AN ACT
Relating to construction liens; amending RCW 60.04.011, 60.04.031, 60.04.041,
60.04.051, 60.04.081, 60.04.091, 60.04.141, 60.04.151, 60.04.161, 60.04.171,
60.04.181, 60.04.221, and 60.04.902; adding a new section to chapter 60.04 RCW;
providing an effective date; and declaring an emergency.
BE IT ENACTED BY THE LEGISLATURE
OF THE STATE OF WASHINGTON:
Sec.
1. RCW
60.04.011 and 1991 c 281 s 1 are each amended to read as follows:
Unless
the context requires otherwise, the definitions in this section apply
throughout this chapter.
(1)
"Construction agent" means any registered or licensed contractor,
registered or licensed subcontractor, architect, engineer, or other person
having charge of any improvement to real property, who shall be deemed the
agent of the owner for the limited purpose of establishing the lien created by
this chapter.
(2)
"Contract price" means the amount agreed upon by the contracting
parties, or if no amount is agreed upon, then the customary and reasonable
charge therefor.
(3)
"Draws" means periodic disbursements of interim or construction
financing by a lender.
(4)
"Furnishing labor, professional services, materials, or equipment"
means the performance of any labor or professional services, the contribution
owed to any employee benefit plan on account of any labor, the provision of any
supplies or materials, and the renting, leasing, or otherwise supplying of
equipment for the improvement of real property.
(5)
"Improvement" means: (a) Constructing, altering, repairing,
remodeling, demolishing, clearing, grading, or filling in, of, to, or upon any
real property or street or road in front of or adjoining the same; (b) planting
of trees, vines, shrubs, plants, hedges, or lawns, or providing other
landscaping materials on any real property; and (c) providing professional
services upon real property or in preparation for or in conjunction with the
intended activities in (a) or (b) of this subsection.
(6)
"Interim or construction financing" means that portion of money
secured by a mortgage, deed of trust, or other encumbrance to finance
improvement of, or to real property, but does not include:
(a)
Funds to acquire real property;
(b)
Funds to pay interest, insurance premiums, lease deposits, taxes, assessments,
or prior encumbrances;
(c)
Funds to pay loan, commitment, title, legal, closing, recording, or appraisal
fees;
(d)
Funds to pay other customary fees, which pursuant to agreement with the owner
or borrower are to be paid by the lender from time to time;
(e)
Funds to acquire personal property for which the potential lien claimant may
not claim a lien pursuant to this chapter.
(7)
"Labor" means exertion of the powers of body or mind performed at the
site for compensation. "Labor" includes amounts due and owed to any
employee benefit plan on account of such labor performed.
(8)
"Mortgagee" means a person who has a valid mortgage of record or deed
of trust of record securing a loan.
(9) (("Owner"
means the record holder of any legal or beneficial title to the real property
to be improved or developed.
(10)))
"Owner-occupied" means a single-family residence occupied by the
owner as his or her principal residence.
(((11)))
(10) "Payment bond" means a surety bond issued by a surety
licensed to issue surety bonds in the state of Washington that confers upon
potential claimants the rights of third party beneficiaries.
(((12)))
(11) "Potential lien claimant" means any person or entity
entitled to assert lien rights under this chapter who has otherwise complied
with the provisions of this chapter and is registered or licensed if required
to be licensed or registered by the provisions of the laws of the state of
Washington.
(((13)))
(12) "Prime contractor" includes all contractors, general
contractors, and specialty contractors, as defined by chapter 18.27 or 19.28
RCW, or who are otherwise required to be registered or licensed by law, who
contract directly with a property owner or their common law agent to assume
primary responsibility for the creation of an improvement to real property, and
includes property owners or their common law agents who are contractors,
general contractors, or specialty contractors as defined in chapter 18.27 or
19.28 RCW, or who are otherwise required to be registered or licensed by law,
who offer to sell their property without occupying or using the structures,
projects, developments, or improvements for more than one year.
(((14)))
(13) "Professional services" means 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.
(((15)))
(14) "Real property lender" means a bank, savings bank,
savings and loan association, credit union, mortgage company, or other
corporation, association, partnership, trust, or individual that makes loans
secured by real property located in the state of Washington.
(((16)))
(15) "Site" means the real property which is or is to be
improved.
(((17)))
(16) "Subcontractor" means a general contractor or specialty
contractor as defined by chapter 18.27 or 19.28 RCW, or who is otherwise
required to be registered or licensed by law, who contracts for the improvement
of real property with someone other than the owner of the property or their
common law agent.
Sec.
2. RCW
60.04.031 and 1991 c 281 s 3 are each amended to read as follows:
(1)
Except as otherwise provided in this section, every person furnishing
professional services, materials, or equipment for the improvement of real
property shall give the owner or reputed owner notice in writing of the right
to claim a lien. If the prime contractor is in compliance with the
requirements of RCW 19.27.095, 60.04.230, and 60.04.261, this notice shall also
be given to the prime contractor as described in this subsection unless
the potential lien claimant has contracted directly with the prime contractor.
The notice may be given at any time but only protects the right to claim a lien
for professional services, materials, or equipment supplied after the date
which is sixty days before:
(a)
Mailing the notice by certified or registered mail to the owner or reputed
owner; or
(b) Delivering
or serving the notice personally upon the owner or reputed owner and
obtaining evidence of ((service)) delivery in the form of a
receipt or other acknowledgement signed by the owner or reputed owner or an
affidavit of service.
In the
case of new construction of a single-family residence, the notice of a right to
claim a lien may be given at any time but only protects the right to claim a
lien for professional services, materials, or equipment supplied after a date
which is ten days before the notice is ((mailed or served)) given
as described in this subsection.
(2)
Notices of a right to claim a lien shall not be required of:
(a)
Persons who contract directly with the owner or the owner's common law agent;
(b)
Laborers whose claim of lien is based solely on performing labor; or
(c)
Subcontractors who contract for the improvement of real property directly with
the prime contractor, except as provided in subsection (3)(b) of this
section.
(3)
Persons who furnish professional services, materials, or equipment in
connection with the repair, alteration, or remodel of an existing
owner-occupied single-family residence or appurtenant garage:
(a)
Who contract directly with the owner-occupier or their common law agent
shall not be required to send a written notice of the right to claim a lien and
shall have a lien for the full amount due under their contract, as provided in
RCW 60.04.021; or
(b)
Who do not contract directly with the owner-occupier or their common law
agent shall give notice of the right to claim a lien to the
owner-occupier. Liens ((claims by)) of persons furnishing
professional services, materials, or equipment who do not contract directly
with the owner-occupier or their common law agent may only be satisfied
from amounts not yet paid to the prime contractor by the owner at the time the
notice described in this section is received, regardless of whether amounts not
yet paid to the prime contractor are due. For the purposes of this
subsection "received" means actual receipt of notice by personal
service, or registered or certified mail, or three days after mailing by
registered or certified mail, excluding Saturdays, Sundays, or legal holidays.
(4)
The notice of right to claim a lien described in subsection (1) of this
section, shall include but not be limited to the following information and
shall substantially be in the following form, using lower-case and upper-case
ten-point type where appropriate.
NOTICE
TO OWNER
IMPORTANT:
READ BOTH SIDES OF THIS NOTICE CAREFULLY.
PROTECT
YOURSELF FROM PAYING TWICE
To:.............................. Date:......................
Re:...................(description of property: Street address or general
location.)
From:.......................................................
AT THE
REQUEST OF: .................... (Name of person ((placing the order))
ordering the professional services, materials, or equipment)
THIS IS NOT
A LIEN: This notice is sent to you to tell you who is providing professional
services, materials, or equipment for the improvement of your property and to
advise you of the rights of these persons and your responsibilities. Also take
note that laborers on your project may claim a lien without sending you a
notice.
OWNER/OCCUPIER
OF EXISTING RESIDENTIAL PROPERTY
Under
Washington law, those who ((work on or provide materials)) furnish
labor, professional services, materials, or equipment for the repair,
remodel, or alteration of your owner-occupied principal residence and who are
not paid, have a right to enforce their claim for payment against your
property. This claim is known as a construction lien.
The law
limits the amount that a lien claimant can claim against your property. Claims
may only be made against that portion of the contract price you have not
yet paid to your prime contractor as of the time ((you received)) this
notice was given to you or three days after this notice was mailed to you.
Review the back of this notice for more information and ways to avoid lien
claims.
COMMERCIAL
AND/OR NEW RESIDENTIAL PROPERTY
We have or
will be providing ((labor, materials,)) professional services, materials,
or equipment for the improvement of your commercial or new residential
project. In the event you or your contractor fail to pay us, we may file a
lien against your property. A lien may be claimed for all ((materials,
equipment, and)) professional services, materials, or equipment furnished
after a date that is sixty days before this notice was given to you or
mailed to you, unless the improvement to your property is the construction of a
new single-family residence, then ten days before this notice was given to
you or mailed to you.
Sender:
................................................
Address:
...............................................
Telephone:
.............................................
Brief
description of professional services, materials, or equipment provided or to be
provided: .......................................
IMPORTANT
INFORMATION ON REVERSE SIDE
IMPORTANT
INFORMATION FOR YOUR PROTECTION
This notice
is sent to inform you that we have or will provide ((materials,))
professional services, materials, or equipment for the ((repair,
remodel, or alteration)) improvement of your property. We expect to
be paid by the person who ordered our services, but if we are not paid, we have
the right to enforce our claim by filing a construction lien against your
property.
LEARN more
about the lien laws and the meaning of this notice by discussing them
with your contractor, suppliers, Department of Labor and Industries,
the firm sending you this notice, your lender, or your attorney.
COMMON
METHODS TO AVOID CONSTRUCTION LIENS: There are several methods available to
protect your property from construction liens. The following are two of the
more commonly used methods.
DUAL PAYCHECKS (Joint Checks): When paying your
contractor for services or materials, you may make checks payable jointly to
the contractor and the firms furnishing you this notice.
LIEN RELEASES: You may require your contractor to
provide lien releases signed by all the suppliers and subcontractors from whom
you have received this notice. If they cannot obtain lien releases because you
have not paid them, you may use the dual payee check method to protect
yourself.
YOU SHOULD
TAKE ((WHATEVER)) APPROPRIATE STEPS ((YOU BELIEVE NECESSARY))
TO PROTECT YOUR PROPERTY FROM LIENS.
YOUR
PRIME CONTRACTOR AND YOUR CONSTRUCTION LENDER ARE REQUIRED BY LAW TO GIVE YOU
WRITTEN INFORMATION ABOUT LIEN CLAIMS. IF YOU HAVE NOT RECEIVED IT, ASK THEM
FOR IT.
*
* * * * * * * * * * * *
(5)
Every potential lien claimant providing professional services where no
improvement as defined in RCW 60.04.011(5) (a) or (b) has been commenced, and
the professional services provided are not visible from an inspection of the
real property ((shall)) may record in the real
property records of the county where the property is located a notice which
shall contain the professional service provider's name, address,
telephone number, legal description of the property, the owner or reputed
owner's name, and the general nature of the professional services provided. If
such notice is not recorded, the lien claimed shall be subordinate to the interest
of any subsequent mortgagee and invalid as to the interest of any subsequent
purchaser ((who)) if the mortgagee or purchaser acts in good
faith and for a valuable consideration acquires an interest in the property
prior to the commencement of an improvement as defined in RCW 60.04.011(5) (a)
or (b) without notice of the professional services being provided. The
notice described in this subsection shall be substantially in the following
form:
NOTICE
OF FURNISHING PROFESSIONAL SERVICES
That
on the (day) day of (month and year) , (name of provider) began providing
professional services upon or for the improvement of real property legally
described as follows:
[Legal
Description
is
mandatory]
The
general nature of the professional services provided is
.....................................................................
.....................................................................
The owner
or reputed owner of the real property is ..................
.....................................................................
............................
(Signature)
............................
(Name
of Claimant)
............................
(Street
Address)
............................
(City, State, Zip Code)
............................
(Phone Number)
(6) A
lien authorized by this chapter shall not be enforced unless the lien claimant
has complied with the applicable provisions of this section.
NEW
SECTION. Sec. 3. A new
section is added to chapter 60.04 RCW to read as follows:
The
legislature finds that acts of coercion or attempted coercion, including
threats to withhold future contracts, made by a contractor or developer to
discourage a contractor, subcontractor, or material or equipment supplier from
giving an owner the notice of right to claim a lien required by RCW 60.04.031,
or from filing a claim of lien under this chapter are matters vitally affecting
the public interest for the purpose of applying the consumer protection act,
chapter 19.86 RCW. These acts of coercion are not reasonable in relation to
the development and preservation of business. These acts of coercion shall
constitute an unfair or deceptive act or practice in trade or commerce for the
purpose of applying the consumer protection act, chapter 19.86 RCW.
Sec.
4. RCW
60.04.041 and 1991 c 281 s 4 are each amended to read as follows:
A
contractor or subcontractor required to be registered under chapter 18.27 RCW
or licensed under chapter 19.28 RCW, or otherwise required to be registered or
licensed by law, shall be deemed the construction agent of the owner for the
purposes of establishing the lien created by this chapter only if so registered
or licensed. Persons dealing with contractors or subcontractors may rely, for
the purposes of this section, upon a certificate of registration issued
pursuant to chapter 18.27 RCW or license issued pursuant to chapter 19.28 RCW,
or other certificate or license issued pursuant to law, covering the period
when the labor, professional services, material, or equipment shall be
furnished, and the lien rights shall not be lost by suspension or revocation of
registration or license without their knowledge. No lien rights described in
this ((section)) chapter shall be lost or denied by virtue of the
absence, suspension, or revocation of such registration or license with respect
to any contractor or subcontractor not in immediate contractual privity with
the lien claimant.
Sec.
5. RCW
60.04.051 and 1991 c 281 s 5 are each amended to read as follows:
The
lot, tract, or parcel of land which is improved is subject to a lien to the
extent of the interest of the ((person for whom)) owner at whose
instance, directly or through a common law or construction agent the labor,
professional services, equipment, or materials were furnished, as the court
deems appropriate for satisfaction of the lien. If, for any reason, the title
or interest in the land upon which the improvement is situated cannot be
subjected to the lien, the court in order to satisfy the lien may order the
sale and removal of the improvement from the land which is subject to
the lien((, from the land)).
Sec.
6. RCW
60.04.081 and 1991 c 281 s 8 are each amended to read as follows:
(1) Any
owner of real property subject to a recorded ((notice of)) claim of lien
under this chapter, or ((the)) contractor ((or)),
subcontractor, lender, or lien claimant who believes the claim of lien
to be frivolous and made without reasonable cause, or clearly excessive may
apply by motion to the superior court for the county where the property,
or some part thereof is located, for an order directing the lien claimant to
appear before the court at a time no earlier than six nor later than fifteen
days following the date of service of the application and order on the lien
claimant, and show cause, if any he or she has, why the ((lien claim)) relief
requested should not be ((dismissed, with prejudice)) granted.
The motion shall state the grounds upon which relief is asked, and shall be
supported by the affidavit of the applicant or his or her attorney setting
forth a concise statement of the facts upon which the motion is based.
(2)
The order shall clearly state that if the lien claimant fails to appear at the
time and place noted the lien ((claim)) shall be ((dismissed)) released,
with prejudice (([,])), and that the lien claimant shall be
ordered to pay the costs requested by the applicant including reasonable
attorneys' fees.
(3) If
no action to foreclose the lien claim has been filed, the clerk of the court
shall assign a cause number to the application and obtain from the applicant a
filing fee of thirty-five dollars. If an action has been filed to foreclose
the lien claim, the application shall be made a part of that action.
(4)
If, following a ((full)) hearing on the matter, the court determines
that the lien ((claim)) is frivolous and made without reasonable cause,
or clearly excessive, the court shall issue an order ((dismissing)) releasing
the lien ((claim)) if frivolous and made without reasonable cause,
or reducing the ((claim)) lien if clearly excessive, and awarding
costs and reasonable attorneys' fees to the applicant to be paid by the lien
claimant. If the court determines that the ((claim of)) lien is not
frivolous and was made with reasonable cause, and is not clearly
excessive, the court shall issue ((and)) an order so stating and
awarding costs and reasonable attorneys' fees to the lien claimant to be paid
by the applicant.
(5)
Proceedings under this section shall not affect other rights and remedies
available to the parties under this chapter or otherwise.
Sec.
7. RCW 60.04.091
and 1991 c 281 s 9 are each amended to read as follows:
Every
person claiming a lien under RCW 60.04.021 shall ((record)) file for
recording, in the county where the subject property is located, a notice of
claim of lien not later than ninety days after the person has ceased to furnish
labor, professional services, materials, or equipment or the last date on which
employee benefit contributions were due. The notice of claim of lien:
(1)
Shall state in substance and effect:
(a)
The name, phone number, and address of the claimant;
(b)
The first and last date on which the labor, professional services, materials,
or equipment was furnished or employee benefit contributions were due;
(c)
The name of the person indebted to the claimant;
(d)
The street address, legal description, or other description reasonably
calculated to identify, for a person familiar with the area, the location of
the real property to be charged with the lien;
(e)
The name of the owner or reputed owner of the property, if known, and, if not
known, that fact shall be stated; and
(f)
The principal amount for which the lien is claimed.
(2)
Shall be signed by the claimant or some person authorized to act on his or her
behalf who shall affirmatively state they have read the notice of claim of lien
and believe the notice of claim of lien to be true and correct under penalty of
perjury, and shall be acknowledged pursuant to chapter 64.08 RCW. If the ((claim))
lien has been assigned, the name of the assignee shall be stated. Where
an action to foreclose the lien has been commenced such notice of claim of lien
may be amended as pleadings may be by order of the court insofar as the
interests of third parties are not adversely affected by such amendment. A
claim of lien substantially in the following form shall be sufficient:
CLAIM
OF LIEN
......,
claimant, vs .., ((owner or reputed owner)) name
of
person indebted to claimant:
((Notice is hereby given that on the ..... day of
..... (date of commencement of furnishing labor, professional services,
materials, or equipment and the last date contributions to any type of
employee benefit plan became due), ..... at the request of ..........,
.......... commenced to (perform labor, furnish professional services,
materials, or equipment) upon .......... (here describe property subject to the
lien) of which property the owner, or reputed owner, is .......... (or if the
owner or reputed owner is not known, insert the word "unknown"), the
(furnishing of labor, professional services, materials, or equipment) ceased on
the ..... day of ..........; that said (labor, professional services,
material, or equipment) was of the value of .......... dollars, for which the
undersigned claims a lien upon the property herein described for the sum of
.......... dollars. (In case the claim has been assigned, add the words
"and .......... is assignee of said claim", or claims, if several are
united.))) Notice is hereby given that the person named below claims a
lien pursuant to chapter 64.04 RCW. In support of this lien the following
information is submitted:
1.
NAME OF LIEN CLAIMANT: ..............................
TELEPHONE NUMBER: ...................................
ADDRESS: ............................................
2. DATE ON WHICH THE
CLAIMANT BEGAN TO PERFORM LABOR, PROVIDE PROFESSIONAL SERVICES, SUPPLY MATERIAL
OR EQUIPMENT OR THE DATE ON WHICH EMPLOYEE BENEFIT CONTRIBUTIONS BECAME
DUE:
..........................................................
3. NAME OF PERSON INDEBTED
TO THE CLAIMANT:
...............................................................
4. DESCRIPTION OF THE
PROPERTY AGAINST WHICH A LIEN IS CLAIMED (Street address, legal description or
other information that will reasonably describe the property): ..................
...............................................................
...............................................................
...............................................................
5. NAME OF THE OWNER OR
REPUTED OWNER (If not known state
"unknown"):....................................................
6. THE LAST DATE ON
WHICH LABOR WAS PERFORMED; PROFESSIONAL SERVICES WERE FURNISHED; CONTRIBUTIONS
TO AN EMPLOYEE BENEFIT PLAN WERE DUE; OR MATERIAL, OR EQUIPMENT WAS FURNISHED:........................................................................................................................
7. PRINCIPAL AMOUNT FOR
WHICH THE LIEN IS CLAIMED
IS:..............................................................
8. IF THE CLAIMANT IS
THE ASSIGNEE OF THIS CLAIM SO STATE
HERE:..........................................................
...............................................................
....................,
Claimant
..............................
..............................
(Phone
number, address, city,
and
state of claimant)
STATE OF WASHINGTON, COUNTY OF
..........,ss.
.........., being sworn, says: I am the claimant (or
attorney of the claimant, or administrator, representative, or agent of the
trustees of an employee benefit plan) above named; I have read or heard the
foregoing claim, read and know the contents thereof, and believe the same to be
true and correct and that the claim of lien is not frivolous and is made
with reasonable cause, and is not clearly excessive under penalty of
perjury.
..............................
Subscribed and sworn to before
me this ..... day of ........
..............................
The
period provided for recording the ((notice)) claim of lien is a
period of limitation and no action to foreclose a ((claim of)) lien
shall be maintained unless the ((notice is recorded)) claim of lien
is filed for recording within the ninety-day period stated. The lien
claimant shall give ((notice of)) a copy of the claim of lien to
the owner or reputed owner by mailing it by certified or registered mail
or by personal service within fourteen days of the time the claim of lien
is ((recorded)) filed for recording. Failure to do so results in
a forfeiture of any right the claimant may have to attorneys' fees and costs
against the owner under RCW 60.04.181.
Sec.
8. RCW
60.04.141 and 1991 c 281 s 14 are each amended to read as follows:
No
lien created by this chapter binds the property subject to the lien for a
longer period than eight calendar months after the ((notice of)) claim
of lien has been recorded unless an action is filed by the lien claimant within
that time in the superior court in the county where the subject property is
located to enforce the lien, and service is made upon the owner of the subject
property within ninety days of the date of filing the action; or, if credit is
given and the terms thereof are stated in the ((notice of)) claim of
lien, then eight calendar months after the expiration of such credit; and in
case the action is not prosecuted to judgment within two years after the
commencement thereof, the court, in its discretion, may dismiss the action for
want of prosecution, and the dismissal of the action or a judgment rendered
thereon that no lien exists shall constitute a cancellation of the lien. This
is a period of limitation, which shall be tolled by the filing of any petition
seeking protection under Title Eleven, United States Code by an owner of any
property subject to the lien established by this chapter.
Sec.
9. RCW
60.04.151 and 1991 c 281 s 15 are each amended to read as follows:
The
lien claimant shall be entitled to recover upon the claim recorded the contract
price after deducting all claims of other lien claimants to whom the claimant
is liable, for furnishing labor, professional services, materials, or
equipment; and in all cases where a ((notice of)) claim of lien shall be
recorded under this chapter for labor, professional services, materials, or
equipment supplied to any lien claimant, he or she shall defend any action
brought thereupon at his or her own expense((; and)). During the
pendency of the action, the owner may withhold from the prime contractor the
amount of money for which a claim is recorded by any subcontractor, supplier,
or laborer((; and)). In case of judgment against the owner or
the owner's property, upon the lien, the owner shall be entitled to deduct from
sums due to the prime contractor the principal amount of the judgment from
any amount due or to become due from ((him or her)) the owner to
the ((lien claimant)) prime contractor plus such costs, including
interest and attorneys' fees, as the court deems just and equitable, and ((he
or she)) the owner shall be entitled to recover back from the ((lien
claimant)) prime contractor the amount for which ((the)) a
lien ((is)) or liens are established in excess of any sum that
may remain due from ((him or her)) the owner to the ((lien
claimant)) prime contractor.
Sec.
10. RCW
60.04.161 and 1991 c 281 s 16 are each amended to read as follows:
Any
owner of real property subject to a recorded ((notice of)) claim of lien
under this chapter, or ((the)) contractor ((or)),
subcontractor, lender, or lien claimant who disputes the correctness or
validity of the ((notice of)) claim of lien may record, either before or
after the commencement of an action to enforce the lien, in the office of the
county recorder or auditor in the county where the ((notice of)) claim
of lien was recorded, a bond issued by a surety company authorized to issue
surety bonds in the state. The surety shall be listed in the latest federal
department of the treasury list of surety companies acceptable on federal
bonds, published in the Federal Register, as authorized to issue bonds on
United States government projects with an underwriting limitation, including
applicable reinsurance, equal to or greater than the amount of the bond to be
recorded. The bond shall contain a description of the ((notice of))
claim of lien and real property involved, and be in an amount equal to the
greater of five thousand dollars or two times the amount of the lien claimed if
it is ten thousand dollars or less, and in an amount equal to or greater than
one and one-half times the amount of the lien if it is in excess of ten
thousand dollars. If the ((notice of)) claim of lien affects more than
one parcel of real property and is segregated to each parcel, the bond may be
segregated the same as in the ((notice of)) claim of lien. A separate
bond shall be required for each ((notice of)) claim of lien made by
separate claimants. However, a single bond may be used to guarantee payment of
amounts claimed by more than one ((lien)) claim of lien by a
single claimant so long as the amount of the bond meets the requirements of
this section as applied to the aggregate sum of all claims by such claimant.
The condition of the bond shall be to guarantee payment of any judgment upon
the lien in favor of the lien claimant entered in any action to recover the
amount claimed in a ((notice of)) claim of lien, or on the claim
asserted in the ((notice of)) claim of lien. The effect of recording a
bond shall be to release the real property described in the notice of claim of
lien from the lien and any action brought to recover the amount claimed.
Unless otherwise prohibited by law, if no action is commenced to recover on a
lien within the time specified in RCW 60.04.141, the surety shall be discharged
from liability under the bond. If an action is timely commenced, then on
payment of any judgment entered in the action or on payment of the full amount
of the bond to the holder of the judgment, whichever is less, the surety shall
be discharged from liability under the bond.
Nothing
in this section shall in any way prohibit or limit the use of other methods,
devised by the affected parties to secure the obligation underlying a claim of
lien and to obtain a release of real property from a claim of lien.
Sec.
11. RCW
60.04.171 and 1991 c 281 s 17 are each amended to read as follows:
The
lien provided by this chapter, for which claims of lien have been recorded, may
be foreclosed and enforced by a civil action in the court having jurisdiction
in the manner prescribed for the judicial foreclosure of a mortgage. The court
shall have the power to order the sale of the property. In any action brought
to foreclose a lien, the owner shall be joined as a party. The ((lien
claims of all)) interest in the real property of any person((s))
who, prior to the commencement of the action, ((have legally)) has a
recorded ((claims of lien against)) interest in the ((same))
property, or any part thereof, shall not be foreclosed or affected unless they
are joined as a party.
A
person shall not begin an action to foreclose a lien upon any property while a
prior action begun to foreclose another lien on the same property is pending,
but if not made a party plaintiff or defendant to the prior action, he or she
may apply to the court to be joined as a party thereto, and his or her lien may
be foreclosed in the same action. The filing of such application shall toll
the running of the period of limitation established by RCW 60.04.141 until
disposition of the application or other time set by the court. The court shall
grant the application for joinder unless to do so would create an undue delay
or cause hardship which cannot be cured by the imposition of costs or other
conditions as the court deems just. If a lien foreclosure action is filed
during the pendency of another such action, the court may, on its own motion or
the motion of any party, consolidate actions upon such terms and conditions as
the court deems just, unless to do so would create an undue delay or cause
hardship which cannot be cured by the imposition of costs or other conditions.
If consolidation of actions is not permissible under this section, the lien
foreclosure action filed during the pendency of another such action shall not
be dismissed if the filing was the result of mistake, inadvertence, surprise,
excusable neglect, or irregularity. An action to foreclose a lien shall not be
dismissed at the instance of a plaintiff therein to the prejudice of another
party to the suit who claims a lien.
Sec.
12. RCW
60.04.181 and 1991 c 281 s 18 are each amended to read as follows:
(1) In
every case in which different construction liens are claimed against the same
property, the court shall declare the rank of such lien or class of liens,
which liens shall be in the following order:
(a)
Liens for the performance of labor;
(b)
Liens for contributions owed to employee benefit plans;
(c) Liens
for furnishing material, supplies, or equipment;
(d)
Liens for subcontractors, including but not limited to their labor and
materials; and
(e)
Liens for prime contractors, or for professional services.
(2)
The proceeds of the sale of property must be applied to each lien or class of
liens in order of its rank and, in an action brought to foreclose a lien, pro
rata among each claimant in each separate priority class. A personal judgment
may be rendered against any party personally liable for any debt for which the
lien is claimed. If the lien is established, the judgment shall provide for
the enforcement thereof upon the property liable as in the case of foreclosure
of judgment liens. The amount realized by such enforcement of the lien shall
be credited upon the proper personal judgment. The deficiency, if any,
remaining unsatisfied, shall stand as a personal judgment, and may be collected
by execution against any party liable therefor.
(3)
The court may allow the prevailing party in the action, whether plaintiff or
defendant, as part of the costs of the action, the moneys paid for recording
the ((notice of)) claim of lien, costs of title report, bond costs, and
attorneys' fees and necessary expenses incurred by the attorney in the superior
court, court of appeals, supreme court, or arbitration, as the court or
arbitrator deems reasonable. Such costs shall have the priority of the class
of lien to which they are related, as established by subsection (1) of this
section.
(4)
Real property against which a lien under this chapter is enforced may be
ordered sold by the court and the proceeds deposited into the registry of the
clerk of the court, pending further determination respecting distribution of
the proceeds of the sale.
Sec.
13. RCW
60.04.221 and 1991 c 281 s 22 are each amended to read as follows:
Any
lender providing interim or construction financing where there is not a payment
bond of at least fifty percent of the amount of construction financing shall
observe the following procedures and the rights and liabilities of the lender
and potential lien claimant shall be affected as follows:
(1)
Any potential lien claimant who has not received a payment within five days
after the date required by their contract, invoice, employee benefit plan
agreement, or purchase order may within thirty-five days of the date required
for payment of the contract, invoice, employee benefit plan agreement, or
purchase order, ((file)) give a notice as provided in subsections
(2) and (3) of this section of the sums due and to become due, for which a
potential lien claimant may claim a lien under this chapter.
(2)
The notice shall be signed by the potential lien claimant or some person
authorized to act on his or her behalf ((who shall affirmatively state under
penalty of perjury, they have read the notice and believe it to be true and
correct)).
(3)
The notice shall be ((filed)) given in writing ((with)) to
the lender at the office administering the interim or construction financing,
with a copy ((furnished)) given to the owner and appropriate
prime contractor. The notice shall be given by:
(a)
Mailing the notice by certified or registered mail to the lender, owner, and
appropriate prime contractor; or
(b)
Delivering or serving the notice personally and obtaining evidence of delivery
in the form of a receipt or other acknowledgment signed by the lender, owner,
and appropriate prime contractor, or an affidavit of service.
(4)
The notice shall state in substance and effect as follows:
(a)
The person, firm, trustee, or corporation filing the notice is entitled to
receive contributions to any type of employee benefit plan or has furnished
labor, professional services, materials, or equipment for which a ((right of))
lien is given by this chapter.
(b)
The name of the prime contractor, common law agent, or construction agent
ordering the same.
(c) A
common or street address of the real property being improved or the legal
description of the real property.
(d)
The name, business address, and telephone number of the lien claimant.
The
notice to the lender may contain additional information but shall be in
substantially the following form:
NOTICE
TO REAL PROPERTY LENDER
(Authorized
by RCW ..........)
TO:
.............................................................
(Name
of Lender)
.............................................................
(Administrative
Office-Street Address)
.............................................................
(City)
(State) (Zip)
AND TO:
.............................................................
(Owner)
AND TO:
.............................................................
(Prime
Contractor-If Different Than Owner)
.............................................................
(Name of
Laborer, Professional, Materials, or Equipment Supplier)
whose
business address is ........................., did at the property located at
..........................
(Check
appropriate box) ( ) perform labor ( ) furnish professional services ( )
provide materials ( ) supply equipment as follows:
................................................................
................................................................
................................................................
which was
ordered by ...........................................,
(Name
of Person)
whose
address was stated to be..................................
................................................................
The amount owing to the undersigned according to
contract or purchase order for labor, supplies, or equipment (as above
mentioned) is the sum of ......................... Dollars
($
.......... ). Said sums became due and owing as of
...............................................................
(State
Date)
...........................................,
..................
You are hereby required to withhold from any future
draws on existing construction financing which has been made on the subject
property (to the extent there remain undisbursed funds) the sum of
......................... Dollars
($
.......... ).
IMPORTANT
Failure to
comply with the requirements of this notice may subject the lender to a whole
or partial compromise of any priority lien interest it may have pursuant to RCW
60.04.226.
DATE:
..............
By:
...................
Its:
..................
(((4)))
(5) After the receipt of the notice, the lender shall withhold from the
next and subsequent draws the amount claimed to be due as stated in the
notice. Alternatively, the lender may obtain from the prime contractor or
borrower a payment bond for the benefit of the potential lien claimant in an
amount sufficient to cover the amount stated in the potential lien claimant's
notice. The lender shall be obligated to withhold amounts only to the extent
that sufficient interim or construction financing funds remain undisbursed as
of the date the lender receives the notice.
(((5)))
(6) Sums so withheld shall not be disbursed by the lender, except by the
written agreement of the potential lien claimant, owner, and prime contractor
in such form as may be prescribed by the lender, or the order of a court of
competent jurisdiction.
(((6)))
(7) In the event a lender fails to abide by the provisions of
subsections (4) and (5) of this section, then the mortgage, deed of trust, or
other encumbrance securing the lender ((will)) shall be
subordinated to the lien of the potential lien claimant to the extent of the
interim or construction financing wrongfully disbursed, but in no event more
than the amount stated in the notice plus costs as fixed by the court,
including reasonable attorneys' fees.
(((7)))
(8) Any potential lien claimant shall be liable for any loss, cost, or
expense, including reasonable attorneys' fees and statutory costs, to a party
injured thereby arising out of any unjust, excessive, or premature notice filed
under purported authority of this section. "Notice" as used in this
subsection does not include notice given by a potential lien claimant of the
right to claim liens under this chapter where no actual claim is made.
(((8)))
(9)(a) Any owner of real property subject to a notice to real property
lender under this section, or the contractor ((or)),
subcontractor, lender, or lien claimant who believes the claim that
underlies the notice is frivolous and made without reasonable cause, or is
clearly excessive may apply by motion to the superior court for the
county where the property, or some part thereof is located, for an order
commanding the potential lien claimant who issued the notice to the real
property lender to appear before the court at a time no earlier than six nor
later than fifteen days from the date of service of the application and order
on the potential lien claimant, and show cause, if any he or she has, why the
notice to real property lender should not be declared void. The motion
shall state the grounds upon which relief is asked and shall be supported by
the affidavit of the applicant or his or her attorney setting forth a concise
statement of the facts upon which the motion is based.
(b)
The order shall clearly state that if the potential lien claimant fails to
appear at the time and place noted, the notice to lender shall be declared void
and that the potential lien claimant issuing the notice shall be ordered to pay
the costs requested by the applicant including reasonable attorneys' fees.
(c)
The clerk of the court shall assign a cause number to the application and
obtain from the applicant a filing fee of thirty-five dollars.
(d)
If, following a ((full)) hearing on the matter, the court determines
that the claim upon which the notice to real property lender is based is
frivolous and made without reasonable cause, or clearly excessive, the court
shall issue an order declaring the notice to real property lender void if
frivolous((,)) and made without reasonable cause, or reducing the
amount stated in the notice if clearly excessive, and awarding costs and
reasonable attorneys' fees to the applicant to be paid by the person who issued
the notice. If the court determines that the claim underlying the notice to
real property lender is not frivolous and was made with reasonable
cause, and is not clearly excessive, the court shall issue an order so stating
and awarding costs and reasonable attorneys' fees to the issuer of the notice
to be paid by the applicant.
(e)
Proceedings under this subsection shall not affect other rights and remedies
available to the parties under this chapter or otherwise.
Sec.
14. RCW
60.04.902 and 1991 c 281 s 32 are each amended to read as follows:
This
act shall take effect ((April)) June 1, 1992. Lien claims based
on an improvement commenced by a potential lien claimant on or after ((April))
June 1, 1992, shall be governed by the provisions of this act.
NEW
SECTION. Sec. 15. This
act is necessary for the immediate preservation of the public peace, health, or
safety, or support of the state government and its existing public
institutions, and shall take effect June 1, 1992, except section 14 of this act
which shall take effect immediately.
