As a subcontractor, what happens if I sign releases in order to get paid for my work?

Often contracts for public projects and large private projects require subcontractors to sign lien waivers and releases in order to receive periodic payments for their work. The subcontractors, in turn, are required to obtain similar waivers from sub-subcontractors and suppliers. For subcontractors, this creates a breeding ground for conflict. The subcontractor may feel it has a claim against the general contractor but needs to get paid, and so it is faced with the choice of releasing the claim or potentially not getting paid. This conflict can trickle down to sub-subs and suppliers who may have a claim against any of the other parties. Last year, in Connelly Construction Corporation v. Travelers, the Eastern District of Pennsylvania confirmed that these lien waivers and releases are enforceable. This decision reinforces the need for subcontractors to seriously consider the consequences of signing these waiver forms.  Commonly, general contractors will accept markups to the waiver form intended to preserve a subcontractor’s claim. Subcontractors (as well as sub-subs and suppliers) can benefit greatly from seeking legal advice before signing a contract that requires these forms or the forms themselves.