Contractor's Affidavit to Induce Lender to Release Funds - Final Payment
Definition and meaning
The Contractor's Affidavit to Induce Lender to Release Funds - Final Payment is a legal document utilized in construction projects to declare that a general contractor has fulfilled their obligations under a construction contract. This affidavit serves as a formal assertion that all subcontractors, suppliers, and laborers have been compensated for their work and that no construction liens or outstanding claims exist against the project. The affidavit is generally presented to a lender as part of the process to release funds for the final payment due to the general contractor.
How to complete a form
Completing the Contractor's Affidavit involves several key steps:
- Fill in Personal Details: Include the name of the affiant, the corporate contractor, and the principal office address.
- Specify the Project: Clearly state the property address for the project.
- Financial Affirmations: Certify that all subcontractors, suppliers, and laborers have been fully paid for their work up to a specified date.
- Notarization: The completed affidavit must be sworn and signed in the presence of a notary public.
Make sure to double-check all information for accuracy and completeness before submission.
Who should use this form
This affidavit is primarily intended for general contractors who need to confirm their compliance with contract terms, particularly regarding payments to subcontractors and suppliers. It is essential for situations where final payments are pending from a lender, ensuring the lender that no outstanding claims exist that could affect the financial disbursement. Owners of the property and lenders may also find this form relevant as it protects their interests in the transaction.
Key components of the form
The Contractor's Affidavit contains several critical elements that need to be addressed:
- Identification of Parties: Clearly list the names and addresses of the affiant (general contractor), owner, and lender.
- Certification of Payment: A declaration that the contractor has paid all subcontractors, suppliers, and laborers in full.
- Waiver of Liens: An assurance that all rights to claim construction liens are waived up to the specified date.
- Bonding Over Liens: A commitment to bond over any potential claims that may arise post-submission.
Each of these components plays a significant role in ensuring that the final payment can be released without legal complications.
Common mistakes to avoid when using this form
When completing the Contractor's Affidavit, there are several pitfalls to watch out for:
- Incomplete Information: Ensure that all required fields are filled in completely and accurately.
- Incorrect Dates: Double-check the date specified for payment to avoid discrepancies.
- Notary Errors: Ensure that the affidavit is signed correctly and notarized as required; an incomplete notarization can invalidate the document.
- Failure to Verify Payments: Confirm that all subcontractors and suppliers have indeed been paid before signing the affidavit.
Avoiding these mistakes will help safeguard the legal standing of the affidavit.
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FAQ
In the mechanics lien process, a lien waiver is a document from a contractor, subcontractor, materials supplier, equipment lessor or other party to the construction project (the claimant) stating they have received payment and waive any future lien rights to the property (of the owner) for the amount paid.
An unconditional release means that there are no restrictions on the release of the lien. This type of lien release is often used in final project documents to confirm that the project is complete, payment has occurred, and you release all future rights to file liens on the project.
An unconditional mechanic's lien waiver states the contractor has in fact been paid in full for the stated work. Write the name of the maker of the check in the space provided on the mechanic's lien release form. Fill in the amount of the payment. Write the name of contractor the payment is being made to.
Name of Claimant. This is the name the party to be paid, and the party who will be signing the lien waiver document. Name of Customer. Job Location. Owner. Exceptions. Claimant's Signature. Claimant's Title. Date of Signature.
An "Unconditional Waiver and Release Upon Final Payment" extinguishes all claimant rights upon receipt of the payment. A "Conditional Waiver and Release Upon Final Payment" extinguishes all claimant rights upon receipt of the final payment with certain provisions.
In the event that the contract is breached and payment is not received, an affidavit for mechanics' lien may be filed to place a lien on the project.
A lien waiver is quite common in the construction business. Essentially, it is a document from a contractor, subcontractor, supplier, or another party who holds a mechanic's lien that states they have been paid in full and waive future lien rights to the disputed property.
Conditional lien waivers are provided by contractors or suppliers before they've been paid. The key language to look for in these documents is upon payment of an amount, the vendor releases their right to file a lien on the work provided up until a certain date.