Washington Lien Law Summary

PUBLIC WORKS

(60.28.011 et seq., 39.04.240 et seq., and 39.08.010 et seq.)

All public contracts, except that contracts for less than $300,000 may be exempted from the bonding and retainage requirements. [60.28.011 et seq., 39.08.010 et seq., 39.04.155] NOTE that highway construction contracts administered by the department of transportation, with an estimated price of $250 million or more, may have bonds of less than the full contract price, as long as the bonds are at least $250 million. [39.08]

Who may have a lien?

authorizes a subcontractor to perform work, including by a change order beyond the scope of the contract or subcontractor, and without permission from or a signature by the owner, the subcontractor will still be allowed to claim a lien against the property. The contractor is the owner’s construction agent, thereby exposing the owner’s property to liens. [Henifin Const., L.L.C. v. Keystone Const., 145 P.3d 402, (Wash.App. Div. 1 2006)]

Contractors, subs, furnisher of labor, professional services, materials, or equipment to owner, registered or licensed general, registered or licensed sub, architect, engineer, or other agent having control of the project. Note that developers, tree removal services, cabinet installers and consultants acting as general contractors are among those considered contractors. In addition, anyone who offers to sell their property without occupying or using the building, etc., for more than one year from the date the building, etc. was substantially completed or abandoned, is considered a contractor. A person who superintends or consults on contracting work; a person who performs the activities of a contractor for the purpose of selling or leasing improved property the person has owned for less than 12 months, and a person who performs the activities of a contractor on one’s own property for the purpose of selling, demolishing or leasing the property are all now considered contractors. [60.04.021; 18.27.090]

NOTE that it is now a gross misdemeanor for a contractor to subcontract to or use an unregistered subcontractor.

[18.27.020(2)(e)]

BOND: Subs, employee trust funds and furnishers of labor or materials to general or sub. Supplier to supplier has no rights against bond. [Farwest Steel v. Mainline Metal, 48 Wash. App 719, 741 P.2d. 58 (1987); cert. denied, 109 Wash.2d 1009 (1987)]. NOTE, HOWEVER, that despite the language of the statute, courts have ruled that ERISA preempts this statute, and trust funds cannot bring a claim against the bond. [Puget Sound Electrical Workers Health & Welfare Trust Fund v.] Merit Co., 123 Wn.2d 565, 572-73, 870 P.2d 960 (1994); International Brotherhood of Electrical Workers, Local Union No. 46 v. Trig Electric Construction Co., 142 Wn.2d 431, 13 P.3d 622 (2000), cert. denied, 532 U.S.

1002 (2001); and Leo Finnegan Const. Co., Inc. v. Northwest Plumbing & Pipefitting Industry Health Welfare & Vacation Trust, Not Reported in P.3d, 2008 WL 2811319 (Wash.App. Div. 2, 2008)] A business that supplies temporary workers to a sub does not have bond rights, at least not where the supplier of workers has limited involvement, supervision, and responsibility on the project. [39.08.010; Better Financial Solutions, Inc. v. Caicos Corp., 73 P.3d 424, 117 Wash.App. 899 (2003); reconsideration denied] RETAINAGE: Everyone performing labor or supplying materials to general or sub. Suppliers to suppliers are not covered. [Farwest Steel v. Mainline Metal, 48 Wash. App 719, 741 P.2d. 58 (1987); cert. denied, 109 Wash.2d 1009 (1987)] Note also that a business that supplies temporary workers to a sub does not have a claim against the retainage. [60.28.011; Cushman at

What is the lien against?

Who must give the Notice to Customer?

The improvement and the land upon which it is situated. As to stop notices on funds held by lender, see “Special Notes” section, below. NOTE that where a project is a private project on public land, the lien will attach only to the improvement, and not to the realty. [60.04.021; Estate of Haselwood v. Bremerton Ice Arena, Inc., --- P.3d ----, 2009 WL 1803272, (Wash.2009)]

The General Contractor must give the Notice to Customer in the situations outlined below. This notice is different from the Notice to Owner, which everyone who has a contract with someone other than the owner must give. The Notice to Owner is discussed in subsequent sections. The General Contractor must give the Notice to Customer in the following situations:

1.When the work involves the repair, alteration or construction of a commercial building costing more than $1,000 but less than $60,000.

2.When the work involves the alteration or construction of four or fewer residential units, where bid or price is greater than $1,000.

NOTE that in these situations, the general contractor is required to give the Notice To Customer BEFORE starting construction. See FORM E. If the form is not given, the contractor is not allowed to bring or maintain a lien foreclosure. The Notice to Customer is not required to be given by contractors contracting with other contractors. NOTE ALSO that the contractor must keep a signed copy of the disclosure statement in his or her files for at least 3 years, and produce a signed or

§48.03[A]; Better Financial Solutions, Inc. v. Transtech Electric, Inc., 112 Wash.App. 697, 51 P.3d (2002), review denied, 149 Wash.2d

1010, 69 P.3d 874 (2003)]

-Contractor's payment bond. [39.08.010] NOTE that highway construction contracts administered by the department of transportation, with an estimated price of $250 million or more, may have bonds of less than the full contract price, as long as the bonds are at least $250 million. [39.08.030]

-Retained percentage of funds due the contractor. [60.28.011]

NOTE that where a project is a private project on public land, the lien will attach only to the improvement, and not to the realty. [Estate of Haselwood v. Bremerton Ice Arena, Inc., --- P.3d ----, 2009 WL 1803272, (Wash.2009)]

Not applicable.

Who must give Notice of Intent (now called Notice to Owner) or preliminary notice?

electronic signature copy of it to the DLI, if so requested. [18.27.114]

The Notice to Owner is given by those who do not have a contract with the owner.

General Contractors are required to give the Owner the Notice to Customer, which is discussed in the section immediately preceding this one. Potential claimants are required to give the Notice to Owner or Notice to Customer in the following circumstances:

NOTICE TO OWNER: Repair, remodel or alteration of existing owner-occupied single-family residence: All providers of professional services, materials or equipment who do not contract directly with the owner-occupier. Subcontractors who provide ONLY labor do not need to give notice, but subcontractors who provide labor AND either materials, equipment or professional services need to give the preliminary notice in order to have lien rights. If no notice is given, a subcontractor who provides both labor and materials will still have lien rights for his or her labor, but not for the materials. Professional services are defined in the code as surveying, establishing or marking the boundaries of, preparing maps, plans, or specifications for, or inspecting, testing, or otherwise performing any other architectural or engineering services for the improvement of real property. [60.04.031; 60.04.011; Northlake Concrete Products, Inc. v. Wylie, 34 Wash.App. 810, 663 P.2d 1380 (1983); Pacific Erectors, Inc. v. Gall Landau Young Const. Co., Inc., 62 Wash.App. 158, 813 P.2d 1243 (1991), reconsideration denied, review denied 118

Wash.2d 1015, 827 P.2d 1011] 2. All other projects: Every person

furnishing professional services, labor, materials or equipment, except those contracting directly with owner, laborers claiming solely for labor, and licensed or registered subcontractors contracting directly with prime contractor. There is a special notice to be given by those providing professional services where the improvement itself has not been

PAYMENT BOND: Anyone supplying materials to a subcontractor, including those supplying both labor and materials. Subcontractors who contract directly with the prime contractor do not need to provide a preliminary notice, regardless of whether they are providing labor, materials or both. Sub-subcontractors who supply only labor do not need to provide a preliminary notice. [39.08.065; LRS Electric Controls, Inc. v. Hamre Const., Inc., 153 Wash.2d. 731, 107 P.3d 721 (2005)] Note that where a sub or sub-sub supplies heavy equipment with operators, they MAY be deemed to only be laborers, and no preliminary notice would be required, but it is safest to send the notice anyway. The equipment must not be actually incorporated into or become part of the structure. It is also best if the claimant’s bills do not typically itemize the equipment separately from the operators. [Campbell Crane & Rigging Services, Inc. v. Dynamic Intern. AK, Inc., 186 P.3d 1193 (Wash.App. Div. 2,2008)]

RETAINAGE: Every claimant. [60.28.015; LRS Electric Controls, Inc. v. Hamre Const., 153 Wash.2d. 731, 107 P.3d 721 (2005)]

PAYMENT BOND: Contractor. [39.08.065]

RETAINAGE: Contractor. [60.28.015]

PAYMENT BOND: Notice must be delivered or mailed within 10 days after first delivery. NOTE, HOWEVER, that written notice given to contractor more than 10 days after materials are first delivered is effective as to materials subsequently delivered, at least where the materials are delivered on order, as opposed to being purchased under a specific contract for a fixed quantity at a given price. [39.08.065; Cascade Lumber & Shingle Co. v. Wright, 99 Wash. 421, 169 P. 833 (1918)]

RETAINAGE: While the statute is not absolutely clear, it is best to ensure that the notice is received within 60 days after first delivery. If received later, it relates back 60 days. [60.28.015]

PAYMENT BOND:

-That supplier has begun supplying materials to the job

-Name of sub ordering materials or to whom

How must preliminary notice be given?

Who must give final notice?

To whom is final notice given?

When is final notice given?

PROVIDERS OF PROFESSIONAL SERVICES PRIOR TO THE IMPROVEMENT, SEE FORM F, BELOW. [60.04.031]

NOTICE TO CUSTOMER:

SEE ATTACHED FORM E. [18.27.114]

For the Notice to Owner, Registered or certified mail or personal service. [60.04.031]

For the Notice to Customer, Form E, no method of delivery is specified.

All claimants. [60.04.091]

County auditor of county where property is located AND copy to owner after recording. [60.04.091]

Within 90 days after claimant’s last delivery or last date on which employee benefit contributions were due. NOTE that a copy of the notice must also be sent to the owner by certified or registered mail, or personally served within FOURTEEN (14) days of filing the claim. Failure to do so forfeits any right to attorneys' fees and costs against the owner. [60.04.091]

NOTE that where work on a contract is performed after a period of inactivity, even a small amount of work or materials will act to extend the lien filing date, so long as the work or materials are supplied at the request of the owner for the purpose of completing the original contract, and not for the purpose of merely extending the filing deadline, and not pursuant to some separate contract. (Intermountain Elec., Inc. v. G-A-T Bros. Constr., Inc., 115 Wn.App. 384, 62 P.3d

548 (2003); DKS Const. Management, Inc. v. Baker Boyer Bancorp, 118 Wash.App. 1076, Not Reported in P.3d, (Wash.App. Div. 3,2003), opinion not published.) NOTE that the claimant can file more than

the materials were furnished

-That contractor and its bond will be held liable for payment of the materials supplied. (39.08.065)

RETAINAGE:

-Name of supplier and that supplier is or has furnished materials to project

-Name of sub ordering materials

-That a lien against retained percentage may be claimed for all materials furnished by supplier. [60.28.015]

BOND AND RETAINAGE: Registered or certified mail or personal service. [60.28.015]

All claimants on bond or retainage. [39.08.030, 60.28.011]

Public body letting the contract. [39.08.030, 60.28.011]

BOND: Within 30 days after completion and acceptance of the project. [39.08.030] RETAINAGE: Within 45 days after completion of the contract work. NOTE, HOWEVER, that where the project is conducted under the general contractor/- construction manager procedure, the project may be divided in half, and where the sub or supplier’s work is completed in the first half of the project, the public body may accept the completion of the subcontract and give public notice of its acceptance. In such a case, the claimant must give its notice within 45 days of acceptance of the completion of the subcontract. If it is given later, such as within 45 days after completion of the entire contract, the claim will be invalid. Thus it is very important to know whether the project is operating under the general contractor/- construction manager procedure, and the sooner the notice is given, the better.

[60.28.011]

BOND AND RETAINAGE:

Presented to and filed with the public body. Per Cushman, registered or certified mail, return receipt requested, is sufficient.

[39.08.030; Cushman at §48.03[A]]

BOND AND RETAINAGE: Notice including name of claimant, identification of public body, amount of claim, name of principal and surety, description of project, brief description of work, services or materials provided, and signature of claimant. To apply to retainage, must state that the claimant is making a claim against the retainage as well. See FORM D below. [39.08.030]

BOND: Always set deadline within 1 year of last performance or actual delivery date. Within 6 years after filing notice of claim, however no attorney’s fees are allowed if suit is brought within 30 days after filing notice of claim. If, however, the bond itself specifies a shorter period, that may control, thus if there is any kind of issue it is essential to obtain a copy of the bond itself. (Re: 6 year deadline, see 117 Wn.2d 511)

RETAINAGE: Within 4 months after filing the notice of claim. Notice may be refiled every four months to keep the claim alive. If, however, the notice is not refiled and no action is timely taken on the claim, it cannot be revived by filing a claim at a later date, more than four months after filing or refiling the notice. If the claimant files another claim on the same project (more than four months after the initial filing or a refiling), it cannot include the same debt. (NOTE that this is different from the situation with a lien claim on a private project.) [60.28.030; Airefco, Inc. v. Yelm Community Schools No. 2, 52 Wash.App. 230, 758 P.2d 996, review denied, 111 Wash.2d 1029 (1988); Shope

Enterprises, Inc. v. Kent School Dist., 41 Wash.App. 128, 702 P.2d 499 (1985)]

PAYMENT BOND: Principal, interest, costs, and, as long as suit brought more than 30 days after notice filed, attorney's fees. NOTE, however, that where a sub or supplier is claiming against the bond, interest will be paid at the statutory rate, not at the rate agreed to by the claimant and general or sub. NOTE ALSO that, while the award of attorney’s fees is not discretionary, the amount awarded is. [39.08.030; U.S. Filter

Distribution Group Inc. v. Katspan, Inc., 72 P.3d 1103, 117 Wash.App. 744 (Div. 1, 2003); Diamaco, Inc. v. Mettler, 135 Wash.App. 927, 145 P.3d 399 (2006)] RETAINAGE: Principal, interest, costs and attorney's fees. NOTE, however, that only claimants can recover attorney’s fees; a general contractor that defends against a claim is not entitled to them. NOTE ALSO that, while the award of attorney’s fees is not discretionary, the amount awarded is.

[60.28.015, 60.28.030; Better Financial Solutions, Inc. v. Caicos Corp., 73 P.3d 424, 117 Wash.App. 899 (2003); reconsideration denied); Diamaco, Inc. v. Mettler, 145 P.3d 399, 135 Wash.App. 572 (2006)]

PAYMENT BOND: Yes.

RETAINAGE: No specific provision.

PAYMENT BOND: No specific provision. RETAINAGE: A contract provision providing for the waiver of retainage rights is void as against public policy. (39.04.900)

NOTE that the right to serve an offer of settlement cannot be waived in a public works contract. [39.04.240]

BOND: No specific provisions, thus presumed pro rata.

RETAINAGE (FOR CONTRACTS OVER $20,000): (1) wages owed to contractor's employees who have not been paid the prevailing wage; (2) B&O taxes and other excise taxes under RCW Chapter 82;

(3) all unemployment compensation and industrial insurance taxes owed under RCW Chapters 50 & 51; (4) other claimants; and

(5) all other taxes, increases and penalties due and owing from the contractor. [60.28.040]

Effective July 22, 2007, There is now a requirement that anyone entering into a public works contract demonstrate that they satisfy certain responsibility criteria. In addition, a general contractor must verify that each of the contractor’s subs satisfies the criteria, and each sub must verify that all of his or her subs also satisfy the criteria. This verification requirement and the responsibility criteria must now be included in all public works contracts. [ 39.04, 39.06, WA Legis. 133 (2007)]