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Whether you’re a general contractor (GC), subcontractor, or property owner, understanding South Dakota 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 South Dakota 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.)
South Dakota is part of the majority of U.S. states in that it does not provide a specific or statutory form for lien waivers. Parties can include anything they want, including clauses that can weaken your leverage to get paid. Fortunately, the state does protect GCs, subs, and suppliers from complications, as lien rights cannot be waived in the contract or before payment.
Here’s what you need to know before handling South Dakota lien waivers:
- In South Dakota, lien rights can only be waived to the extent of an endorsed joint check between the payee and the individual laborer who has furnished services or materials. The joint check must include a “conspicuous” provision on the back that references the written agreement between parties, including that “the payees, by their endorsements and in consideration of the payment represented by the joint check, jointly and severally waive all claims to which they may be entitled.”
- South Dakota provides a unique law that protects GCs from lien-related claims made by lower-tier parties. GCs must file a Notice of Project Commencement with the register of deeds in the county where work is taking place within 30 days of the project start date alongside a filing fee. This step is only valid if the GC posts their name, address, and location notice on the job site.
South Dakota doesn’t provide a specific or statutory form.
Both conditional and unconditional lien waivers are valid in South Dakota as long as they’re exchanged pursuant to or after payment.
Both conditional and unconditional lien waivers are valid in South Dakota as long as they’re exchanged pursuant to or after payment.
To be considered valid in South Dakota, a lien waiver must:
- be in writing
- be signed by the waiving party
- clearly state the amount being waived and the property to which it applies
- be accompanied by an endorsed joint payee check
Lien rights cannot be waived in South Dakota construction contracts, as waivers must be exchanged alongside payment.
In South Dakota, lien waivers must be accompanied by a joint payee check, so lien rights can’t be waived before payment.
Completing Lien Waivers in Siteline
- Create, monitor, and track all your lien waivers in one place.
- Automatically fill out and send the right waiver at the right time.
- Request lower-tier lien waivers from all your sub-tier contractors, vendors, and suppliers—individually or in bulk.
- Securely collect e-signatures, with automatic reminders for any unsigned waivers.
- Package and submit signed waivers to your GCs directly within Siteline.
South Dakota doesn’t provide a specific or statutory lien waiver form for owners or construction teams to use. Since parties can draft these forms, look over every clause, and negotiate for fair payment terms.
South Dakota lien waivers need to hit every mark when it comes to legal requirements:
- It must be accompanied by an endorsed joint payee check that references the lien waiver agreement,
- It should clearly state the amount being waived and the property to which it applies, and
- It must be signed by the party waiving their lien rights.
South Dakota offers limited guidance when it comes to timing for construction lien waivers. In state law 44-9A-2, lien rights can only be waived in connection to the endorsement of a joint check. This means contractors and suppliers need to either submit a progress payment or get paid before the lien waiver can be exchanged.
Let’s walk through the types of lien waivers you can work with in South Dakota:
- Conditional lien waivers, which are only effective once payment is received, are exchanged with progress payment applications.
- Unconditional lien waivers, which become binding upon signature, should only be submitted after payment is received.
For a more detailed breakdown of waiver types and timing, check out our handy lien waiver guide.
Lien waiver provisions that attempt to waive lien rights cannot be added to the contract for South Dakota lien waivers. State laws make it clear that lien rights can only be waived to the extent of payment received, which is a boon for construction teams. (Regardless, make sure to thoroughly review your contract before starting any project.)
Fortunately, South Dakota protects construction teams entering into a lien waiver dispute. Lien rights can only be waived through an express agreement that is linked to an endorsed joint payee check for work that has already been performed. This limits any payment headaches, as lien rights are retained until payment hits the bank.
Should a dispute happen during your South Dakota construction job, start by reviewing your lien waiver and corresponding job contract. Mediation and negotiation are often the best first steps; if they don’t prove to be fruitful, consider consulting with a construction law attorney who is familiar with South Dakota lien laws.
Lien waivers in South Dakota can be tricky. Once you understand the rules, you can protect yourself from any payment issues. Start familiarizing yourself with this list of resources:
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.