Change Orders and Lien Rights: What You Don’t Document Could Cost You

By Patrick Hogan, handle.com

Change orders are a reality on almost every job. But for subcontractors and suppliers, even a small change in scope can put payment and lien rights at risk if not properly documented. When timelines are tight and communication is informal, it’s easy to agree to a change over a call or text and keep moving.

But if that change isn’t backed by proper documentation, you may be setting yourself up for a dispute you can’t win.

This article walks through the payment risks tied to undocumented or mismanaged change orders and shows what steps you can take to stay compliant and protected.

Change Orders That Don’t Make It to Paper

A verbal go-ahead from the GC or site supervisor often feels like enough to proceed. But unless that approval is followed up with a signed change order, you’re working on assumptions, exposing you to risk. Payment terms, lien waivers, and notice requirements don’t automatically adjust to changes in scope, yet many contractors treat them like they do.

Here’s what can happen when the paper trail falls short:

– You submit a pay app or invoice for the added or revised work, but it later gets disputed or delayed because it wasn’t on the original contract.
– A conditional waiver that doesn’t reflect the updated amount is issued, leading to underpayment or waiver of rights for unpaid work.
– A lien is filed, but it doesn’t hold up because the change order work wasn’t clearly included in the contract documentation.

The core issue? Construction is a document-driven industry. If you can’t prove what was agreed to – and when – you lose leverage.

Impact on Lien and Notice Requirements

Many states have strict requirements around notice and lien deadlines. A major issue with undocumented change orders is that they blur the lines on when your work began and ended, and what work you’re claiming payment for.

Two common problems:

 1. Shifting Project Dates

If your last date of work changes due to added scope, it may reset or shift your lien filing deadline – but only if it’s documented. Otherwise, you may miss your deadline without realizing it.

2.  Scope Disputes

If a GC or owner disputes whether a change was authorized or part of the original agreement, they may claim your lien is invalid because it includes work not covered under contract.

In states like California, where preliminary notice is tied to scope and timing, failing to send notice for added work can invalidate your right to lien. In others, like Texas, the clock for filing a lien depends on the last month you furnished materials – but if those materials were added in an informal change, it’s harder to prove that timing.

Lien Waivers and Change Order Chaos

Lien waivers are another risk area. A typical waiver form – especially unconditional ones – states that you waive your lien rights for work through a certain date and for a certain amount. If a change order hasn’t been processed and paid for before you sign the waiver, you may inadvertently waive your right to recover for that work.

A few common waiver mistakes tied to change orders:

  • Signing too early: You issue an unconditional waiver based on scheduled pay but haven’t been paid for the new scope yet. If there’s a delay in processing the CO, you lose leverage.
  • Failing to cross-check: Field teams approve work, but office teams issue waivers without cross-referencing CO status, leading to misalignment.

The solution isn’t just legal review – it’s better internal coordination and document tracking.

Best Practices for Managing Change Orders and Lien Rights Together

1. Don’t Rely on Verbal Approvals
Every change should be acknowledged in writing, ideally with a signed CO. At a minimum, get written confirmation via email or a formal ticketing system. Texts don’t cut it in court or during payment disputes.

2. Link Change Orders to Notices and Waivers
Update preliminary notices if the added work changes your project scope, timeline, or furnishing dates. Some states allow amendments while others will ask you to send new ones. Always consult state resources and stay updated with ever-changing notice requirements for states you work in.

Track which COs are pending, approved, and invoiced – and make sure lien waivers match the updated totals to avoid signing away rights.

3. Train Field and Office Teams on CO Protocol

Field teams often authorize work before a CO is formalized. Make it standard practice to document what was added, when it was approved, and who signed off. Office staff should cross-check CO status before issuing waivers or processing billing.

4. Use a Centralized System
If you’re still tracking change orders, waivers, and notices in spreadsheets or emails, you’re opening yourself up to error. A digital system helps keep timelines aligned, alerts you to missing documents, and ensures changes are reflected in lien deadline tracking.

5. Flag Unpaid Change Orders Early
If you’ve invoiced for a change order and it hasn’t been paid or it’s still under review, don’t issue a waiver covering that amount. Flag it internally and communicate with your customer to clarify what’s being paid and what’s not.

Ensure Payments on Change Orders
Change orders aren’t just about scope – they’re about risk. When documentation falls behind, your right to get paid takes the hit. For subcontractors and suppliers, staying ahead means treating change orders as a core part of your lien and payment compliance process.

If you want to protect your margins, preserve your lien rights, and avoid payment disputes down the road, start treating every change order like it would be disputed or unpaid, because it is not unusual, and you don’t want to lose out on payments for work done.

About the Author:

Patrick Hogan is the CEO of Handle.com, where they build software that helps contractors and material suppliers with lien management and payment compliance. The biggest names in construction use Handle on a daily basis to save time and money while improving efficiency.

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