Is a no-lien clause or an up-front lien waiver enforceable in a Delaware construction contract?
No. Notwithstanding any other law, any contract, agreement or understanding by which the right to file or enforce a mechanics' lien under 25 Del. C. ch. 27 is waived is void as against public policy and wholly unenforceable. Two things are preserved: a written waiver executed and delivered by a contractor, subcontractor, material supplier or labourer SIMULTANEOUSLY WITH OR AFTER payment for the labour performed or materials supplied, and a written agreement to subordinate, release or satisfy a lien made after a statement of claim has been filed. Granting credit or taking notes or other securities is not itself a waiver unless received as payment or the lien is expressly waived; its only effect is to postpone the lien until the agreed time expires.
The trap
Timing is the whole rule. The industry habit of collecting a lien waiver with the pay application, before the money moves, fails in Delaware, because the statute saves only a waiver executed simultaneously with or after payment. A subordination or release negotiated after a statement of claim has been filed is fine. And the section that § 2706(b) expressly refuses to touch is the one that can defeat the lien outright: under § 2707 no lien attaches to land or a structure 'used solely as a residence of said owner' once the owner has made full or final payment to the contractor in good faith, so on a residential job the waiver question can be moot. A related trap sits one chapter over: 25 Del. C. § 2614 makes a broker's advance waiver of a broker's lien void too, but not on the same terms. It saves only a waiver given after the broker has 'first received full payment', with no simultaneous-with-payment saving and no post-claim subordination.
4 authorities
- statute25 Del. C. § 2706enactment date not established
The words that state the rule
(b) Notwithstanding the provisions of any other law, except as provided in this subsection: Any contract, any agreement or understanding whereby the right to file or enforce any lien created under this chapter is waived, shall be void as against public policy and wholly unenforceable. This section shall not preclude a requirement for a written waiver of the right to file a mechanics’ lien executed and delivered by a contractor, subcontractor, material supplier or laborer simultaneously with or after payment for the labor performed or the materials supplied has been made to such contractor, subcontractor, material supplier or laborer nor shall this section be applicable to a written agreement to subordinate, release or satisfy all or part of such lien made after a statement of claim has been filed under this chapter. Nothing in this subsection shall amend, exempt, limit or qualify the provisions of § 2707 of this title.
- statute25 Del. C. § 2614enactment date not established
The words that state the rule
An agreement by a broker to waive its right to a broker’s lien without having first received full payment is against public policy, void, and unenforceable.
- statute25 Del. C. § 2706enactment date not established
The words that state the rule
(a) Persons entitled to avail themselves of the lien provided for in this chapter shall not be considered as waiving the same by granting a credit or receiving notes or other securities, unless the same be received as payment or the lien expressly waived, but the sole effect thereof shall be to prevent such persons from availing themselves of the liens provided for in this chapter until the expiration of the time agreed upon.
- statute25 Del. C. § 2707enactment date not established
The words that state the rule
No lien shall be obtained under this chapter upon the lands, structure, or both, of any owner which is used solely as a residence of said owner when the owner has made either full or final payment to the contractor, in good faith, with whom the owner contracted for the construction, erection, building, improvement, alteration or repair thereof. Prior to or simultaneous with the receipt of any full or final payment by the contractor, the contractor must provide the owner either: (1) A notarized, verified written certification that the contractor has paid in full for all labor performed and materials furnished to the date of such full or final payment in or for such construction, erection, building, improvement, alteration or repair or (2) A written release of mechanics’ liens signed by all persons who would otherwise be entitled to avail themselves of the provisions of this chapter, containing a notarized, verified certification signed by the contractor that all of the persons signing the release constitute all of the persons who have furnished materials and performed labor in and for the construction, erection, building, improvement, alteration and repair to the date of the release and who would be entitled otherwise to file mechanics’ liens claims. Failure of the contractor to provide the owner a written certification or a release of mechanics’ liens at such time shall constitute sufficient cause for the immediate suspension, revocation or cancellation of the contractor’s occupational and business licenses. If the owner has not made full payment in good faith to such contractor, the lien may be obtained in accordance with this chapter, but it shall be a lien only to the extent of the balance of the payment due such contractor, which balance or portion shall be payable pro rata among the claimants who perfect liens. Payments made to the contractor by the owner after service of process, as provided in § 2715 of this title, shall not be deemed to be “in good faith.”
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.