Whether you’re a general contractor (GC), subcontractor, or property owner, understanding Arizona lien waivers is crucial. These essential documents function as receipts acknowledging payment up to a specific amount, thereby waiving the party’s right to file a lien against the property for that amount. While the concept is straightforward, the practical application of lien waivers can be complex.
Several types of lien waivers exist, each requiring submission at specific times during a project. (For a deeper dive into lien waiver basics, refer to The Ultimate Guide to Construction Lien Waivers for Subcontractors.) Moreover, lien waiver requirements vary by state, with each jurisdiction setting its own rules regarding valid forms, contents, and enforcement.
Understanding these nuanced requirements is important for subcontractors to maintain compliance, prevent payment disputes, and protect their financial interests. So grab your hard hat, and let’s dive into the world of Arizona lien waivers!
(For more general information on lien waivers, check out this on-demand webinar: End the Whack-a-Mole: Lien Waiver Best Practice for Subs.)
When working on construction projects in Arizona, it’s important to remember that Arizona is one of just 12 states that regulates lien waivers with a specific and statutory form. Parties can choose between four outlined form options:
- conditional waiver and release on progress payment,
- unconditional waiver and release on progress payment,
- conditional waiver and release on final payment, and
- unconditional waiver and release on final payment.
It’s important to align with the format and content as closely as possible, or as the law puts it, “substantially”; any deviations will render lien waivers unenforceable. Subcontractors in Arizona are protected when they follow the outlined form and all inclusions.
Here’s what you need to know when handling Arizona lien waivers:
- Arizona’s two subsets of conditional lien waiver forms note that they are in effect and binding once “there is evidence of payment,” demonstrated by endorsement on a single or joint payee check or via written acknowledgment of payment. Meanwhile, the state’s two subsets of unconditional lien waiver forms are enforceable upon signing, even if payment hasn’t been received. To that end, it’s in your best interest not to sign until you receive payment.
- Arizona law prohibits any lien waiver terms or contractual provisions that attempt to waive lien rights before performing work, otherwise known as advance lien waivers. Arizona lien waivers should only be exchanged at specific project milestones or after work has concluded.
In Arizona, lien waivers that do not follow the format and contents of a state-mandated form “substantially” are deemed unenforceable.
The state accepts both conditional and unconditional lien waivers. Within statutes, Arizona outlines four different lien waiver forms parties can use: conditional progress, unconditional progress, conditional final, and unconditional final.
The state accepts both conditional and unconditional lien waivers. Within statutes, Arizona outlines four different lien waiver forms parties can use: conditional progress, unconditional progress, conditional final, and unconditional final.
To be considered valid, Arizona lien waivers must:
- be in writing
- follow the outlined format and provide the content as specified within state statutes
- be signed by both the owner, construction lender, or general contractor as well as the claimant
State law expressly prohibits waiving lien rights in either the Arizona lien waiver or the contractual terms that govern it.
As long as structure and contents are followed per one of the four outlined forms parties must use for lien waivers in Arizona, lien rights can be waived after work has been completed, but before payment has been received.
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Yes, Arizona does require all parties to use a specific, statutory lien waiver form. In fact, if the form or content doesn’t align “substantially,” it’s deemed unenforceable by state law.
To advocate for any project-specific lien waiver requirements, outline them in the corresponding contract for the lien waiver. The lien waiver should be a 1:1 match to the government-mandated form.
Lien waivers in Arizona are governed by specific statutory requirements. Each must be met for the lien waiver to be valid and enforceable:
- Lien waivers must follow the format and content of the state’s lien waiver form, including conditional progress, unconditional progress, conditional final, or unconditional final; and
- Each must contain standardized elements such as the project name, job number, pay amount, and more.
If you choose unconditional lien waivers, an additional notice must be included
on the form: “Notice: This document waives rights unconditionally and states that you
have been paid for giving up those rights. This document is enforceable against you if you sign it, even if you have not been paid. If you have not been paid, use a conditional release form.”
When it comes to timing for the exchange of Arizona lien waivers, parties must follow the guidelines outlined within state statutes based on one of the four subtypes:
- A conditional waiver and release on progress payment indicates that you will waive your lien rights for that specific portion of the project after the general contractor pays the noted amount. This should be exchanged when you submit a pay app for a progress payment.
- An unconditional waiver and release on progress payment should ideally be exchanged after you receive payment for the specified amount, thus allowing you to waive your right to file a lien on this portion of the project. (If you exchange this waiver before being paid for an Arizona construction job, you risk payment delays or issues.)
- A conditional waiver and release on final payment states that you will waive your lien rights for the entire project, only if the general contractor pays the remaining balance in full. Submit this waiver with the final pay app to signify a project has ended.
- Lastly, an unconditional waiver and release on final payment should be exchanged after the final payment has been received from the general contractor. This waives all of your lien rights on the project. File this waiver subset only if you’ve received your final payment, including retention and fees.
(If you’re wondering which type of lien waivers to use for your construction project, review this comprehensive guide.)
Arizona mandates that parties should use waivers for both progress payments and the final payment. If you choose a conditional lien waiver and release, note that an endorsement on a valid check or a written acknowledgment of payment is required.
One more important thing to keep in mind: Each form notes that any services completed after the lien waiver is signed cannot be covered by law, so it’s important to exchange lien waivers only after work has been completed. Arizona prohibits advance lien waivers.
Since Arizona lien waiver forms, in both format and content, are governed by the state, it’s important to keep the contract language as similar as possible to these forms for them to be enforceable. When it comes to the contract, waiving lien rights is not allowed in Arizona. Review the contract carefully to ensure all project-specific requirements are reflected.
Here’s some good news regarding any potential lien waiver disputes in Arizona: Since the state outlines what should be included in lien waiver forms and when they should be exchanged, the law is very clear-cut. This offers extra protection to subcontractors in obtaining fair payment for construction projects.
If there is a dispute over an Arizona lien waiver, we recommend reviewing the lien waiver and contract in full. The next step would be consulting with a construction law attorney familiar with Arizona lien laws.
Understanding Arizona lien law is crucial to operating a construction business in this state
and getting paid on time. Here are several resources to review as you prepare for jobs in Arizona:
Automate the process with Siteline. Contractors use our lien waiver tool to digitize all of their lien waiver forms (primary and vendor), send waiver requests to lower-tier contractors and vendors, collect e-signatures, and submit completed waivers to their clients—without ever leaving the system. Siteline even provides centralized tracking to help contractors monitor vendor waiver statuses to see who’s received the form, who’s opened it, and who has (or hasn’t) signed. This means contractors can collect waivers faster while eliminating payment delays caused by compliance holds.
Disclaimer: The information provided on this page is for general informational purposes only and does not constitute legal advice. We recommend you consult a qualified attorney for advice specific to your situation.