Progress payments on unconditional lien waivers are a riskier arrangement to use between subcontractors and general contractors, as they cannot guarantee that all payments will be made. Another problem: the traditional system of exchanging lien waivers often results in challenges relating to how waivers are created, sent, signed, and stored — and whether waivers are compliant with state-specific regulations.
Using lien waiver management software will help you reduce risk and solve these common roadblocks. As a general contractor in the construction industry, you probably know the ins and outs of lien waivers, but you may not know how to automate the lien waiver process. We’ll explore how automating the partial unconditional lien waiver process can help you eliminate common challenges while also reducing payment processing time by up to 70%.
The Benefits of Automating a Partial Unconditional Lien Waiver
Unlike conditional waivers, an unconditional lien waiver comes into effect from the moment it is signed, instead of the moment the partial payment is made. Unconditional lien waivers act as proof of payment for work that has been signed as paid for. However, this can be extremely risky as lien rights are given up without a guarantee of proof of payment. A partial unconditional lien waiver is best used when you are still expecting future payments for the project but are wanting to receive a partial payment in the meantime.
When drawing up and signing partial unconditional lien waivers, you’ve probably come across a few of these roadblocks:
- Not following US State requirements when using a lien waiver template. Each State has its own requirements — including if they allow for the use of partial unconditional waivers. You can learn more about State requirements in our State-by-State guide to lien waivers.
- A lack of trust and open communication between subcontractors and general contractors. Using unconditional waivers can lead subcontractors to worry if they will be paid for their work. While general contractors might feel that the waiver is being withheld from them.
- Waivers that have been misplaced or lost on the job site or in the office.
- The wrong lien waiver template is used and submitted.
- Disruptions due to unconditional waivers missing information or being incomplete, resulting in time wasted when chasing down subcontractors.
- Missing financial details needed to pay the subcontractor by check.
- Payment is made without proof of lien waiver.
- Your team is drowning in paperwork and unable to safely store all documents.
- The subcontractor doesn’t have up-to-date compliance documentation.
- Financial errors and cash flow issues — from paying the full amount rather than a partial payment, paying twice, or delaying payments.
With so much room for error, automating the lien waiver process is the best way to stop common mistakes in their tracks. Here’s how it can help you:
- General contractors can store lien waiver templates for subcontractors to use — ensuring that the correct lien waiver template will always be followed and allowing for easier data capturing.
- No more chasing subcontractors for signed waivers — if they do not submit their signed and locked waiver, they cannot be paid for their work.
- Automating software requires all subcontractors to have up-to-date compliance documentation in order to receive payment. If not, they will be alerted when signing a lien waiver.
- ePayment replaces the need for filing paper checks. All payments can be automated on the software upon receipt of the lien waiver.
- Automating software allows you to integrate with your ERP software. Your payment apps will align with your contacts, eliminating the need for time-consuming manual integration.
- Digital signatures can be automated for all relevant parties.
- The notarization process, if required, can be automated quickly with remote, online notarization.
- Notifications can be sent out to parties who have to sign lien waivers — no more tracking subcontractors down to sign waivers.
- All lien waivers are stored on the cloud and can provide you and your team with a status overview of all existing waivers and projects.
Lien waiver management is a time-consuming process for all involved. Traditional waiver exchanges leave room for error and financial mistakes. With lien waiver management software, time-consuming manual processes, like filing checks, can become a thing of the past. Lien waiver automation can reduce payment processing time by up to 70%.
What Do Automated Partial Unconditional Lien Waivers Look like?
With lien waiver software management, like GCPay, you can create customized and branded lien waiver templates that will speed up the submission and filing process. Alongside your custom-branded templates, you’ll also be able to ensure state regulations are followed by all on-site.
After agreeing to a partial payment plan, your unconditional lien waiver template should include the following fields:
- Name of claimant
- Name of customer (hiring party)
- Job location and project name
- Property owner
- Through date
- Amount of the check, cash, ACH or electronic payment
- Claimant’s signature and title
- Date of signature
Creating a partial unconditional waiver template using the fields listed above will help to keep legal jargon simple and easy to understand for both parties. Once the subcontractor has correctly filled in their details and signed the waiver, payment can then occur.
How You Can Automate the Partial Unconditional Lien Waiver Process
It can be time-consuming to navigate the world of lien waivers. That’s why it’s best to use an automated lien waiver software management system, like GCPay. This software can help you speed up the waiver process by enabling the electronic exchange of waivers and ePayments.
Partnering with the right solutions provider will bring peace of mind to your team and ensure every filed waiver is correct and paid out. You’ll no longer have to file checks or chase down subcontractors.