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Can the owner enforce a lien release I signed for a higher amount?

Can the owner enforce a lien release I signed for a higher amount?

Full question:

The general contractor forced me to sign a lien release that was for $407,000. I had only been paid $289,000 (inclusive of the subject payment). I performed an additional $150,000 of work after the date of the release. The owner fired the general contractor from the job. I filed a lien on the property for the $150,000. The Owner is now suing me stating that they have a lien release showing that I've been paid $407,000 and they are demanding that I remove my lien. Am I in the wrong? Do I have a case?

Category: Contractors
Subcategory: Construction Liens
Date: 04/07/2025
State: Arizona

Answer:

Generally, if you haven't been fully paid, a conditional release form should be used. Your situation depends on the type of release you signed—whether it was a waiver or a release. It's advisable to consult a local attorney who can review your documents and facts.

During construction, property owners may require lien releases from subcontractors and suppliers to protect against unpaid claims. If a general contractor is paid but fails to pay subcontractors, those subcontractors can still file liens. Unlike mortgage liens, these claims cannot force a foreclosure. Owners often require lien releases as part of their contracts with contractors.

The terms 'lien waiver' and 'lien release' are often used interchangeably, but they have different implications. A release indicates that a claim has been satisfied, while a waiver relinquishes a known right. Waivers are typically signed before work begins, while releases are signed after payment is made. A lien waiver does not prevent you from pursuing other claims, such as breach of contract.

In your case, if you signed a lien release stating you were paid $407,000, it could complicate your ability to enforce a lien for the additional $150,000 of work. However, if you can demonstrate that the release was conditional upon payment that you did not receive, you may have a valid defense. Refer to Arizona statutes, specifically A.R.S. § 33-1008, which outlines the requirements for lien waivers and releases.

For more specific guidance, consider seeking legal advice tailored to your situation.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

What is the purpose of a lien release?

A lien release serves to formally acknowledge that a debt related to a property has been satisfied. It protects property owners by ensuring that subcontractors or suppliers cannot later claim unpaid amounts after a release is signed. This document is often required by property owners to prevent future claims against the property, especially when contractors are involved. However, if a release is signed without full payment, it may complicate a party's ability to enforce further claims.

How do I fight a construction lien?

To fight a construction lien, you can challenge its validity by proving that the work was not completed or that payment was made. You may also argue that the lien was filed incorrectly or that it violates state laws. It's important to gather evidence, such as contracts, payment records, and communications. Consulting with a local attorney experienced in construction law can help you navigate the process effectively.

Should I sign a lien waiver before payment on Reddit?

Signing a lien waiver before payment can be risky. It typically relinquishes your right to claim a lien for work completed up to that point. If you haven't received full payment, it's advisable to use a conditional waiver instead, which protects your rights until payment is confirmed. Always consider the implications and consult with a legal professional before signing any waivers.

What is a contractor's final payment affidavit and release of lien?

A contractor's final payment affidavit and release of lien is a document that confirms the contractor has been paid in full for their work and waives any future claims against the property. It protects the property owner by ensuring that no further liens can be filed by the contractor for the completed work. This document is often required before the final payment is made to ensure all parties are clear on the payment status.

Should I sign a lien waiver before getting paid?

Signing a lien waiver before getting paid can be risky, as it may forfeit your right to file a lien for unpaid work. If you decide to sign, ensure it's a conditional waiver that protects your rights until payment is received. Always assess the situation carefully and consult with a legal professional to understand the potential consequences before signing any waiver.