Is this upfront lien waiver in our subcontract or purchase agreement enforceable in Alaska?
Yes, without needing separate consideration: a real departure from states that require the waiver be given in exchange for payment. AS 34.35.117(a): "a written waiver of lien or stop-lending notice of rights created under AS 34.35.050 -- 34.35.120 signed by a claimant requires no consideration and is valid and binding." But it cannot reach ahead of the work: "A waiver permitted under this section may not relate to labor, materials, services, or equipment furnished after the date the waiver is signed by the claimant."
The trap
AS 34.35.117(b) is an absolute, separate carve-out that a broadly worded corporate waiver cannot reach: "An individual described in AS 34.35.120(10) may not waive right to claim a lien under AS 34.35.050 -- 34.35.120. A waiver that purports to waive the lien rights of that individual or class of individuals is void." AS 34.35.120(10) defines that protected class narrowly and specifically: "'individual' means a natural person who actually performs labor upon a building or other improvement as an employee of the owner or any contractor furnishing labor, materials, services, or equipment for the construction, alteration, or repair of a building or other improvement." A subcontractor entity signing a blanket lien waiver therefore does not, and by this statute's own words cannot, waive its own individual employee-laborers' personal lien rights: drafting the waiver more broadly does not change that outcome. The converse mistake is the one that has actually been litigated, and it is worth knowing which way it came out. In Nystrom v. Buckhorn Homes, Inc. a general contractor argued it was itself an "individual" and so could not have waived; the court held the term "does not include contractors", reasoning that "[i]f Buckhorn is an 'individual,' then all general contractors, including large, sophisticated contractors would lose the ability to waive their lien rights. Such a result is contrary to the intent of lien waivers: to help facilitate project financing." A contractor cannot borrow the laborer's shield.
6 authorities
- statuteAS 34.35.117enactment date not established
The words that state the rule
Except as provided under (b) of this section, a written waiver of lien or stop-lending notice of rights created under AS 34.35.050 — 34.35.120 signed by a claimant requires no consideration and is valid and binding. A waiver permitted under this section may not relate to labor, materials, services, or equipment furnished after the date the waiver is signed by the claimant.
- statuteAS 34.35.117enactment date not established
The words that state the rule
An individual described in AS 34.35.120 (10) may not waive right to claim a lien under AS 34.35.050 — 34.35.120. A waiver that purports to waive the lien rights of that individual or class of individuals is void.
- statuteAS 34.35.120enactment date not established
The words that state the rule
“individual” means a natural person who actually performs labor upon a building or other improvement as an employee of the owner or any contractor furnishing labor, materials, services, or equipment for the construction, alteration, or repair of a building or other improvement
The words that state the rule
The legislative history of AS 34.35.117 also supports a finding that “individual” does not include contractors.
The words that state the rule
If Buckhorn is an “individual,” then all general contractors, including large, sophisticated contractors would lose the ability to waive their lien rights. Such a result is contrary to the intent of lien waivers — to help facilitate project financing.
The words that state the rule
Second, the trial court erred, as a matter of law, in construing the term “individual” in AS 34.35.120(10) to include Buckhorn and in awarding priority to Buckhorn’s lien, if valid, over Nystrom’s prior recorded deed of trust.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.