is measured

Lien waivers are measured in dollars and dates. Each waiver states a dollar amount (the payment it covers) and a through date (the end of the billing period it releases). Progress waivers track the net payment after retainage, so a $100,000 gross billing with 10% retainage produces a $90,000 waiver. The documents appear as exhibits to the subcontract, as required attachments to each AIA G702/G703 pay application package, and in closeout submittals. Several states, including California and Texas, mandate statutory waiver forms, so the wording is not negotiable there. Estimators do not take off waivers, but they should price the administration: notarization, lower-tier waiver collection, and the staff time to chase them belong in general conditions when the contract demands monthly waiver packages.

Worked example

A worked lien waiver example.

Worked example

Say your subcontract value is $500,000 with 10% retainage (illustrative numbers). Work completed through May 31 totals $333,333. Retainage held: $333,333 x 0.10 = $33,333. Earned less retainage: $333,333 minus $33,333 = $300,000. Previous payments received: $220,000. Current payment due: $300,000 minus $220,000 = $80,000. The correct exchange: sign a conditional waiver and release on progress payment for $80,000 with a through date of May 31, and submit it with the pay application. That waiver only takes effect when the $80,000 actually clears. Once funds arrive, the GC will typically request an unconditional progress waiver for the same $80,000 along with next month's billing. Never sign the unconditional version before the money clears; if the check fails, you have released lien rights on $80,000 of work with nothing in hand. The $33,333 retainage stays outside the waiver until the conditional final waiver at closeout.

How Ruh handles it

How Ruh handles lien waiver.

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Lien waiver: frequently asked questions

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

A conditional waiver only takes effect once the payment it describes actually clears the bank, so the signer keeps lien rights if the check fails. An unconditional waiver releases lien rights the moment it is signed, whether or not payment ever arrives. Standard practice is conditional before payment, unconditional after funds clear.

When should a subcontractor sign an unconditional lien waiver?+

Only after the payment has actually cleared, not when the check is handed over. Many GCs request the unconditional progress waiver for last month's payment alongside the conditional waiver for the current billing, which keeps the exchange safe for both sides. Signing unconditional waivers in advance to speed up payment is the most common and most expensive waiver mistake.

Does a progress lien waiver release retainage?+

Normally no. A properly drafted progress waiver covers the net payment received and carves out retainage, unbilled change orders, and disputed claims. Retainage stays lien-able until it is paid and released through the final waiver at closeout, so check the through date and the exclusions language before signing.

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Related terms

RetainageSchedule of values (SOV)Pay applicationChange order

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Figures on this page are illustrative. Construction estimates depend on project-specific conditions, source documents, market pricing, and professional judgment. Ruh's AI assists the estimator and does not replace professional review: your team reviews, validates, and approves every estimate, bid, and pricing decision.

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