In this Part 4 of our series, we explain the changes to the waiver and release forms under the new law effective July 1, 2012. The release forms are mostly the same, as well as the rules regarding their use, but there are important differences. It is best to have the new forms in front of you while you read this article. Click Here to download these forms. Start using the new forms with payment applications submitted on or after July 1.
There are still four waiver and release forms: Conditional Waiver and Release on Progress Payment (Civil Code §8132), Unconditional Waiver and Release on Progress Payment (Civil Code §8134), Conditional Waiver and Release on Final Payment (Civil Code §8136) and Unconditional Waiver and Release on Final Payment (Civil Code §8138), although the wording has changed and a capitalized “Notice” is required on all four documents.
So, what’s new in the forms?
The two progress payment forms now use the term “Through Date”, which indicates the date through which the claimant has provided labor, services or materials which are covered by the release, subject to the stated exceptions.
As for the exceptions to the progress payment releases, the convoluted language regarding “extra work”, “extras”, and “additional work” has now been standardized. Simply stated, “extras for which the Claimant has not received payment” are excepted from the scope of the progress payment release. However, the old rule remains that work performed prior to the date of the release pursuant to a signed change order are released unless listed as an exception.
The conditional progress payment release form has another new and important exception. Earlier progress payments which have not yet been paid are excepted, so long as you list them. Here’s the language of the exception:
“The following progress payments for which the Claimant has previously given a conditional waiver and release but has not received payment:
Date(s) of waiver and release: _________________________
Amount(s) of unpaid progress payment(s): $_____________”
IMPORTANT: As you see, you must list the amount of the earlier unpaid progress payment and the date(s) of the conditional waiver and release corresponding to each unpaid progress payment.
Also, as before, unpaid retention and contract rights are also automatic exceptions indicated on the progress payment release forms.
As for the two final payment releases (conditional and unconditional), the only permissible Exception is for “disputed claims for extras in the amount of $____________”.
RECOMMENDATION: If any of your claims for extras have not been quantified or submitted at the time the final payment release is submitted, make a good faith estimate of the disputed amount and include it in the Exceptions.
In Part 5, we will discuss what’s new in public works.
Hunt Ortmann Los Angeles construction litigation attorneys are still offering free in-house seminars regarding the new changes in lien law to any interested company. Hurry, these seminars are being scheduled daily. Check out our Lien Law Seminar Invitation for more information. Please email santoro@huntortmann.com to inquire or schedule this time-sensitive seminar for your company today!
Dale Ortmann is a Shareholder with Hunt Ortmann, a leader in California construction law and Mechanic’s Lien issues. If you have any questions about this bulletin or the changes regarding the new Mechanic’s Lien Law or Preliminary Notice Form, please contact him atortmann@huntortmann.com.