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Tennessee Waivers

  • Any contract provision that purports to waive any right to a lien is void and unenforceable as against the public policy of Tennessee. T.C.A. 66-11-124(b).
  • A pay-if-paid clauses does not likely waive lien rights.
  • If a lien claimant accepts a note or notes for all or any part of the amount of the lien claimant's demand, such acceptance shall not constitute a waiver of the lien claimant's lien, unless expressly agreed in writing.
  • "Paid if Paid" is enforced if explicit.
  • "Pay when Paid" suggests time for payment.
  • Pay-when-paid clause in the subcontract or purchase order does not create a condition precedent to payment.

Retainage Provisions

Public & Private

  • The maximum rate of retainage is 5 percent on all public and private projects. TENN.
    CODE ANN. § 4-15-102. See also TENN. CODE ANN. §66-34-103(a).
  • Retained funds must be kept in an interest-bearing escrow account. TENN. CODE ANN. §
    6634-104. The funds must be released by the owner to the prime contractor within 90 days of completion or substantial completion of a project, whichever occurs first. Prime contractors are required to release retainage to subcontractorsand suppliers within 10 days of payment of retainage to the general contractor by the owner. TENN. CODE ANN. § 66-34-103(b).
  • Contractors and subcontractors may substitute securities in lieu of retainage or, on private
    contracts, provide a line of credit. TENN. CODE ANN. § 12-4-108(c), (d).