A subcontractor performed $38 million in work but was owed $5.3 million when the general contractor materially breached. The subcontract contained a lien waiver favoring the owner. The Fifth Circuit ruled that when a general contractor materially breaches, the subcontractor can treat the contract as dissolved, which retroactively cancels the lien waiver obligation. This means subcontractors are not locked into lien waivers if the contractor fails to pay.
Material breach by the general contractor allows you to dissolve the subcontract and recover lien rights, even if you signed a lien waiver
Dissolution works retroactively—it erases the contract as if it never existed, including the lien waiver clause
You can raise the same defenses against an owner (as third-party beneficiary) that you could raise against the general contractor