Is the lien waiver our Alabama subcontract makes us sign enforceable?
Alabama's construction statutes read here do not prohibit or prescribe a lien waiver. What they do say is that the paying party may condition payment on the receipt of a full release of any lien of the contractor, subcontractor, or sub-subcontractor for the amount of work being paid (Ala. Code § 8-29-3(n)), and that a party may not waive the right to receive interest before a payment is due under a contract subject to the prompt-payment chapter, although a party may waive the interest due on a late payment on or after the date the payment is due (§ 8-29-5), and that the chapter does not apply at all to residential homebuilders, to improvements to real property intended for residential purposes consisting of 16 or fewer residential units, to contracts, subcontracts or sub-subcontracts of $10,000 or less, or to contracts with the State or the local governments of Alabama (§ 8-29-7). The mechanics' and materialmen's lien itself is created by Ala. Code § 35-11-210 for work, labor, material, fixtures or machinery furnished for a building or improvement on land under a contract with the owner or the owner's agent, architect, trustee, contractor or subcontractor, on compliance with the division's requirements, and for employees of the contractor and materialmen furnishing to him the lien extends only to the amount of any unpaid balance due the contractor by the owner.
The trap
Two things a drafter should not read into the statute. The release § 8-29-3(n) contemplates is tied to "the amount of work being paid": nothing in the chapter blesses a release of lien rights for work not yet paid for, and nothing in it voids one either, so the waiver's own words govern. And the one waiver the chapter does restrict is of statutory interest, not of the lien: an advance waiver of interest before payment is due is outside what § 8-29-5 permits. Read § 8-29-3(n) whole before relying on it, too: the same subsection that lets the paying party condition payment on a lien release also preserves its right to withhold or not approve payment on the grounds set out in the contract, on the grounds in § 8-29-4, or otherwise for work not properly performed or payment not earned, grounds the section names and that are not stated here. Note also the ceiling in § 35-11-210, and note who it catches: the lien of an employee of the contractor, or of a person furnishing material to the contractor, reaches only the unpaid balance due the contractor from the owner, unless the supplier gave the owner the written pre-furnishing notice the section describes. A subcontractor is in the section's first clause and takes the full lien.
6 authorities
- statuteAla. Code § 8-29-3enactment date not established
The words that state the rule
(n) Nothing herein limits or alters the paying party’s right to withhold or not approve payment on grounds set forth in the party’s contract or the grounds set forth in Section 8-29-4 or otherwise for work not properly performed or payment not earned; rather, this section is intended only to establish a maximum amount of retainage, establish the timing for release of retainage, and provide for the payment of interest for improperly held retainage. Also, the paying party may condition payment on the receipt of a full release of any lien of the contractor, subcontractor, or sub-subcontractor for the amount of work being paid.
- statuteAla. Code § 8-29-3enactment date not established
The words that state the rule
(o) All loans and loan proceeds related to a construction project, and the disbursement and use thereof, are governed solely by the terms of the documents evidencing and securing the loan, and contractors, subcontractors, and sub-subcontractors have no lien or rights in any such loan, loan proceeds, or the disbursement or use thereof.
- statuteAla. Code § 8-29-5enactment date not established
The words that state the rule
A party may not waive the right to receive interest before a payment is due under a contract subject to this section. A party may waive the interest due on any late payment on or after the date the payment is due under Section 8-29-3.
- statuteAla. Code § 8-29-7enactment date not established
The words that state the rule
This chapter does not apply to the following: (1) Residential homebuilders. (2) Improvements to real property intended for residential purposes which consist of 16 or fewer residential units. (3) Contracts, subcontracts, or sub-subcontracts in the amount of ten thousand dollars ($10,000) or less. (4) Contracts with the state or local governments of the State of Alabama.
- statuteAla. Code § 35-11-210enactment date not established
The words that state the rule
Every mechanic, person, firm, or corporation who shall do or perform any work, or labor upon, or furnish any material, fixture, engine, boiler, waste disposal services and equipment, or machinery for any building or improvement on land, or for repairing, altering, or beautifying the same, under or by virtue of any contract with the owner or proprietor thereof, or his or her agent, architect, trustee, contractor, or subcontractor, upon complying with the provisions of this division, shall have a lien therefor on such building or improvements and on the land on which the same is situated, to the extent in ownership of all the right, title, and interest therein of the owner or proprietor, and to the extent in area of the entire lot or parcel of land in a city or town; or, if not in a city or town, of one acre in addition to the land upon which the building or improvement is situated; or, if employees of the contractor or persons furnishing material to him or her, the lien shall extend only to the amount of any unpaid balance due the contractor by the owner or proprietor, and the employees and materialmen shall also have a lien on the unpaid balance. But if the person, firm, or corporation, before furnishing any material, shall notify the owner or his or her agent in writing that certain specified material will be furnished by him or her to the contractor or subcontractor for use in the building or improvements on the land of the owner or proprietor at certain specified prices, unless the owner or proprietor or his or her agent objects thereto, the furnisher of the material shall have a lien for the full price thereof as specified in the notice to the owner or proprietor without regard to whether or not the amount of the claim for the material so furnished exceeds the unpaid balance due the contractor, unless on the notice herein provided for being given, the owner or proprietor or his or her agent shall notify the furnisher in writing before the material is used, that he or she will not be responsible for the price thereof.
- statuteAla. Code § 35-11-210enactment date not established
The words that state the rule
The notice may be given in the following form, which shall be sufficient: “To __________, owner or proprietor: “Take notice, that the undersigned is about to furnish __________, your contractor or subcontractor, certain material for the construction, or for the repairing, altering, or beautifying of a building or buildings, or improvement or improvements, on the following described property: ______________________________________________ ______________________________________________ and there will become due to the undersigned on account thereof the price of the material, for the payment of which the undersigned will claim a lien.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.