Release of lien form - working with contractors

[Drew Clements]

I'm doing some remodeling on one of my units and trying to follow advice from some of the articles and posts on BP regarding working with contractors - most everything seems pretty straightforward, but I'm trying to figure out the release of lien (mechanic's lien) now.

Anyone have any recommendations on where to find a form/what it should contain. I've never seen one, so I'm very green on the subject.

I live in Colorado if that would make a difference on the form/details included therein.

Thanks in advance for any input on this!

[Bill Gulley]

Drew, your contractor should have a form, if they are "business" type contractors otherwise you should be able to get it from your title company. Ask for a "Lien Waiver". 

These can be a DIY document, to some extent, if it's primarily for labor by the ones working. If they know they signed a lien waiver they know they can't make a claim as to not being paid in full to a certain date. Much of it is simply a receipt for payment with verbage added stating the undersigned waives their right to place any lien for work accomplished on the subject property arising from any work (and materials) performed to this date (and the undersigned warrants that all costs of materials have been paid in full) (If they supplied materials). You can add an indemnification agreement as well.

The undersigned agrees, in consideration of full payment advanced and made, the receipt of which being acknowledged, to indemnify and hold harmless the owner of any loss, cost, damage or expense, including but not limited to reasonable attorney fees together with costs of court for and against any claims arising from or out of work or materials remaining unpaid upon the subject property to the date hereof.

The waiver has a title of "Lien Waiver and Hold Harmless Agreement", then signature of each worker paid on their own form (They all don't sign the same form).

I would add the HH Agreement if materials were supplied by the contractor, If it's just for labor it's really not needed, but okay if they do sign it.

It's pretty much a psychological play when it comes to labor, they know they signed a release and they know they'd get their hand slapped if they claimed they weren't paid. So that's much of the point as well.

Since you have had work done in the past 90 days or 120 days (depending on your laws) your title company will want a lien waiver from all your worked on the property, or the general who claims he has paid all subs and hold harmless the owner from their claims as well as materials. If you paid for materials you can give the waiver to the new buyer or their title company.  

For the psychological effect, you can draft up a form to sign. If you have a large project where many material suppliers are involved, you ask each of them for a waiver when you purchase materials, for small items simply keep receipts.......you may have a "cut-off" amount like $500 and less just rely on receipts, for a $2500 HVAC unit get a waiver. If you have a larger project I'd suggest you have your waiver forms reviewed by your attorney of title company before you get involved under contract.

Just as with most other things, the degree of enforceability of your documents becomes more significant as the value of the deals go up, the more money involved the more you need to be concerned with the small stuff. Check with your title company, they should have lien waivers already prepared.

Just happened to drop by, good luck!     :)