A conditional lien waiver (also called a conditional waiver or conditional lien release) is a document signed by a contractor, subcontractor, or supplier that waives their right to file a lien claim, but only upon the condition that their payment has been received and processed. It is issued with each draw invoice and is the standard protection against payment failure in residential construction.
Conditional waivers protect both the payer and the vendor. The vendor retains the right to file a lien if the payment fails to clear, bounces, or is reversed. The payer can enforce the waiver as proof of payment once the check clears or the wire transfers. For construction loans, lenders require conditional waivers from the GC and all major subs before releasing each draw.
The key distinction is that a conditional waiver is effective only upon receipt of payment, whereas an unconditional waiver (also called a final waiver) is effective immediately and waives all lien rights regardless of payment. Conditional waivers are used for progress draws; unconditional waivers are used only at final completion and after final payment has cleared.