What is a waiver of lien?

• A. A contract provision that guarantees prompt payment to subcontractors.
• B. A contract provision that gives up the right to make a claim against the community association for payments not received.
• C. A clause that increases penalties for late payments.
• D. A provision that allows a contractor to withhold all work.

Answer: (B)

A waiver of lien is a contract provision where a contractor or subcontractor gives up the right to place a lien on the community association’s property for the payments covered. This protects the association by ensuring that, once the specified payment is made, there won’t be a lien claim attached to the property for that work, which helps keep title clear and avoids future payment disputes. Lien rights are a security interest in the property that can complicate transfers or financing, so waivers reduce that risk. Waivers are often conditioned on payment, so the lien right is released when the payment is received. This concept differs from provisions focused on timing or penalties or on withholding work, which deal with other aspects of the contract rather than relinquishing lien claims.