Lien Waivers: General Information

A lien waiver is a compliance document involved in the payment process for a project. The party that receives a payment (for instance, a contractor, subcontractor, or supplier of materials) signs a lien waiver to waive their rights against the property in exchange for the payment.

You can set up lien waivers for a vendor class, vendor, and project to be generated conditionally or unconditionally.

Learning Objectives

In this chapter, you will learn how to do the following:

• Configure the automatic generation of conditional lien waivers
• Configure the automatic generation of unconditional lien waivers
• Specify actions to be performed for outstanding lien waivers
• Manually add a lien waiver for a document
• Mark a lien waiver as the final one
• Print and email lien waivers

Applicable Scenarios

In construction projects, lien waivers are issued to reflect that a subcontractor is waiving lien rights for a specific amount in exchange for the received payment or the promise of payment.

Configuration of Lien Waivers for Vendors

You can set up the automatic generation of lien waivers in the system for conditional or unconditional lien waivers. You also can manually create lien waivers and edit them (including those generated automatically).

For each particular project, you specify the list of vendor classes for which the lien waivers should be generated by specifying the applicable vendor classes on the Lien Waiver Settings tab of the Projects (PM301000) form. For each vendor class, you can specify a minimum commitment amount so that lien waivers are automatically generated for each project commitment whose amount is larger than or the same as the specified minimum amount. If the minimum commitment amount is set to 0, the system will generate lien waivers for commitments of any amount.

The system automatically generates lien waivers for the vendors that belong to the vendor classes that have the Generate Lien Waivers Based on Project Settings check box selected on the General tab of the Vendor Classes (AP201000) form. When you create a new vendor of the class, the system automatically selects the Generate Lien Waivers Based on Project Settings check box on the General tab of the Vendors (AP303000) form to indicate that the system will create lien waivers for this vendor automatically if the project for which you are entering a payment includes this vendor class. You can clear this check box to exclude a particular vendor of the vendor class from the lien waiver generation process.

Mailing Settings for Lien Waivers

You define mailing settings for each vendor to automatically send lien waivers of a specific type by email and to print the lien waivers. You configure separate mailings for each lien waiver category (that is, conditional partial, conditional final, unconditional partial, and unconditional final).

When you create a new vendor on the Vendors (AP303000) form, the system copies mailing settings from the settings of the vendor class on the Mailing & Printing tab of the Vendor Classes (AP201000) form. You can override these settings in the vendor record on the Mailing & Printing tab of the Vendors form.

When you print or email a lien waiver on the Print/Email Lien Waivers (CL502000) form, the system uses the report specified for the corresponding mailing in the vendor record. If the vendor has no active mailing for a lien waiver of a particular type, the system will use the mailing that is defined in the vendor class of this vendor.

Outstanding Lien Waivers

An outstanding lien waiver is a lien waiver that has not been marked as received and whose Through Date on the Compliance Management (CL401000) form is earlier than the current business date in the system. You configure the notification about outstanding lien waivers that exist for AP documents being processed on the Compliance Preferences (CL301000) form. The system searches for outstanding lien waivers through all compliance documents related to the particular primary and joint vendors.

Conditional Partial Lien Waivers

Conditional lien waivers should be issued when a progress payment on a project is expected. A signed lien waiver of this type becomes effective immediately after the payment has been prepared.

The automatic generation of conditional lien waivers is set up in the system when the Automatically Generate Lien Waivers check box is selected in the Conditional Lien Waivers section of the Compliance Preferences (CL301000) form. In this case, the system will generate conditional partial lien waivers when an AP bill is paid—that is, when the status of the corresponding payment is changed to Pending Printing or Balanced. Also, you can select the Generate for AP Documents Not Linked to Commitments check box if you need to automatically generate lien waivers for payments that are related to a project but are not linked to project commitments.

A payment created on the Checks and Payments (AP302000) or Prepare Payments (AP503000) form may include multiple bills related to different projects, project tasks, and commitments. The system groups the payment amounts to each lien waiver and generates conditional lien waivers based on the option selected in the Calculate Amount By box in the Conditional Lien Waivers section on the Lien Waiver Settings tab of the Compliance Preferences form.

You also can manually create conditional lien waivers for particular documents. For more information, see Lien Waivers: Manual Creation of Lien Waivers.

Unconditional Partial Lien Waivers

Unconditional lien waivers should be issued when a progress payment on the project is expected. A lien waiver of this type becomes effective after it has been signed, regardless of whether the payment has actually been received.

The automatic generation of unconditional lien waivers is set up in the system when the Automatically Generate Lien Waivers check box is selected in the Unconditional Lien Waivers section of the Compliance Preferences (CL301000) form. In this case, the system will generate unconditional partial lien waivers when an AP bill is paid—that is, when the status of the corresponding payment is changed to Pending Printing or Balanced. Also, you can select the Generate for AP Documents Not Linked to Commitments check box if you need to automatically generate lien waivers for payments that are related to a project but are not linked to project commitments.

A payment created on the Checks and Payments (AP302000) or Prepare Payments (AP503000) form may include multiple bills related to different projects, project tasks, and commitments. The system groups the payment amounts to each lien waiver and generates unconditional lien waivers based on the option selected in the Calculate Amount By box in the Unconditional Lien Waivers section on the Lien Waiver Settings tab of the Compliance Preferences form.

You also can manually create unconditional lien waivers for particular documents. For more information, see Lien Waivers: Manual Creation of Lien Waivers.

Final Lien Waivers

By default, the system generates each conditional or unconditional lien waiver as a partial one. That is, this lien waiver is considered to be exchanged for a progress payment. If a payment being received is a final payment for a bill, you need to mark the corresponding lien waiver as the final one. To do this, you open the prepared payment on the Checks and Payments (AP302000) form. On the Compliance tab, you click the line with the lien waiver and then click Set as Final on the table toolbar. The system will change the type of the lien waiver to Conditional Final or Unconditional Final.

Lien Waivers for Joint Payments

For a joint payee bill, the system creates a payment for the main vendor (that is, the vendor that is working directly with you on the project) and separate payments for the joint payees. The system automatically generates lien waivers for all these payments by using the general rules of lien waiver generation. For more information on processing joint payments, see Joint Payments: General Information.