Aug 01

It is important for you to understand the clauses in an agreement when signing a contract for any professional service. Although this might seem like simple common sense, most people don’t understand clauses in agreements, such as the right of subrogation, subrogation waiver provisions, and so on.

Subrogation, in insurance law, is the insurer’s right on agreeing to payout a claim or to pay a claim and its put in place for the insured to recover paid sums. The insurer has the right to pursue any claim that the insured person is entitled to make against any third party who has caused its loss. In essence, subrogation is in place to prevent an insured person from claiming from a third-party wrongdoer and the insurer, getting overcompensated in the process.

Issues with Subrogation when Drafting Insurance and Liability Clauses

Subrogation issues arise when someone has been injured and another party or person at fault pays for some or all of the damages which result from the injury. By definition, a subrogation claim will allow a collateral source or an innocent paying party to stand for the injured party. When asserting subrogation claims, collateral sources are not entitled to more rights than the individual who was eligible to get the initial benefits.

The issues surrounding subrogation can lead to great difficulties in cases where lawsuit settlement is against a third-party. It is possible for both the collateral source provider and injured party to settle a part of their claims with an at-fault party. The only thing is that such settlements might affect the insured’s right to get ongoing benefits or the insurer’s or insurance broker responsibility to give payments. Quite often, the obligation to payout benefits and the right to get ongoing benefits will depend on if adequate notice is provided to the intended settlement non-settling party.

The parties have to get an express provision within the policy to deny the insurance provider’s rights of subrogation to get rid of the risk that they seeks to impose subrogation rights. A no-subrogation clause along with an exclusion of the underlying contract in the policy would make sure that any liability for that particular risk remains with the insurer.

Bear in mind that these agreements can be single name insurance or co-insurance policies. Even though a contract might provide for one party to procure the insurance, it is important to consider whether it should be a single name insurance plan or two parties in a contract.

Subrogation will matter in cases where you have covered loss, and submit a claim to the insurance provider, but another party is responsible for part or all of the damages.

If you are injured and being bombarded by different parties proclaiming subrogation rights, then you need to consult a lawyer to understand the laws in your state as well as one’s obligations to insure.

Oct 30

Unconditional Lien Waiver upon Final Payment

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What is Unconditional Lien Waiver upon Final Payment?


The unconditional lien waiver on final payment is considered to be the safest waiver which releases all the rights and places the lien on the owners. People who use the release are quite confident that their work will be performed within a stipulated time period. Unconditional waiver is related to all the future and present legal rights and it is mostly utilized by the construction vendors. Most of the waivers are also provided in the sports and leisure activity arena where a person seeks legal protection from the liability.  If the other party gives up the right, it means absolving the other person of all the responsibilities.

Unconditional Lien Waiver on Final PaymentUnconditional liens are very important when the construction projects are being undertaken and the waivers are advocated to protect the property from the claims brought by contractors. When the project is completed, the release of the final payment is executed.  It helps to release the construction project from the financial obligations of the contractors. The waivers must be supplied with certain information such as the parties involved and the description of the job. In addition, the amount paid to the contractors and the payment conditions must also be mentioned in the documents.  Additional terms should be outlined as to what claims are being released.

If the client is not able to pay contractors or suppliers it might result in the constructed property being confiscated by the mechanic liens. The waiver can act as a legal impediment in the transferring of the title and it must be paid up front to the suppliers before the title is supplied to the other owners.

As far as non construction context is concerned, unconditional waivers are seen in the professional and the recreational groups wherein it helps to avoid the liability. It occurs when the participants are injured during the games. Whenever an activity is carried out and is quite risky, it is important to sign the waiver agreement with the parties. The mechanics lien is a document which states the contractor has received a certain amount of the money from the project. Before signing the contract, one should read the terms and conditions carefully.  Claimants must issue this type of release when they have got full payment in the bank. The release can be demanded by the owners when they are paid in full for the work done. Unconditional lien waiver helps to induce the final payment to the intended recipients.

Oct 30

Conditional Lien Waiver upon Final Payment

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What is a Conditional Lien Waiver upon Final Payment?



The conditional lien waiver on final payment is a binding document that officially releases the claim of the people who provided services like supply of raw materials and labor to complete a project as soon as they are paid and there is substantial proof that this is so. This proof can be given as a written acknowledgement by the claimant as to let know that payment has been received or endorsement on a single or a joint check by the claimant received by the bank from which it was drawn by the client. This form is very much similar to that for the conditional waiver on progress payment. It does not however allow you to list other waivers and the payment still left to be made in your name.

How is it different?

The payment should be done completely under this without any returned checks or temporary stopping of paychecks to ensure that no law is violated which could lead to litigation in the interest of the claimant. The conditional waiver of final payment ensures that the claimant gets paid for the services extended by him or her. The proof demanded for the payment done secures the legality of the document that can be later challenged in court should the claimant state otherwise later regarding the payment for the services provided. The document protects both the claimant and the client in this manner as the client will be required to pay the claimant the money asked of him through till the date mentioned on the form and once the payment is made and evidence provided in relation to the payment received, it will be documented and cannot later be claimed by the claimant that there was any kind of defaulting on the payment made by the client. The firm also works to the advantage of both as the property rights are released as soon as the evidence of payment is released (this works in the claimant’s favor as they do not have to give up the rights as soon as they sign the document but only after the payment is received).

Why it is better?

The conditional waiver of final payment is better than the conditional and unconditional waiver on progress payment as the property rights are not signed over until and unless the payment and evidence for payment is received. The conditional and unconditional waiver of progress payment makes the claimant let go of the property right as soon as they sign it. It’s better to use conditional waiver on final payment that works with such versatility in both parties interests.

 

Oct 30

Unconditional Lien Waiver on Progress Payment

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What is Unconditional Lien Waiver on Progress Payment?



Unlike a conditional waiver of progress payment, the unconditional waiver of progress payment does not guarantee you a payment for the services extended by you towards your client as it releases your liability rights to the property as soon as you sign it. It does not matter any longer whether you receive the payment by the through date mentioned on the form. The form itself mentions something to the tune that if you do not receive the payment by the through date mentioned then it is not anybody’s responsibility and that you should get a conditional waiver and release on a progress report form.

How is it different from conditional waiver on progress payment?

The only difference between the conditional waiver of progress payment and unconditional waiver on progress payment form format is that in the financial institution detail section of the unconditional waiver, you only need to fill up the amount that you are expected to receive. The firm also does not provide any space for claims for unpaid waivers unlike in the conditional waiver on a progress payment form. The unconditional waiver of progress payment will release the claimant’s right from the property of the client as soon as it is signed and will remain released despite non-payment of the full amount by the through date. Basically the unconditional waiver of progress payment will free the client from any stipulations and should not be signed unless and until the claimant trusts the client on payments from the past projects that were worked on together with them.  This is almost like confirming that you have received the payment for the work done and are required to relinquish rights to the property even before you get the money for the work done. The conditional waiver of progress payment at least ensures payment by the through date mentioned on form even if it waives the right of the claimants to the property as soon as they sign it.

When to use it?

The general advice is to never go for the unconditional waiver of progress payment as it does not protect the interest of the claimant. The waiver works to the advantage of the owner as he can make the payment to the claimant at whatever time he wishes to depend upon his/her financial situation. In cases like these where there is enough confidence in the client that the payment will come through eventually and there is no need to necessarily make him/her liable for unfulfilled payment through a specific date then this is a safe waiver to sign.

Oct 30

Conditional Lien Waiver on Progress Payment

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What is a Conditional Lien Waiver on Progress Payment?


A lien waiver is a document developed to protect the interest of the people who provide with materials, labor and other services for the completion of a construction project. The claimant, who is the person or a group of people who provided the materials, labor and other significant services specific to the project sign the waiver stating that they have received the payment for the work executed by them and that they waive any liability rights to the property of the owner. The payment is generally done in a progressive manner requiring no checks to be returned or be stopped. There are four types of waivers; one is a conditional waiver of progress payment, another is an unconditional waiver of progress payment, similarly the next two are: conditional waiver of final payment and unconditional waiver of final payment.

How it works?

Conditional Lien Waiver on Progress PaymentOut of all of these, the conditional waiver of progress payment is considered to be the safest waiver as it will release all claimants’ rights through a specific date, mentioned on the form as “Through Date’’, provided all the payments are cleared by the date that is mentioned.  A conditional waiver and release on a progress payment form will incorporate the following details: The name of the claimant, the name of the customer, the job location, owner and the through date in the part of the form which deals with identifying information. The next part of the form will ask the owner to fill in the details of the financial institution like the name of the bank at which the check was drawn, the amount the check is worth and the name of the person or organization to whom the check is payable to. Furthermore the next section could ask you the details of other waivers for which you haven’t received payment yet. They ask you to fill out the through date of the waivers and the exact amount to be paid. The last section will deal with the claimant’s signature, his/her title and the date of signature.

What are its advantages?

This form will help you get payment for your services extended with surety as the through date set will ensure that the property built by your efforts is not released readily to its owner. The form is beneficial for all claimants as the fear of non-release of property is a strong one as far as the owner is concerned, he is very likely to give the money asked of him in the very beginning of the project readily to safeguard his interests. This document becomes more of a binding one that prevents anyone to default and be tied up in any sort of litigation.

Oct 30

Lien Waiver

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What is Lien Waiver?


We need a lien waiver because it relinquishes a business or person’s right to put a lien on the assists of another person or party. Contractors and mechanics often use lien waivers and these are signed by the customers that have had contractor or mechanical work done where the bill has been paid in full. If there’s no waiver the mechanic or contractor can take their supplies back and is able to place a lien on the property if the customer hasn’t paid in full as they agreed to. The lien waiver is given once the customer has paid in full for the work that they requested.

Lien WaiverWhen a contractor or a mechanic does work they put themselves at risk because the customer may make late payments so they may not pay at all. The lien protects the contract or mechanic against any type of non-payment. The lien waiver certifies that the customer has paid in full and that the contractor can’t make any claims. The contractor can make claims if the customer hasn’t paid in full because there’s no lien waiver given. The customer needs to know that the contractor can put liens on their property if the work isn’t paid for. Once the work is paid for the waiver will let them know that the work is complete and that the contractor can no longer put a lien on the property.

The waiver assures all parties such as a mechanic, contractor, supplier, and so on that the work is complete and paid for. If a contractor is getting paid in installments for example, and the customer doesn’t pay, the contractor could take heavy losses due to the cost of their supplies. With a lien, they can get this money back. If the work is completed and the customer pays in full they can supply a waiver for the customer to assure the customer that no lien can be placed on their property. The lien protects the contractor, and the lien waiver protects the customer.

The contractor should supply the lien waiver to the customer once the bills are paid or the customer should ask for a lien waiver so there’s no possibility of the contractor placing a lien on work that has been paid for by the customer. If the customer knows ahead of time that a lien can be put on their property if no payments are made that customer is going to be more willing to make the payments required for the work that you do.

As a contractor or a mechanic you need the lien waiver for your customer. You can assure them that the waiver will be given once they have paid you in full for the work that you have both agreed to. This waiver protects the customer while the lien protects you. You should only give the waiver once you are satisfied that everything has been paid for. As the customer you should get this waiver right away once you have paid for the work so there’s no chance of claims being brought against you falsely.

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