North Carolina Building Contractor License Practice Exam

A lien waiver is used to release the owner from ________.

1. Paying for completed work

2. Marketing expenses

3. Paying twice for materials and labor

4. Future project liabilities

The correct answer is: Paying twice for materials and labor

A lien waiver is a legal document that contractors and subcontractors often use in the construction industry to confirm that they have been paid for their work and that they waive any further claims against the property owner for payment related to that work. The primary purpose of the lien waiver is to protect the property owner from potential double payments for labor and materials. When a contractor or subcontractor submits a lien waiver, they are stating that they have received payment for the completed work, which means the owner does not have to pay again for those same services. This is important because, without a lien waiver, a contractor could potentially file a lien against the property if they do not get paid, even if the owner has already paid another party involved. Understanding a lien waiver’s role helps prevent future financial liabilities for property owners, particularly in avoiding duplication of payments. In this context, it is clear that a lien waiver serves to mitigate the risk of paying twice for materials and labor provided during the construction process.