S-4355               _______________________________________________

                                                   SENATE BILL NO. 6569

                        _______________________________________________

State of Washington                              50th Legislature                              1988 Regular Session

By Senators West, Warnke and Anderson

Read first time 1/26/88 and referred to Committee on  Financial Institutions & Insurance.

AN ACT Relating to construction lien information; and adding new sections to chapter 30.04 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1.     For the purposes of sections 2 and 3 of this act, "real property lenders" means a bank, savings bank, savings and loan association, credit union, mortgage company, or other corporation, association, or partnership that makes loans secured by real property located in this state.

NEW SECTION. Sec. 2.     The supervisor of banking shall prepare informational material for use by all real property lenders.  The material shall be designed to provide residential mortgage loan applicants with a working knowledge of construction lien laws and available safeguards against lien claims against their real property and the improvements on it.  The material shall contain, at a minimum, a discussion of:

          (1) Contractor, subcontractor, and materialmen liens and how they arise, including typical fact patterns;

          (2) Contractor registration, including the advantages of using a registered contractor, the existence of a registered contractor's bond posted with the state, the amount of the bond, and the possibility that the bond may be inadequate to cover claims for improper work or failure to pay laborers, subcontractors, or material suppliers;

          (3) Methods of protection against lien claims including obtaining lien release documents, joint payee checks, lender supervision under RCW 60.04.200 and 60.04.210, and requiring contractor disclosure of all potential lien claimants as a condition of payment; and

          (4) Sources of further information, including the department of labor and industries building and construction safety inspection services division.

NEW SECTION. Sec. 3.     Every real property lender shall supply the informational material described in section 2 of this act to applicants for all loans, the proceeds of which may be used for residential interim construction financing, permanent financing of a new residence, or residential repair or remodeling.

NEW SECTION. Sec. 4.     Sections 1 through 3 of this act are added to chapter 30.04 RCW.