# WaiverAudit — Comprehensive Technical, Legal & Architecture Reference

> WaiverAudit (https://waiveraudit.com) is the automated compliance and draw packet audit platform for commercial construction General Contractors (GCs), project executives, construction lenders, and title companies. It reconciles commercial billing packets in 7 to 25 seconds before payment disbursement.

---

## 1. Problem Space & Industry Context

In commercial construction, the monthly pay application draw cycle is the single highest-liability operational bottleneck:
- **Draw Friction**: Subcontractors submit pay applications (AIA G702/G703 or trade invoices) alongside lien waivers, ACORD 25 Certificates of Insurance (COI), and secondary material supplier releases.
- **Lien Exposure**: If a GC releases payment without a valid, properly executed statutory lien waiver, or if the waiver consideration differs from the disbursement check, the property remains vulnerable to mechanics' liens, double payment, and title encumbrances.
- **Orphan 2nd-Tier Supplier Liens**: Unpaid material suppliers (e.g., Ferguson, Graybar, Sunbelt Rentals, Vulcan Materials) can record direct mechanics' liens against the property even if the GC paid the 1st-tier trade contractor in full.
- **Multi-Page G703 Subtotal Traps**: Continuation sheets spanning 5 to 30 pages render conflicting per-page running subtotals and unitemized change orders that cause lender package rejections.
- **Two-Waiver Rule Failures**: GCs frequently fail to verify that previous draw funds actually cleared before releasing the current draw's funds.
- **Insurance Endorsement Gaps**: Subcontractor policies lapse or lack critical ISO endorsements (CG 20 10 ongoing operations, CG 20 37 completed operations, CG 24 04 waiver of subrogation, CG 20 01 primary & non-contributory), transferring multimillion-dollar defect liabilities back onto the GC.

WaiverAudit eliminates these liabilities through deterministic multimodal extraction, integer-cent mathematical reconciliation, and automated state statutory enforcement.

---

## 2. The 5-Document Compliance Parity Engine (Option A 2-Layer Packet Grid)

WaiverAudit utilizes an adaptive 2-layer packet architecture:

### Layer 1: Direct Payment Documents
1. **Current Statutory Lien Waiver (Strictly Required)**:
   - Primary conditional or unconditional progress waiver.
   - Verifies consideration matches to the exact penny ($0.01 tolerance).
   - Validates verbatim statutory language for regulated states.
   - Verifies authorized signature, through-date, and mandatory physical notary jurats and seals (MS and WY).
2. **Subcontractor Invoice (Optional)**:
   - Cross-checks Net Payment Due against Current Waiver consideration and AIA G702 Line 8.
   - Verifies retainage deduction calculations.
   - Scans line items for third-party material suppliers and equipment rentals.
3. **AIA G702 / G703 Pay Application (Optional)**:
   - Evaluates the 9-line cover sheet math and executes the G703 Continuation Sheet Lean Rollup.

### Layer 2: Protection & Prior Period Documents
4. **Prior Unconditional Waiver (Optional — Solves the "Two-Waiver Rule")**:
   - GCs operating best-practice draw management require both Draw N Conditional Waiver (for current pending billing) and Draw N-1 Unconditional Waiver (proving last month's check cleared the bank).
   - Reconciles against AIA G702 Line 7 ("Less Previous Certificates for Payment") in dual modes: Cumulative or Discrete Period.
5. **ACORD 25 Certificate of Insurance (COI) Pre-Flight (Optional)**:
   - Audits policy active dates, CGL minimum limits ($1M occurrence / $2M aggregate standard), and verifies critical endorsements.

### Layer 3: Progressive Sub-Tier Materialman Defense
- **Automated Vendor Detection**: Identifies material charges and supply houses (Ferguson, Graybar, Sunbelt Rentals, Vulcan Materials, 84 Lumber, etc.) exceeding a $5,000 threshold.
- **Progressive Sub-Tier Intake**: Project accountants attach secondary supplier releases via a slide-over drawer with vendor chips (`[ 📄 Graybar ($18.5k) ✕ ]`).
- **Tri-State Legal Risk Classification**:
  - `VERIFIED_RELEASED`: Unconditional waiver attached with matching consideration.
  - `JOINT_CHECK_REQUIRED`: Conditional waiver attached; two-party joint check required before disbursement.
  - `UNRELEASED_EXPOSURE_HOLD`: Material charge detected with NO waiver on file; payment hold recommended on that portion to prevent second-tier mechanics' liens.

---

## 3. AIA G702 & G703 Lean Rollup Engine

### G702 Summary Cover Sheet Math
1. **Line 1**: Original Contract Sum
2. **Line 2**: Net Change by Change Orders (Approved additions minus deductions)
3. **Line 3**: Contract Sum to Date (`Line 1 ± Line 2 == Line 3`)
4. **Line 4**: Total Completed and Stored to Date (from G703 Column G)
5. **Line 5**: Retainage:
   - `Line 5a`: Retainage on Completed Work (% of Column D + E)
   - `Line 5b`: Retainage on Stored Materials (% of Column F)
   - `Line 5 == Line 5a + Line 5b`
6. **Line 6**: Total Earned Less Retainage (`Line 4 - Line 5 == Line 6`)
7. **Line 7**: Less Previous Certificates for Payment (Cumulative Line 6 from prior draws)
8. **Line 8**: **CURRENT PAYMENT DUE** (`Line 6 - Line 7 == Line 8`) — The critical payment figure.
9. **Line 9**: Balance to Finish, Including Retainage (`Line 3 - Line 6 == Line 9`)

### G703 Continuation Sheet Lean Rollup
In commercial construction, G703 continuation sheets frequently span 5 to 30 pages and render conflicting per-page running subtotals or carried-forward balances. WaiverAudit executes a lean, deterministic rollup:
- **Terminal Grand Total Parity (`Col G == Line 4`)**: Bypasses intermediate page footers and asserts that the terminal cumulative Grand Total of Column G (*Total Completed and Stored to Date*) equals G702 Line 4 within ±$0.01 integer-cent tolerance.
- **Semantic Header Fallback**: Multimodal extraction maps shifted or non-standard column headers ("Total Work to Date", "Completed and Stored") directly to Column G.
- **Change Order Diagnostic (`Line 4 - Col G == Line 2`)**: Detects when subcontractors bill original SOV lines on G703 and carry approved change orders on G702 Line 2 without appending rows to G703 until closeout. Flags an informative diagnostic: *"Continuation sheet reflects base contract only; Line 2 Net Change Orders unitemized."*
- **Zero-Retainage-Safe Net Earned Diagnostic**: If Column G matches Line 6 (*Total Earned Less Retainage*), flags a Net Earned notice ONLY when Line 5 retainage is greater than zero, strictly preventing false positives on $0-retainage jobs.

### Multi-Way Mathematical Parity Assertion
WaiverAudit asserts down to the exact penny ($0.01 tolerance):
`AIA G702 Line 8 (Current Payment Due) == Subcontractor Invoice Net Due == Current Statutory Waiver Consideration`
If any amount differs by > $0.01, it is flagged as an immediate blocker before funds are disbursed.

---

## 4. Statutory Mechanics' Lien Waiver Rules (12 Regulated States)

Under US construction law, 38 states permit freedom-of-contract or custom lien waivers, while 12 states strictly mandate statutory waiver forms. WaiverAudit enforces statutory legal compliance across all 12 jurisdictions:

### 1. California (Cal. Civ. Code §§ 8132, 8134, 8136, 8138)
- Requires strict verbatim statutory forms: Conditional Progress (§ 8132), Unconditional Progress (§ 8134), Conditional Final (§ 8136), and Unconditional Final (§ 8138).
- Any alteration, addition, or non-conforming wording voids the waiver as a matter of law.
- Must include the mandatory uppercase statutory notice box. Notary not required.

### 2. Texas (Tex. Prop. Code § 53.284 & HB 2237)
- 4 statutory forms with boldface 10-point statutory warning notice.
- **HB 2237 Reform (Effective Jan 1, 2022)**: Completely abolished notarization requirements for Texas lien waivers. Unnotarized waivers signed by authorized corporate agents are fully valid.
- Express statutory reservation of rights for unpaid retainage and pending change orders.

### 3. Florida (Fla. Stat. § 713.20)
- Statutory Progress (§ 713.20(4)) and Final (§ 713.20(5)) waiver forms.
- Non-statutory forms allowed only if explicitly agreed in the prime contract under § 713.20(8).

### 4. Georgia (O.C.G.A. § 44-14-366)
- Uses **Interim Waiver and Release Upon Payment** and **Waiver and Release Upon Final Payment**.
- **90-Day Statutory Conversion Rule**: An Interim Waiver automatically becomes an unconditional release 90 days after execution unless the claimant files an official Affidavit of Nonpayment.

### 5. Arizona (A.R.S. § 33-1008)
- 4 strict statutory forms: Conditional/Unconditional Progress and Conditional/Unconditional Final.
- Mandatory warning notices regarding statutory payment defenses.

### 6. Nevada (NRS § 108.2457)
- 4 statutory forms with mandatory boldface statutory warning box.
- Requires affirmative representation that all lower-tier suppliers and laborers have been paid.

### 7. Michigan (MCL § 570.1115)
- Partial Conditional, Partial Unconditional, Full Conditional, and Full Unconditional forms.
- Prohibits broad indemnification clauses embedded in lien waivers.

### 8. Mississippi (Miss. Code § 85-7-433)
- Interim and Final statutory forms. 60-day Affidavit of Nonpayment limit.
- **MANDATORY Notary Jurat**: Mississippi law mandates a formal Notary Public Jurat and physical commission seal. Unnotarized waivers are statutorily void.

### 9. Missouri (RSMo § 429.016)
- Statutory residential disclosure rules and commercial mechanics' lien requirements.

### 10. Massachusetts (M.G.L. c. 254 § 32)
- Partial Waiver and Subordination of Lien.
- Advance unconditional waivers are void as contrary to public policy.

### 11. Utah (Utah Code § 38-1a-802)
- Statutory progress and final forms tied to the State Construction Registry (SCR).

### 12. Wyoming (Wyo. Stat. § 29-10-101 & § 29-2-109)
- Statutory preliminary and final lien waiver formats.
- **MANDATORY Notary Jurat**: Wyoming law requires an official Notary Public acknowledgment and seal. Unnotarized waivers are statutorily void.

---

## 5. ACORD 25 Certificate of Insurance (COI) Verification

WaiverAudit audits ACORD 25 certificates to prevent vicarious liability from transferring to the General Contractor:
- **Commercial General Liability (CGL)**: Verifies $1,000,000 Each Occurrence / $2,000,000 General Aggregate standards.
- **Policy Active Status**: Compares policy expiration dates against the draw billing period and waiver through-date.
- **Mandatory ISO Endorsements**:
  - **CG 20 10**: Additional Insured — Ongoing Operations.
  - **CG 20 37**: Additional Insured — Completed Operations (protects GC against post-completion defect claims).
  - **CG 24 04**: Waiver of Subrogation (prevents the sub's insurer from suing the GC).
  - **CG 20 01**: Primary and Non-Contributory (sub's policy responds first before GC insurance).
- **Workers' Compensation**: Verifies statutory coverage is active.

---

## 6. High-Volume Batch Intake & Trade Qualifier Discrimination

WaiverAudit's high-volume sorting engine ([`fileAutoMatcher.ts`](https://waiveraudit.com)) eliminates manual sorting friction:
- **Tier 1: Numeric Token Intersection**: Matches draw numbers and invoice numbers across loose PDFs.
- **Tier 2: Trade Qualifier Discrimination**: Prevents collisions when multiple subcontractors share root names (e.g., `Apex Electrical` vs `Apex Drywall` are strictly isolated into separate draw packages).
- **Tier 3: Secondary Supplier Keyword Routing**: Identifies supplier waivers (`Graybar`, `84 Lumber`, `Ferguson`, `Sunbelt`) and routes them directly to Layer 3.
- **Unassigned Files Fallback Tray**: Unrecognized files (`scan_001.pdf`) are placed in an unassigned tray with 1-click draw assignment dropdowns.
- **Unrestricted Batch Dropzone**: Zero arbitrary file limits (`slice(0, maxDraws * 5)` stripped), supporting high-volume draw folder drops.

---

## 7. Architecture & Dual-Mode Privacy

```
[ User Browser / Procore ]
           │
           │ Direct Presigned Upload (15-min ephemeral PUT)
           ▼
┌──────────────────────────────────────────────┐
│        Cloudflare R2 Object Storage          │  <-- Unlimited Capacity, $0 Egress
│  • Raw 50MB PDF Binaries                     │
│  • AES-256 Encrypted at Rest                 │
│  • 30-Day Auto-Purge Lifecycle Rule          │
└──────────────────────┬───────────────────────┘
                       │
                       │ TLS 1.3 In-Memory Stream
                       ▼
┌──────────────────────────────────────────────┐
│        Google Gemini Multimodal AI           │  <-- Enterprise API (Zero Model Training)
│  • OCR Extraction of Unstructured Pay Apps   │
└──────────────────────┬───────────────────────┘
                       │
                       │ Structured JSON
                       ▼
┌──────────────────────────────────────────────┐
│     Deterministic TypeScript Parity Engine   │  <-- Integer Cents Arithmetic (diffInCents)
│  • Col G == Line 4 ($0.01 tolerance)         │
│  • Line 8 == Net Due == Waiver               │
│  • Sub-Tier Clearance Status                 │
│  • MS & WY Notary Jurat Enforcement          │
└──────────────────────┬───────────────────────┘
                       │
                       ▼
┌──────────────────────────────────────────────┐
│            Supabase PostgreSQL DB            │  <-- Lightweight Metadata (~4 KB / row)
│  • Projects & Draw Ledgers (Draw #1 to #24)  │
│  • SHA-256 Hashes & Discrepancies            │
│  • 1,000,000 Audits < 500 MB                 │
└──────────────────────────────────────────────┘
```

### Dual-Mode Document Retention
- **Mode A (Stateless Public & Pass Users)**: 100% ephemeral zero server-side retention. Raw files in Cloudflare R2 transit are auto-purged immediately upon HTTP response delivery. Audit history is stored locally in browser `IndexedDB`.
- **Mode B (Enterprise GC Vault)**: Encrypted project vault (AES-256 at rest) with automated 30-day lifecycle auto-purge of raw PDF files, while cryptographic SHA-256 audit hashes and math ledgers remain permanently auditable for 7-year construction defect statutes of limitation.

---

## 8. Inngest Asynchronous Workers & Procore Integration

- **Inngest Background Queue**: High-volume batch draws (> 5 draws) and Procore webhooks dispatch to Inngest step functions, ensuring zero HTTP timeouts on serverless infrastructure.
- **Procore Integration Ecosystem**:
  1. **OAuth 2.0 Handshake**: Secure authorization via `/api/auth/procore`.
  2. **Data Extraction**: Pulls Procore projects (`/rest/v1.0/projects`), subcontractor commitments (`/rest/v1.0/subcontracts`), and requisitions (`/rest/v1.0/requisitions`).
  3. **Automated Audit**: Reconciles Procore SOVs and pay apps against uploaded statutory waivers.
  4. **Bidirectional Write-Back**: Pushes SHA-256 signed audit certificates and line-item discrepancy comments directly back into Procore requisition comment logs.
  5. **Procore App Marketplace**: Listed in the official Procore Marketplace under *Financial Management & Compliance*.

---

## 9. Pricing Structure

- **Pay-As-You-Go Credits (Any Project, Never Expire)**:
  - **Single Audit**: $9 / audit (individual check).
  - **10-Audit Pack**: $69 ($6.90 / audit).
  - **25-Audit Pack**: $149 ($5.96 / audit).
- **Per-Project Subscription**:
  - **$49 / project / month**: Unlimited monthly draws for that active job site. Archived projects freeze for free.
- **Commercial General Contractor Plans**:
  - **Standard GC Plan ($149/mo or $1,490/yr)**: Up to 3 active projects, unlimited draws, 3 team seats, cloud draw ledger, Procore sync.
  - **Enterprise GC Plan ($399/mo or $3,990/yr)**: Unlimited active projects, unlimited draws, 10 team seats, priority Inngest queue, bidirectional Procore sync, custom waiver templates.

---

## 10. SHA-256 Audit Certificate Specification

Every audit produces a bank-ready PDF certificate containing:
- Unique cryptographic SHA-256 hash digest computed from the audit payload and timestamps.
- Bank-ready verification autoTable detailing Line 8, Col G Rollup, Net Due, Two-Waiver Rule status, Notary Jurat verification, and Sub-Tier clearance.
- Itemized Secondary Sub-Tier Supplier Release Schedule.
- Discrepancy log with actionable remediation instructions.
- Public verification endpoint at `https://waiveraudit.com/sign` where lenders and title companies verify certificate authenticity.