5404-S

AN ACT Relating to commercial real estate broker's liens; and adding a new chapter to Title 60 RCW.

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

NEW SECTION. Sec. 1. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter:

(1) "Commercial real estate" means any interest in real property located in this state except (a) an interest in real property which is improved with one to four dwelling units, or (b) an interest in unimproved real property on which, under the county or city zoning ordinances applicable to that real property, the maximum permitted development is one to four dwelling units, or (c) an interest in real property classified as farm and agricultural land for assessment purposes pursuant to chapter 84.34 RCW. Commercial real estate does not include single-family residential units such as condominiums, townhouses, timeshares, or homes in a subdivision when sold, leased, or otherwise conveyed on a unit by unit basis even though these units may be part of a larger building or parcel of real estate containing more than four residential units.

(2) "Real estate broker" or "broker" means the same as under chapter 18.85 RCW.

(3) "Real estate" means an identified parcel or tract of land, including improvements, if any.

NEW SECTION. Sec. 2. (1) A broker has a lien upon commercial real estate in the amount due to the broker:

(a) Under a written instrument signed by the owner of an interest in the commercial real estate or the owner's agent; or

(b) Under a written instrument signed by a prospective buyer or prospective tenant or their respective agent as to the purchase, lease, or other conveyance to the buyer or tenant of an interest in the commercial real estate.

(2) The lien under this chapter is available only to the broker named in an instrument signed by the owner, buyer, or tenant.

(3) The lien under this chapter may not attach to the commercial real estate unless the broker is, or will be as a result of the closing of a sale or lease transaction, entitled to compensation under a written instrument signed by the owner, buyer, tenant, or their respective authorized agent, as applicable.

(4) If a broker has a written agreement with an owner of commercial real estate as provided in subsection (1)(a) of this section, the lien under this chapter attaches to that commercial real estate at the time a claim for lien is recorded in the county in which the commercial real estate is located, but only if the recording occurs prior to the actual conveyance or transfer of the commercial real estate against which the broker is claiming a lien. This subsection applies to sales or other conveyances of commercial real estate other than leases. Lease transactions are subject to subsection (6) of this section. The lien attaches as of the date of the recording of the claim for lien and does not relate back to the date of the written agreement.

(5) If a broker has a written agreement with an owner of commercial real estate as provided in subsection (1)(a) of this section, and when payment to the broker is due in installments, a portion of which is due after the conveyance or transfer of the commercial real estate, any claim for lien for those payments due after the transfer or conveyance may be recorded at any time subsequent to the transfer or conveyance of the commercial real estate and prior to the date on which the payment is due but shall only be effective as a security interest in any lien or encumbrance held by the transferor to the extent moneys are still owed to the transferor by the transferee. This subsection applies to sales or other conveyances of commercial real estate other than leases. Lease transactions are subject to subsection (6) of this section. The lien attaches as of the recording of the claim for lien and does not relate back to the date of the written agreement.

(6) In the case of a lease of commercial real estate, if a broker has a written agreement with the owner as provided in subsection (1)(a) of this section, the claim for lien must be recorded within ninety days after the tenant takes possession of the leased premises unless written notice of the intended signing of the lease is delivered by the owner to the broker entitled to claim a lien at least ten days prior to the date of the intended signing of the lease in which case the claim for lien must be recorded before the date indicated for the signing of the lease in the notice delivered to the broker. The lien attaches as of the recording of the claim for lien and does not relate back to the date of the written agreement.

(7) If a broker has a written agreement with a prospective buyer as provided for in subsection (1)(b) of this section, and the prospective buyer purchases or otherwise accepts a conveyance or transfer of the commercial real estate, the claim for lien must be recorded in the county in which the commercial real estate is located within ninety days after the buyer delivers to the broker written notice that the deed for conveyance has been recorded. The lien attaches as of the date of the recording of the claim for lien and does not relate back to the date of the written agreement, but the lien will not attach prior to the date the commercial real estate is conveyed or transferred to the buyer.

(8) If a broker has a written agreement with a prospective tenant of commercial real estate as provided for in subsection (1)(b) of this section, and compensation is due to that broker in connection with a lease transaction, and the tenant subsequently purchases the commercial real estate within three years of the date that payment of compensation is due to the broker pursuant to the written agreement with the tenant/buyer, then the claim for lien must be recorded in the county in which the commercial real estate is located within ninety days after the tenant/buyer delivers to the broker written notice that the deed for conveyance has been recorded. The lien shall attach as of the date of the recording of the claim for lien and does not relate back to the date of the written agreement, but the lien will not attach prior to the date the commercial real estate is conveyed or transferred to the tenant/buyer.

(9) The broker shall within ten days of recording its claim for lien deliver a copy of the claim for lien to the party which entered into the written agreement with the broker and to the owner of record of the commercial real estate. If the broker is notified in writing of the name and address of a prospective buyer of commercial real estate in a transaction that will result in compensation being due to the broker as described in the claim for lien, the broker shall also deliver a copy of the claim for lien to the named prospective buyer within ten days of the later of the date of recording the claim for lien, or the date the notice of the name and address of the prospective buyer is delivered to the broker. The broker's lien is unenforceable if delivery of the copy of the claim for lien does not occur at the time and in the manner required by this subsection.

(10)(a) A broker may bring suit to enforce a lien in the superior court in the county where the commercial real estate is located by filing a complaint and sworn affidavit that the lien has been recorded.

(b) The person claiming a lien in compliance with this chapter shall, unless the claim is based upon an option to purchase the commercial real estate, commence proceedings by filing a complaint on or before the later of the date which is eight months after the recording of the claim of lien, or three months after the date the broker is notified in writing that the sale or lease transaction that results in the compensation being due to the broker as described in the claim for lien has closed. Failure to commence proceedings within the time specified extinguishes the lien. No claim for lien may thereafter be given for the same claim nor may that claim thereafter be asserted in any proceedings under this chapter.

(c)(i) A complaint under this section shall contain a brief statement of the contract or agreements on which the lien is founded, the date when the contract or agreement was made, a description of the services performed, the amount due and unpaid, a description of the property that is subject to the lien, and other facts necessary for a full understanding of the rights of the parties. The plaintiff shall make all interested parties, of whose interest the plaintiff is notified or has knowledge, defendants to the action, and shall issue summons and provide service as in other civil actions. When any defendant resides or has gone out of the state, or on inquiry cannot be found, or is concealed within this state so that process cannot be served on that defendant, the plaintiff shall cause a notice to be given to that defendant, or cause a copy of the complaint to be served upon that defendant, in the manner and upon the same conditions as in other civil actions.

(ii) All liens claimed under this chapter shall be foreclosed in a civil action in the court having jurisdiction in the manner prescribed for the judicial foreclosure of a mortgage. The court has the power to order the sale of the commercial real estate. In any action brought to foreclose a lien, the owner shall be joined as a party. The interest in the commercial real estate of any person who, prior to the commencement of the action, has a recorded interest in the commercial real estate, or any part thereof, shall not be foreclosed or affected unless that person is joined as a party.

(11) The lien notice shall state the name, address, and phone number of the claimant, the name of the party which entered into the written agreement with the broker, the name of the owner of the commercial real estate, a description of the commercial real estate upon which the lien is being claimed, the amount for which the lien is claimed, and the real estate license number of the broker. The claim for lien shall recite that the information contained in the notice is true and accurate to the knowledge of the signator. The claim for lien shall be signed by the broker or by a person authorized to sign on behalf of the broker and shall be verified.

(12) Whenever a claim for lien has been filed and a condition occurs that would preclude the broker from receiving compensation under the terms of the broker's written agreement, the broker shall record, within ten days following demand by a party who owns an interest in the commercial real estate, a written release or satisfaction of the lien.

(13) Whenever a claim for lien has been filed and is paid, or where there is a failure to institute a suit to enforce the lien within the time provided by this chapter, the broker shall record a satisfaction or release of the lien, on written demand of a party who owns an interest in the commercial real estate, within five days after payment or expiration of the time in which to file the lien.

(14) Upon written demand of the owner of the commercial real estate delivered to the person claiming the lien requiring suit to be commenced to enforce the lien, a suit shall be commenced pursuant to subsection (10)(b) of this section within thirty days thereafter, or the lien is extinguished.

(15) The cost of proceedings asserting or defending a broker's claim of lien, including reasonable attorneys' fees, costs, and prejudgment interests due to the prevailing party shall be borne by the nonprevailing party or parties. When more than one party is responsible for costs, fees, and prejudgment interests, the costs, fees, and prejudgment interests shall be equitably apportioned by the court among those responsible parties.

NEW SECTION. Sec. 3. Prior recorded liens, mortgages, deeds of trust, and other encumbrances, including all advances or charges made or accruing thereunder whether optional or obligatory, and all modifications, extensions, renewals, and replacements thereof have priority over a broker's lien. A prior recorded lien includes, without limitation, a valid mechanic's lien claim that is recorded subsequent to recording of the broker's claim for lien but which relates back to a date prior to the recording date of the broker's claim for lien.

NEW SECTION. Sec. 4. A lien recorded under this chapter shall be extinguished at the time, if any, that the party who entered into a written agreement with a broker as provided in section 2(1) of this act, or that party's agent, deposits with the superior court of the county in which the commercial real estate is located an amount equal to one and one-quarter times the amount of the lien claimed, with the amount to be held pending a resolution of amounts due to the broker.

NEW SECTION. Sec. 5. The commercial real estate that is subject to a lien under this chapter is the commercial real estate identified in a written agreement entered into as provided in section 2(1) of this act.

NEW SECTION. Sec. 6. The county auditor shall record the notice of claim of lien in the same manner as deeds and other instruments of title are recorded under chapter 65.08 RCW. Notices of claim of lien for registered land need not be recorded in the Torrens register. The county auditor shall charge no higher fee for recording notices of claim of lien than other documents.

NEW SECTION. Sec. 7. The claim of lien, when filed as required by this chapter, shall be notice to the husband or wife of the person who appears of record to be the owner of the commercial real estate sought to be charged with the lien, and shall subject all the community interest of both husband and wife to the lien.

NEW SECTION. Sec. 8. Notices to be delivered to a party under this chapter, other than service of process as required in civil actions, may be by registered or certified mail, return receipt requested, or by personal delivery and obtaining evidence of delivery in the form of a receipt or other acknowledgement signed by the party to whom the notice is delivered or an affidavit of service. Delivery is effective at the time of personal delivery, or when deposited in the mail as required by this section.

NEW SECTION. Sec. 9. This chapter applies to lien claims based on a written agreement entered into on or after the effective date of this act.

NEW SECTION. Sec. 10. This chapter may be known and cited as the commercial real estate broker lien act.

NEW SECTION. Sec. 11. Sections 1 through 10 of this act shall constitute a new chapter in Title 60 RCW.