If a seller has work done on a property before closing, then you will need to submit sworn statements and lien waivers to protect the property’s title. A full package of original statements and waivers needs to be submitted at least a few days before closing for review. Please note that all statements and waivers MUST have original signatures at closing and be notarized. Material waivers also must be original, although paid receipts can be copies.
Sworn Statements
A sworn statement is an affidavit that details all subcontracts that have been let for work, material or services performed on the property. There are two basic kinds of sworn statements, an Owner’s Sworn Statement and a General Contractor’s Sworn Statement.
Owner’s Sworn Statement – An Owner’s Sworn Statement should identify all contracts that the owner has entered into for work or materials for the property. If the owner only hired a general contractor then there would only be one line, listing the contract with the general contractor.
General Contractor’s Sworn Statement –A General Contractor’s Sworn Statement should identify all subcontractors that the General Contractor used to supply work and/or materials for the property.
Lien Waivers
Once you have the sworn statements, you should get lien waivers from everyone listed in the sworn statements. A properly executed lien waiver will prevent a contractor from filing an effective lien against a property’s title. There are three basic kinds of lien waivers, Final Lien Waiver, Waiver of Lien to Date, and Material Lien Waiver.
Final Lien Waiver – This is the most commonly used waiver. The full form should be completed, signed in the top and bottom sections by the contractor and notarized. If materials were delivered to the jobsite, as is common with concrete, drywall, brick, etc., a material waiver must also be furnished. If materials were purchased at a retail type store, such are Menards, paid receipts are acceptable. The vendor name, type of material, and amounts should be listed in the grid section of the waiver, and either the material waiver or receipts should be attached.
Waiver of Lien to Date – You should use this form if the contractor is still due additional funds after the first payment. The form should be filled out similarly to the Full Lien Waiver above. If there is no Final Lien Waiver signed by closing then the outstanding amount may be subject to a hold back.
Material Waiver – Most suppliers will have their own form of material waiver, but if not, you can use the attached Excel form. This form can be used as a final or partial material lien waver.