What is the purpose of a lien waiver?

A lien waiver serves the purpose of formally releasing a party's claim or right to a lien against a property. When a contractor, subcontractor, or supplier completes work on a property and is paid, they often provide a lien waiver to the property owner or general contractor. This document indicates that they have received payment for their services and that they relinquish their right to place a lien on the property for the amount paid. It is essentially a safeguard for the property owner, ensuring that once payment is made, they won't face added claims from that party in the future regarding the same work.

In contrast, the other options do not align with the primary role of a lien waiver. Securing financing (first choice) involves obtaining funds for property improvement, which is unrelated to the release of lien rights. Providing proof of construction completion (third choice) may be documented through different means like a completion certificate or an inspection report, rather than a lien waiver. Lastly, obtaining insurance for the property (fourth choice) pertains to securing coverage against potential losses and is separate from lien considerations. Thus, the accurate function of a lien waiver is to create a record of released lien rights following payment for work performed.