Indiana lien waiver: the anti waiver rule does not reach work on a house
Every fifty state chart files Indiana under waiver prohibited. Read subsection (a) of the section they are citing and it excludes Class 2 structures, which is the statutory name for a house, a duplex, a townhouse and the garage that goes with them. For residential work in Indiana the rule does not apply.
IC 32-28-3-16(b) voids a contract provision requiring an advance waiver of lien or payment bond rights, but subsection (a) applies the section only to construction contracts for buildings other than Class 2 structures and certain utility property. A Class 2 structure is a one or two dwelling unit building, a townhouse, or their outbuildings.
Read the law: IC 32-28-3-16codes.findlaw.com
IC 32-28-3-16(a), the subsection the charts skipFill it in online Type your details in and download it already filled in.This section applies to a construction contract for the construction, alteration, or repair of a building or structure other than: (1) a Class 2 structure (as defined in IC 22-12-1-5) or an improvement on the same real estate auxiliary to a Class 2 structure (as defined in IC 22-12-1-5)
Other than. Everything that follows those two words is outside the rule, and a Class 2 structure is a house.
Download a blank Indiana lien waiver
Indiana prescribes no statutory wording, so this is the general conditional waiver on progress payment, the form that fits most draws. Print it and fill it in by hand, or use the builder below and get it back already filled in.
Free, no signup, no email, no watermark.
What a Class 2 structure is, in the statute's own words
IC 22-12-1-5(a) defines a Class 2 structure as a townhouse, or a building or structure intended to contain or containing only one or two dwelling units, unless any part of it is regularly used as a Class 1 structure. It also covers an outbuilding for such a structure, naming a garage, a barn, and a family swimming pool including an above ground pool.
Subsection (c) defines the townhouse: a single family unit in a group of three or more attached units, each running foundation to roof, not more than three stories, separated from its neighbors by rated fire walls, with open space on at least two sides.
Put plainly, a single family house, a duplex, a row townhouse, and the detached garage, barn or pool that goes with any of them, are all Class 2 structures. That is the whole of the residential market. IC 32-28-3-16(a) removes every one of them from the anti waiver rule.
What the rule does say, for the jobs it reaches
On the work it covers, which is broadly the commercial and multifamily side, Indiana is a normal prohibited state. Subsection (b) voids a contract provision requiring a person who furnishes labor, materials or machinery to waive a lien against the real estate or a claim against a payment bond before being paid.
Subsection (c) adds a second void: a provision under which one or more persons agree not to file a notice of intention to hold a lien. That closes the obvious workaround of leaving the lien intact but removing the notice that preserves it.
Subsection (a) also excludes property owned or controlled by a public utility, a municipally owned utility, a joint agency, a rural electric membership corporation, a rural communications cooperative or a not for profit utility, where the property is used for producing or delivering heat, light, water, telecommunications or power.
The one way back into the rule
The Class 2 definition carries an exception of its own: a building is not a Class 2 structure if any part of it is regularly used as a Class 1 structure. Class 1 is broadly the commercial and public category.
So a house with a shop, an office or a licensed day care operating in part of it can fall back outside the Class 2 definition and back inside the anti waiver rule. That is an edge case, not the usual job, and it is worth a question rather than an assumption.
What an Indiana residential contractor should actually do
Treat Indiana as a state with no protection, because on your work it is one. Read the waiver clause in the contract before you sign the contract, since on a Class 2 structure that clause is not void.
Hand over conditional waivers at every draw and keep the unconditional one until the money has cleared. The conditional form is what ties the release to the payment when no statute does it for you.
Put the amount and the through date on every waiver. Nothing in the Indiana code narrows a broadly worded residential waiver for you.
Which of the four to sign on an Indiana job
On Indiana residential work there is no statute standing between you and the waiver you signed, so the form is the whole of the protection. A conditional waiver ties the release to the payment clearing. An unconditional one releases on signature, paid or not.
Questions people ask
Does Indiana prohibit lien waivers signed before payment?
Only on the jobs the section reaches. IC 32-28-3-16(b) voids such a provision, but subsection (a) applies the section to buildings other than Class 2 structures and certain utility property. A house, duplex, townhouse or their outbuildings are Class 2 structures, so residential contracts are outside the rule.
What is a Class 2 structure in Indiana?
Under IC 22-12-1-5 it is a townhouse, or a building intended to contain only one or two dwelling units, plus outbuildings such as a garage, barn or family swimming pool, unless any part of the structure is regularly used as a Class 1 structure.
Why do other sites say Indiana prohibits advance lien waivers?
Because they quote subsection (b) and stop. Subsection (b) does void the provision. Subsection (a) is what says which contracts the section applies to, and it excludes Class 2 structures, which is where most residential contractors work.
Is an advance waiver enforceable on an Indiana commercial job?
No. On a building that is not a Class 2 structure and not excluded utility property, IC 32-28-3-16(b) voids a provision requiring a waiver of lien or payment bond rights before payment, and (c) voids an agreement not to file a notice of intention to hold a lien.
Working in another state? The general lien waiver forms page covers all four waiver types, and conditional vs unconditional lien waiver explains which of the two to sign and when.
This page quotes IC 32-28-3-16 and explains what it says. It is not legal advice, and a statute can be amended. Read the linked section before you rely on it.