[atlas:bill]

AN ACT Relating to consumer protection regarding contractors; amending RCW 18.27.010, 18.27.030, 18.27.040, 18.27.050, 18.27.090, 18.27.100, 18.27.110, 18.27.114, and 60.04.031; reenacting and amending RCW 18.27.060; adding new sections to chapter 18.27 RCW; repealing RCW 18.27.075; and prescribing penalties.

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

Sec. 1. RCW 18.27.010 and 1997 c 314 s 2 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Contractor" means any person, firm, or corporation who or which, in the pursuit of an independent business undertakes to, or offers to undertake, or submits a bid to, construct, alter, repair, add to, subtract from, improve, move, wreck or demolish, for another, any building, highway, road, railroad, excavation or other structure, project, development, or improvement attached to real estate or to do any part thereof including the installation of carpeting or other floor covering, the erection of scaffolding or other structures or works in connection therewith or who installs or repairs roofing or siding((~~; or, who, to do similar work upon his or her own property, employs members of more than one trade upon a single job or project or under a single building permit except as otherwise provided herein~~)). "Contractor" includes any person, firm, ((or)) corporation, or other entity covered by this subsection, whether or not registered as required under this chapter.

(2) "Department" means the department of labor and industries.

(3) "Director" means the director of the department of labor and industries or designated representative employed by the department.

(4) "General contractor" means a contractor whose business operations require the use of more than two unrelated building trades or crafts whose work the contractor shall superintend or do in whole or in part. "General contractor" shall not include an individual who does all work personally without employees or other "specialty contractors" as defined in this section. The terms "general contractor" and "builder" are synonymous.

((~~(3)~~)) (5) "Partnership" means a business formed under Title 25 RCW.

(6) "Registration cancellation" means a written notice from the department that a contractor's action is in violation of this chapter and that the contractor's registration has been revoked.

(7) "Registration suspension" means a written notice from the department that a contractor's action is a violation of this chapter and that the contractor's registration has been suspended for a specified time, or until the contractor shows evidence of compliance with this chapter.

(8) "Residential homeowner" means an individual person or persons owning or leasing real property upon which one single-family residence is to be built or upon which there is a single-family residence to which improvements are to be made and in which the owner or lessee intends to reside upon completion of any construction.

(9) "Specialty contractor" means a contractor whose operations do not fall within the ((~~foregoing~~)) definition of "general contractor".

((~~(4)~~)) (10) "Unregistered contractor" means a person, firm, ((or)) corporation, or other entity doing work as a contractor without being registered in compliance with this chapter. "Unregistered contractor" includes contractors whose registration is expired ((~~for more than thirty days beyond the renewal date or has been~~)), revoked, or suspended.

((~~(5) "Department" means the department of labor and industries.~~

~~(6) "Director" means the director of the department of labor and industries.~~

~~(7)~~)) (11) "Verification" means the receipt and duplication by the city, town, or county of a contractor registration card that is current on its face, checking the department's contractor registration data base, or calling the department to confirm that the contractor is registered.

Sec. 2. RCW 18.27.030 and 1998 c 279 s 3 are each amended to read as follows:

(1) An applicant for registration as a contractor shall submit an application under oath upon a form to be prescribed by the director and which shall include the following information pertaining to the applicant:

(a) Employer social security number.

(b) Unified business identifier number, if required by the department of revenue.

(i) The applicant's industrial insurance account number issued by the department;

(ii) The applicant's self-insurer number issued by the department; or

(iii) For applicants domiciled in a state or province of Canada subject to an agreement entered into under RCW 51.12.120(7), as permitted by the agreement, filing a certificate of coverage issued by the agency that administers the workers' compensation law in the applicant's state or province of domicile certifying that the applicant has secured the payment of compensation under the other state's or province's workers' compensation law.

((~~(c)~~)) (d) Employment security department number.

((~~(d)~~)) (e) State excise tax registration number.

((~~(e)~~)) (f) Unified business identifier (UBI) account number may be substituted for the information required by ((~~(b)~~)) (c) of this subsection if the applicant will not employ employees in Washington, and by ((~~(c)~~)) (d) and ((~~(d)~~)) (e) of this subsection.

((~~(f)~~)) (g) Type of contracting activity, whether a general or a specialty contractor and if the latter, the type of specialty.

((~~(g)~~)) (h) The name and address of each partner if the applicant is a firm or partnership, or the name and address of the owner if the applicant is an individual proprietorship, or the name and address of the corporate officers and statutory agent, if any, if the applicant is a corporation or the name and address of all members of other business entities. The information contained in such application is a matter of public record and open to public inspection.

(2) The department may verify the workers' compensation coverage information provided by the applicant under subsection (1)((~~(b)~~)) (c) of this section, including but not limited to information regarding the coverage of an individual employee of the applicant. If coverage is provided under the laws of another state, the department may notify the other state that the applicant is employing employees in Washington.

(3)(a) The department shall deny an application for registration if: (i) The applicant has been previously registered as a sole proprietor, partnership, ((or)) corporation, or other entity and the department has notice that the applicant has an unsatisfied final judgment against him or her in an action based on this chapter that was incurred during a previous registration under this chapter; (ii) the applicant was a principal or officer of a previously registered partnership, corporation, or other entity that has an unsatisfied final judgment against it in an action that was incurred during a previous registration under this chapter; (iii) the applicant does not have a valid unified business identifier number, if required by the department of revenue; or (iv) the applicant or prior entity under (a)(ii) of this subsection owes the department money for penalties assessed or fees due.

(b) The department shall suspend an active registration if (i) the department has notice that the registrant is a sole proprietor or a principal or officer of another registered contractor that has an unsatisfied final judgment against it for work within the scope of this chapter; or (ii) the applicant does not maintain a valid unified business identifier number, if required by the department of revenue.

(4) For the purposes of this section, "an unsatisfied final judgment" includes a judgment assigned under RCW 19.72.070.

Sec. 3. RCW 18.27.040 and 1997 c 314 s 5 are each amended to read as follows:

(1) Each applicant shall file with the department a surety bond issued by a surety insurer who meets the requirements of chapter 48.28 RCW in the sum of ((~~six~~)) fifteen thousand dollars if the applicant is a general contractor and ((~~four~~)) eight thousand dollars if the applicant is a specialty contractor. If no valid bond is already on file with the department at the time the application is filed, a bond must accompany the registration application. The bond shall have the state of Washington named as obligee with good and sufficient surety in a form to be approved by the department. The bond shall be continuous and may be canceled by the surety upon the surety giving written notice to the director ((~~of its intent to cancel the bond~~)). A cancellation or revocation of the bond or withdrawal of the surety from the bond automatically suspends the registration issued to the registrant until a new bond or reinstatement notice has been filed and approved as provided in this section. The bond shall be conditioned that the applicant will pay all persons performing labor, including employee benefits, for the contractor, will pay all taxes and contributions due to the state of Washington, and will pay all persons furnishing labor or material or renting or supplying equipment to the contractor and will pay all amounts that may be adjudged against the contractor by reason of breach of contract including negligent or improper work in the conduct of the contracting business. A change in the name of a business or a change in the type of business entity shall not impair a bond for the purposes of this section so long as one of the original applicants for such bond maintains partial ownership in the business covered by the bond.

(2) ((Any contractor registered as of July 1, 1997, who maintains such registration in accordance with this chapter shall be in compliance with this chapter until the next annual renewal of the contractor's certificate of registration. At that time)) At the time of initial registration or renewal, the contractor shall provide a bond((~~, cash deposit,~~)) or other security deposit as required by this chapter and comply with all of the other provisions of this chapter before the department shall issue or renew the contractor's certificate of registration. Any contractor registered as of July 1, 2001, who maintains that registration in accordance with this chapter is in compliance with this chapter until the next renewal of the contractor's certificate of registration.

(3) The total amount paid from a bond or deposit required by this section to claimants other than residential homeowners must not exceed in the aggregate seven thousand five hundred dollars if provided by a general contractor and four thousand dollars if provided by a specialty contractor.

(4) Any person, firm, or corporation having a claim against the contractor for any of the items referred to in this section may bring suit upon the bond or deposit in ((~~the superior~~)) a court of competent jurisdiction of the county in which the work was done or of any county in which jurisdiction of the contractor may be had. The surety issuing the bond shall be named as a party to any suit upon the bond. Action upon the bond or deposit ((shall be commenced by filing the summons and complaint with the clerk of the appropriate superior court within one year from the date of expiration of the certificate of registration in force at the time)) brought by a residential homeowner for breach of contract by a party to the construction contract shall be commenced by filing the summons and complaint with the clerk of the appropriate court of competent jurisdiction within two years from the date of expiration of the certificate of registration in force at the time. Action upon the bond or deposit brought by any other authorized party shall be commenced by filing the summons and complaint with the clerk of the appropriate court of competent jurisdiction within one year from the date the claimed labor was performed and benefits accrued, taxes and contributions owing the state of Washington became due, materials and equipment were furnished, ((or)) the claimed contract work was completed, or abandoned. Service of process in an action against the contractor, the contractor's bond, or the deposit shall be exclusively by service upon the department. Three copies of the summons and complaint and a fee ((of)) adopted by rule of not less than ten dollars to cover the ((~~handling~~)) costs shall be served by registered or certified mail upon the department at the time suit is started and the department shall maintain a record, available for public inspection, of all suits so commenced. Service is not complete until the department receives the ((~~ten-dollar~~)) fee and three copies of the summons and complaint. The service shall constitute service on the registrant and the surety for suit upon the bond or deposit and the department shall transmit the summons and complaint or a copy thereof to the registrant at the address listed in the registrant's application and to the surety within forty-eight hours after it shall have been received.

((~~(4)~~)) (5) The surety upon the bond shall not be liable in an aggregate amount in excess of the amount named in the bond nor for any monetary penalty assessed pursuant to this chapter for an infraction. The liability of the surety shall not cumulate where the bond has been renewed, continued, reinstated, reissued or otherwise extended. The surety upon the bond may, upon notice to the department and the parties, tender to the clerk of the court having jurisdiction of the action an amount equal to the claims thereunder or the amount of the bond less the amount of judgments, if any, previously satisfied therefrom and to the extent of such tender the surety upon the bond shall be exonerated but if the actions commenced and pending at any one time exceed the amount of the bond then unimpaired, claims shall be satisfied from the bond in the following order:

(a) Employee labor and claims of laborers, including employee benefits;

(b) Claims for breach of contract by a party to the construction contract;

(d) Taxes and contributions due the state of Washington;

(e) Any court costs, interest, and attorney's fees plaintiff may be entitled to recover. The surety is not liable for any amount in excess of the penal limit of its bond.

A payment made by the surety in good faith exonerates the bond to the extent of any payment made by the surety.

((~~(5)~~)) (6) If a final judgment impairs the liability of the surety upon the bond so furnished that there ((~~shall not be~~)) is not in effect a bond ((~~undertaking~~)) in the full amount prescribed in this section, ((~~the department shall suspend~~)) the registration of the contractor is automatically suspended until the bond liability in the required amount unimpaired by unsatisfied judgment claims is furnished. ((~~If the bond becomes fully impaired, a new bond must be furnished at the rates prescribed by this section.~~

~~(6)~~)) (7) In lieu of the surety bond required by this section the contractor may file with the department a deposit consisting of cash or other security acceptable to the department.

((~~(7)~~)) (8) Any person having filed and served a summons and complaint as required by this section having an unsatisfied final judgment against the registrant for any items referred to in this section may execute upon the security held by the department by serving a certified copy of the unsatisfied final judgment by registered or certified mail upon the department within one year of the date of entry of such judgment. Upon the receipt of service of such certified copy the department shall pay or order paid from the deposit, through the registry of ((~~the superior~~)) a court of competent jurisdiction which rendered judgment, towards the amount of the unsatisfied judgment. The priority of payment by the department shall be the order of receipt by the department, but the department shall have no liability for payment in excess of the amount of the deposit.

((~~(8)~~)) (9) The director may require an applicant applying to renew or reinstate a registration or applying for a new registration to file a bond of up to five times the normally required amount, up to seventy-five thousand dollars for general contractors or forty thousand dollars for specialty contractors, if the director determines that an applicant, or a previous registration of a corporate officer, owner, or partner of a current applicant, has:

(a) A history of unpaid judgments in actions based on this chapter involving a residential owner of a single-family dwelling and consisting of two or more unpaid judgments for longer than thirty days following the date of entry of the judgment by the court;

(b) Three or more judgments in actions based on this chapter on three or more different structures by three or more different owner claimants; or

(10) The director may adopt rules necessary for the proper administration of the security.

Sec. 4. RCW 18.27.050 and 1987 c 303 s 1 are each amended to read as follows:

(1) At the time of registration and subsequent reregistration, the applicant shall furnish insurance or financial responsibility in the form of an assigned account in the amount of ((~~twenty~~)) fifty thousand dollars for injury or damages to property, and ((~~fifty~~)) one hundred thousand dollars for injury or damage including death to any one person, and ((~~one~~)) two hundred thousand dollars for injury or damage including death to more than one person ((~~or financial responsibility to satisfy these amounts~~)).

(2) ((~~Failure to maintain insurance or financial responsibility relative to the contractor's activities shall be cause to suspend or deny the contractor his or her or their registration.~~)) An expiration, cancellation, or revocation of the insurance policy or withdrawal of the insurer from the insurance policy automatically suspends the registration issued to the registrant until a new insurance policy or reinstatement notice has been filed and approved as provided in this section.

(3)(a) Proof of financial responsibility authorized in this section may be given by providing, in the amount required by subsection (1) of this section, an assigned account acceptable to the department. The assigned account shall be held by the department to satisfy any execution on a judgment issued against the contractor for damage to property or injury or death to any person occurring in the contractor's contracting operations, according to the provisions of the assigned account agreement. The department shall have no liability for payment in excess of the amount of the assigned account.

(b) The assigned account filed with the director as proof of financial responsibility shall be canceled at the expiration of three years after:

(i) The contractor's registration has expired or been revoked; or

(ii) The contractor has furnished proof of insurance as required by subsection (1) of this section;

if, in either case, no legal action has been instituted against the contractor or on the account at the expiration of the three-year period.

(c) If a contractor chooses to file an assigned account as authorized in this section, the contractor shall, on any contracting project, notify each person with whom the contractor enters into a contract or to whom the contractor submits a bid that the contractor has filed an assigned account in lieu of insurance and that recovery from the account for any claim against the contractor for property damage or personal injury or death occurring in the project requires the claimant to obtain a court judgment.

Sec. 5. RCW 18.27.060 and 1997 c 314 s 6 and 1997 c 58 s 817 are each reenacted and amended to read as follows:

(1) A certificate of registration shall be valid for ((~~one~~)) two years and shall be renewed on or before the expiration date. The department shall issue to the applicant a certificate of registration upon compliance with the registration requirements of this chapter.

(2) If the department approves an application, it shall issue a certificate of registration to the applicant. ((~~The certificate shall be valid for:~~

~~(a) One year;~~

~~(b) Until the bond expires; or~~

~~(c) Until the insurance expires, whichever comes first. The department shall place the expiration date on the certificate.~~

~~(3) A contractor may supply a short-term bond or insurance policy to bring its registration period to the full one year.~~

~~(4)~~)) (3) If a contractor's surety bond or other security has an unsatisfied judgment against it or is canceled, or if the contractor's insurance policy is canceled, the contractor's registration shall be automatically suspended on the effective date of the impairment or cancellation. The department shall mail notice of the suspension to the contractor's address on the certificate of registration by certified and by first class mail within forty-eight hours after suspension.

((~~(5)~~)) (4) Renewal of registration is valid on the date the department receives the required fee and proof of bond and liability insurance, if sent by certified mail or other means requiring proof of delivery. The receipt or proof of delivery shall serve as the contractor's proof of renewed registration until he or she receives verification from the department.

((~~(6)~~)) (5) The department shall immediately suspend the certificate of registration of a contractor who has been certified by the department of social and health services as a person who is not in compliance with a support order or a residential or visitation order as provided in RCW 74.20A.320. The certificate of registration shall not be reissued or renewed unless the person provides to the department a release from the department of social and health services stating that he or she is in compliance with the order and the person has continued to meet all other requirements for certification during the suspension.

NEW SECTION. Sec. 6. A new section is added to chapter 18.27 RCW to read as follows:

(1) If a contractor, whether registered or not, defaults in a payment, penalty, or fine due to the department, the director or the director's designee may issue a notice of assessment certifying the amount due. The notice must be served upon the contractor by mailing the notice to the contractor by certified mail to the contractor's last known address or served in the manner prescribed for the service of a summons in a civil action.

(2) A notice of assessment becomes final thirty days from the date the notice was served upon the contractor unless a written request for reconsideration is filed with the department or an appeal is filed in a court of competent jurisdiction in the manner specified in RCW 34.05.510 through 34.05.598. The request for reconsideration must set forth with particularity the reason for the contractor's request. The department, within thirty days after receiving a written request for reconsideration, may modify or reverse a notice of assessment, or may hold a notice of assessment in abeyance pending further investigation. If a final decision of a court in favor of the department is not appealed within the time allowed by law, then the amount of the unappealed assessment, or such amount of the assessment as is found due by the final decision of the court, is final.

(3) The director or the director's designee may file with the clerk of any county within the state a warrant in the amount of the notice of assessment. The clerk of the county in which the warrant is filed shall immediately designate a court of competent jurisdiction cause number for the warrant, and the clerk shall cause to be entered in the judgment docket under the court of competent jurisdiction cause number assigned to the warrant, the name of the contractor mentioned in the warrant, the amount of payment, penalty, or fine due on it, and the date when the warrant was filed. The aggregate amount of the warrant as docketed is a lien upon the title to, and interest in, all real and personal property of the contractor against whom the warrant is issued, the same as a judgment in a civil case docketed in the office of the clerk. The sheriff shall proceed upon the warrant in all respects and with like effect as prescribed by law with respect to execution or other process issued against rights or property upon judgment in a court of competent jurisdiction. The warrant so docketed is sufficient to support the issuance of writs of garnishment in favor of the state in a manner provided by law in case of judgment, wholly or partially unsatisfied. The clerk of the court is entitled to a filing fee which will be added to the amount of the warrant. The clerk of the court must mail a copy of the warrant to the contractor within three days of filing with the clerk.

(4) The director or the director's designee may issue to any person, firm, corporation, other entity, municipal corporation, political subdivision of the state, a public corporation, or any agency of the state, a notice and order to withhold and deliver property of any kind whatsoever when he or she has reason to believe that there is in the possession of the person, firm, corporation, other entity, municipal corporation, political subdivision of the state, public corporation, or agency of the state, property that is or will become due, owing, or belonging to a contractor upon whom a notice of assessment has been served by the department for payments, penalties, or fines due to the department. The effect of a notice and order is continuous from the date the notice and order is first made until the liability out of which the notice and order arose is satisfied or becomes unenforceable because of lapse of time. The department shall release the notice and order when the liability out of which the notice and order arose is satisfied or becomes unenforceable by reason of lapse of time and shall notify the person against whom the notice and order was made that the notice and order has been released.

The notice and order to withhold and deliver must be served by the sheriff of the county or by the sheriff's deputy, by certified mail, return receipt requested, or by an authorized representative of the director. A person, firm, corporation, other entity, municipal corporation, political subdivision of the state, public corporation, or agency of the state upon whom service has been made shall answer the notice within twenty days exclusive of the day of service, under oath and in writing, and shall make true answers to the matters inquired of in the notice and order. Upon service of the notice and order, if the party served possesses any property that may be subject to the claim of the department, the party shall promptly deliver the property to the director or the director's authorized representative. The director shall hold the property in trust for application on the contractor's indebtedness to the department, or for return without interest, in accordance with a final determination of a petition for review. In the alternative, the party shall furnish a good and sufficient surety bond satisfactory to the director conditioned upon final determination of liability. If a party served and named in the notice fails to answer the notice within the time prescribed in this section, the court may render judgment by default against the party for the full amount claimed by the director in the notice, together with costs. If a notice is served upon a contractor and the property subject to it is wages, the contractor may assert in the answer all exemptions provided for by chapter 6.27 RCW to which the wage earner is entitled.

(5) In addition to the procedure for collection of a payment, penalty, or fine due to the department as set forth in this section, the department may recover civil penalties imposed under this chapter in a civil action in the name of the department brought in a court of competent jurisdiction of the county where the violation is alleged to have occurred.

Sec. 7. RCW 18.27.090 and 1997 c 314 s 8 are each amended to read as follows:

This chapter does not apply to:

(1) An authorized representative of the United States government, the state of Washington, or any incorporated city, town, county, township, irrigation district, reclamation district, or other municipal or political corporation or subdivision of this state;

(2) Officers of a court when they are acting within the scope of their office;

(3) Public utilities operating under the regulations of the utilities and transportation commission in construction, maintenance, or development work incidental to their own business;

(4) Any construction, repair, or operation incidental to the discovering or producing of petroleum or gas, or the drilling, testing, abandoning, or other operation of any petroleum or gas well or any surface or underground mine or mineral deposit when performed by an owner or lessee;

(5) The sale or installation of any finished products, materials, or articles of merchandise ((~~which~~)) that are not actually fabricated into and do not become a permanent fixed part of a structure;

(6) Any construction, alteration, improvement, or repair of personal property((, except this chapter shall apply to all mobile/manufactured housing. A mobile/manufactured home may be installed, set up, or repaired by the registered or legal owner, by a contractor registered under this chapter)) performed by the registered or legal owner, or by a mobile/manufactured home retail dealer or manufacturer licensed under chapter 46.70 RCW who shall warranty service and repairs under chapter 46.70 RCW;

(7) A mobile/manufactured home dealer or manufacturer who subcontracts the installation, set-up, or repair work to actively registered contractors. This exemption only applies to the installation, set-up, or repair of the mobile/manufactured homes that were manufactured or sold by the mobile/manufactured home dealer or manufacturer;

(8) Any construction, alteration, improvement, or repair carried on within the limits and boundaries of any site or reservation under the legal jurisdiction of the federal government;

((~~(8)~~)) (9) Any person who only furnished materials, supplies, or equipment without fabricating them into, or consuming them in the performance of, the work of the contractor;

((~~(9)~~)) (10) Any work or operation on one undertaking or project by one or more contracts, the aggregate contract price of which for labor and materials and all other items is less than five hundred dollars, such work or operations being considered as of a casual, minor, or inconsequential nature. The exemption prescribed in this subsection does not apply in any instance wherein the work or construction is only a part of a larger or major operation, whether undertaken by the same or a different contractor, or in which a division of the operation is made into contracts of amounts less than five hundred dollars for the purpose of evasion of this chapter or otherwise. The exemption prescribed in this subsection does not apply to a person who advertises or puts out any sign or card or other device which might indicate to the public that he or she is a contractor, or that he or she is qualified to engage in the business of contractor;

((~~(10)~~)) (11) Any construction or operation incidental to the construction and repair of irrigation and drainage ditches of regularly constituted irrigation districts or reclamation districts; or to farming, dairying, agriculture, viticulture, horticulture, or stock or poultry raising; or to clearing or other work upon land in rural districts for fire prevention purposes; except when any of the above work is performed by a registered contractor;

((~~(11)~~)) (12) An owner who contracts for a project with a registered contractor;

((~~(12)~~)) (13) Any person working on his or her own property, whether occupied by him or her or not, and any person working on his or her personal residence, whether owned by him or her or not but this exemption shall not apply to any person otherwise covered by this chapter who constructs an improvement on his or her own property with the intention and for the purpose of selling the improved property;

((~~(13)~~)) (14) Owners of commercial properties who use their own employees to do maintenance, repair, and alteration work in or upon their own properties;

((~~(14)~~)) (15) A licensed architect or civil or professional engineer acting solely in his or her professional capacity, an electrician licensed under the laws of the state of Washington, or a plumber licensed under the laws of the state of Washington or licensed by a political subdivision of the state of Washington while operating within the boundaries of such political subdivision. The exemption provided in this subsection is applicable only when the licensee is operating within the scope of his or her license;

((~~(15)~~)) (16) Any person who engages in the activities herein regulated as an employee of a registered contractor with wages as his or her sole compensation or as an employee with wages as his or her sole compensation;

((~~(16)~~)) (17) Contractors on highway projects who have been prequalified as required by RCW 47.28.070, with the department of transportation to perform highway construction, reconstruction, or maintenance work.

Sec. 8. RCW 18.27.100 and 1997 c 314 s 9 are each amended to read as follows:

(1) Except as provided in RCW 18.27.065 for partnerships and joint ventures, no person who has registered under one name as provided in this chapter shall engage in the business, or act in the capacity, of a contractor under any other name unless such name also is registered under this chapter.

(2) All advertising and all contracts, correspondence, cards, signs, posters, papers, and documents which show a contractor's name or address shall show the contractor's name or address as registered under this chapter.

(3)(a) All advertising that shows the contractor's name or address shall show the contractor's current registration number. The registration number may be omitted in an alphabetized listing of registered contractors stating only the name, address, and telephone number: PROVIDED, That signs on motor vehicles subject to RCW 46.16.010 and on-premise signs shall not constitute advertising as provided in this section. All materials used to directly solicit business from retail customers who are not businesses shall show the contractor's current registration number. A contractor shall not use a false or expired registration number in purchasing or offering to purchase an advertisement for which a contractor registration number is required. Advertising by airwave transmission shall not be subject to this subsection (3)(a).

(b) The director may issue a subpoena to any person or entity selling any advertising subject to this section for the name, address, and telephone number provided to the seller of the advertising by the purchaser of the advertising. The subpoena must have enclosed a stamped, self-addressed envelope and blank form to be filled out by the seller of the advertising. If the seller of the advertising has the information on file, the seller shall, within a reasonable time, return the completed form to the department. The subpoena must be issued before forty-eight hours after the expiration of the issue or publication containing the advertising or after the broadcast of the advertising. The good-faith compliance by a seller of advertising with a written request of the department for information concerning the purchaser of advertising shall constitute a complete defense to any civil or criminal action brought against the seller of advertising arising from such compliance. Advertising by airwave or electronic transmission is subject to this subsection (3)(b).

(4) ((~~No contractor shall advertise that he or she is bonded and insured because of the bond required to be filed and sufficiency of insurance as provided in this chapter.~~

~~(5)~~)) A contractor shall not falsify a registration number and use it, or use an expired registration number, in connection with any solicitation or identification as a contractor. All individual contractors and all partners, associates, agents, salesmen, solicitors, officers, and employees of contractors shall use their true names and addresses at all times while engaged in the business or capacity of a contractor or activities related thereto.

((~~(6)~~)) (5) Any advertising by a person, firm, or corporation soliciting work as a contractor when that person, firm, or corporation is not registered pursuant to this chapter is a violation of this chapter.

((~~(7)~~)) (6)(a) The finding of a violation of this section by the director at a hearing held in accordance with the Administrative Procedure Act, chapter 34.05 RCW, shall subject the person committing the violation to a penalty of not more than ((~~five~~)) ten thousand dollars as determined by the director.

(b) Penalties under this section shall not apply to a violation determined to be an inadvertent error.

Sec. 9. RCW 18.27.110 and 1997 c 314 s 11 are each amended to read as follows:

(1) No city, town or county shall issue a construction building permit for work which is to be done by any contractor required to be registered under this chapter without verification that such contractor is currently registered as required by law. When such verification is made, nothing contained in this section is intended to be, nor shall be construed to create, or form the basis for any liability under this chapter on the part of any city, town or county, or its officers, employees or agents. However, failure to verify the contractor registration number results in liability to the city, town, or county to a penalty to be imposed according to RCW 18.27.100((~~(7)~~)) (6)(a).

(2) At the time of issuing the building permit, all cities, towns, or counties are responsible for:

(a) Printing the contractor registration number on the building permit; and

(b) Providing a written notice to the building permit applicant informing them of contractor registration laws and the potential risk and monetary liability to the homeowner for using an unregistered contractor.

(3) If a building permit is obtained by an applicant or contractor who falsifies information to obtain an exemption provided under RCW 18.27.090, the building permit shall be forfeited.

Sec. 10. RCW 18.27.114 and 1997 c 314 s 12 are each amended to read as follows:

(1) Any contractor agreeing to perform any contracting project: (a) For the repair, alteration, or construction of four or fewer residential units or accessory structures on such residential property when the bid or contract price totals one thousand dollars or more; or (b) for the repair, alteration, or construction of a commercial building when the bid or contract price totals one thousand dollars or more but less than sixty thousand dollars, must provide the customer with the following disclosure statement in substantially the following form using lower case and upper case twelve-point and bold type where appropriate, prior to starting work on the project:

"NOTICE TO CUSTOMER

((This contractor is registered with the state of Washington, registration no. . . . ., as a general/specialty contractor and has posted with the state a bond or cash deposit of $6,000/$4,000 for the purpose of satisfying claims against the contractor for negligent or improper work or breach of contract in the conduct of the contractor's business. The expiration date of this contractor's registration is . . . . . . This bond or cash deposit may not be sufficient to cover a claim which might arise from the work done under your contract. If any supplier of materials used in your construction project or any employee of the contractor or subcontractor is not paid by the contractor or subcontractor on your job, your property may be liened to force payment. If you wish additional protection, you may request the contractor to provide you with original "lien release" documents from each supplier or subcontractor on your project. The contractor is required to provide you with further information about lien release documents if you request it. General information is also available from the department of labor and industries."))

This contractor is registered with the state of Washington, registration no. . . ., and has posted with the state a bond or deposit of . . . . . for the purpose of satisfying claims against the contractor for breach of contract including negligent or improper work in the conduct of the contractor's business. The expiration date of this contractor's registration is . . . . ..

THIS BOND OR DEPOSIT MIGHT NOT BE SUFFICIENT TO COVER A CLAIM THAT MIGHT ARISE FROM THE WORK DONE UNDER YOUR CONTRACT.

This bond or deposit is not for your exclusive use because it covers all work performed by this contractor. The bond or deposit is intended to pay valid claims up to . . . . . that you and other customers, suppliers, subcontractors, or taxing authorities may have.

FOR GREATER PROTECTION YOU MAY REQUEST YOUR CONTRACTOR TO PROVIDE YOU WITH A PAYMENT AND PERFORMANCE BOND FOR YOUR JOB.

Your contractor may obtain a payment and performance bond for an additional fee to guarantee payment of suppliers and subcontractors and performance of your construction project.

Other methods of protecting yourself include: Employing the services of an attorney, a construction contract control professional, or other construction professional; entering into a joint check arrangement with your contractor and his or her subcontractors and suppliers to insure that payment is made to those parties; and withholding a contractually defined percentage of your construction contract as retainage for a stated period of time to provide protection to you and help insure that your project will be completed as required by your contract.

YOUR PROPERTY MAY BE LIENED.

If a supplier of materials used in your construction project or an employee or subcontractor of your contractor or subcontractors is not paid, your property may be liened to force payment and you could pay twice for the same work.

FOR ADDITIONAL PROTECTION, YOU SHOULD MAKE CHECKS PAYABLE JOINTLY TO THE CONTRACTOR AND SUPPLIERS OR SUBCONTRACTORS AND REQUIRE THE CONTRACTOR TO PROVIDE YOU WITH ORIGINAL "LIEN RELEASE" DOCUMENTS FROM EACH SUPPLIER OR SUBCONTRACTOR ON YOUR PROJECT.

The contractor is required to provide you with further information about lien release documents if you request it. General information is also available from the state Department of Labor and Industries."

(2) A contractor subject to this section shall notify any consumer to whom notice is required under subsection (1) of this section if the contractor's registration has expired or is revoked or suspended by the department prior to completion or other termination of the contract with the consumer.

(3) No contractor subject to this section may bring or maintain any lien claim under chapter 60.04 RCW based on any contract to which this section applies without alleging and proving that the contractor has provided the customer with a copy of the disclosure statement as required in subsection (1) of this section.

(4) This section does not apply to contracts authorized under chapter 39.04 RCW or to contractors contracting with other contractors.

(5) Failure to comply with this section shall constitute an infraction under the provisions of this chapter.

(6) The department shall produce model disclosure statements, and public service announcements detailing the information needed to assist contractors and contractors' customers to comply under this section. As necessary, the department shall periodically update these education materials.

Sec. 11. RCW 60.04.031 and 1992 c 126 s 2 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 delivery in the form of a receipt or other ((~~acknowledgement~~)) acknowledgment 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 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 or in connection with the new construction of a single-family residence for a residential homeowner:

(a) Who contract directly with the ((~~owner-occupier~~)) owner or ((~~their~~)) the owner's 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~~)) owner or ((~~their~~)) the owner's common law agent shall give notice of the right to claim a lien to the ((~~owner-occupier~~)) owner. Liens of persons furnishing professional services, materials, or equipment who do not contract directly with the ((~~owner-occupier~~)) owner or ((~~their~~)) the owner's 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 ordering the professional services, materials, or equipment)

THIS IS NOT A LIEN‑-THIS NOTICE IS MEANT TO PROVIDE YOU WITH INFORMATION NECESSARY TO PROPERLY MANAGE YOUR CONSTRUCTION PROJECT: 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 AND/OR

NEW RESIDENTIAL PROPERTY

Under Washington law, those who 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. If the improvement to your property is the construction of a new single-family residence, a lien may be claimed for all professional services, materials, or equipment furnished during the ten days preceding the date this notice was given to you or mailed to you and thereafter. 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 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 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 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 professional services, materials, or equipment for the 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 APPROPRIATE STEPS 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 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 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.

(7) For the purposes of this section "commercial property" includes residential property that is not owned by a residential homeowner.

NEW SECTION. Sec. 12. A new section is added to chapter 18.27 RCW to read as follows:

(1) The director shall establish a construction contractor advisory committee.

(2) The director or designee is the chair of the committee. The committee may meet at a time and place designated by the director, or a majority of the members, and shall hold meetings during the year to advise the director.

(3) The purpose of the committee is to advise the department on all matters relating to contractor registration under this chapter. The committee's recommendations are advisory only.

(4) The department shall require by rule that applicants for registration under this chapter provide evidence of passing a competency test and completion of up to sixteen hours of education in subjects relating to business practices and laws that affect contractors. In adopting rules pursuant to this section, the department must take into consideration the availability of training programs in all areas of the state and must encourage training providers to use the most up‑to‑date technology.

(5) As a requirement for renewing a certificate of registration, a contractor registered for less than two years must provide the department evidence of completion of up to sixteen hours of education in subjects relating to business practices and laws that affect contractors.

(6) A contractor who was exempt from the testing requirements of this chapter and who is unregistered because of suspension or revocation must complete the continuing education requirements and competency testing requirements of this chapter before the department issues a certificate of registration.

NEW SECTION. Sec. 13. A new section is added to chapter 18.27 RCW to read as follows:

(1) The purpose of this section is to improve the professional business competency of construction contractors by requiring reasonable standards for continuing education and competency testing in subjects relating to business practices and laws affecting contractors. Hours of education refer to clock hours, not credit hours.

(2) An applicant for registration must designate an individual as his or her responsible managing individual. On or after July 1, 2002, the responsible managing individual must be responsible for completing the continuing education requirements and passing the competency test required by this chapter. If the relationship of the responsible managing individual is terminated, the contractor's registration is suspended within ninety days unless another responsible managing individual is qualified by the department. The responsible managing individual may be:

(a) An owner, if the applicant is a sole proprietorship;

(b) A partner, if the applicant is a partnership or limited liability partnership;

(d) A corporate officer, if the applicant is a corporation; or

(e) A designated full‑time permanent employee, if an applicant has documented that no owner, partner, member, or corporate officer of the applicant is directly involved in construction in the state of Washington, and that the employee is the supervisor of the state of Washington construction operations of the applicant.

(3) The department will not accept a responsible managing individual of more than one registration if that individual is not an owner, partner, member, or corporate officer.

(4) An applicant with an expired registration of more than twelve months must provide evidence that he or she completed all required continuing education and competency testing requirements required by this section. An applicant for registration who is not exempt from the education and testing requirements of this section must provide evidence that his or her responsible managing individual completed the prescribed sixteen hours of education at the time of the applicant's responsible managing individual's application for registration.

(5) Effective July 1, 2002, an applicant for registration must provide evidence that his or her responsible managing individual passed the prescribed competency test. Evidence of course completion before July 1, 2002, must consist of the provider issued certificate of satisfactory completion, which the applicant for registration must provide at the time of his or her application. On or after July 1, 2002, evidence that an applicant completed a required education requirement and passed a competency test must consist of electronic information supplied to the department by an education provider and a test administrator.

(6) Effective January 1, 2002, the department will not accept a course approval number issued more than two years before the date of the applicant's initial application for registration.

NEW SECTION. Sec. 14. A new section is added to chapter 18.27 RCW to read as follows:

On or after July 1, 2002, the department must not register a business entity unless the business entity's responsible managing individual obtained a passing score on a test approved by the department.

NEW SECTION. Sec. 15. A new section is added to chapter 18.27 RCW to read as follows:

(1) In lieu of the test required under section 12 of this act, an applicant may provide evidence to the department that:

(a) The responsible managing individual is listed on the department's current computer registration records as having been registered as an individual proprietor, partner, corporate officer, or limited liability company prior to July 1, 2002, and that the business has been inactive with the department for twelve months or less; or

(b) The responsible managing individual has been licensed or registered in good standing as a contractor in another state or country with the state or country's construction contractor regulatory authority for two years or more prior to July 1, 2002, and was continuously and actively registered or licensed to the date of application with the department.

(2) The director may, upon payment of a reciprocity application fee established by rule and the current registration fee, grant a certificate of registration to any applicant who is a registered contractor or registered specialty contractor in any other state or country whose requirements for registration are at least substantially equivalent to the requirements of this state for registration, and which extends the same privileges of reciprocity to contractors and specialty contractors registered in this state.

NEW SECTION. Sec. 16. A new section is added to chapter 18.27 RCW to read as follows:

(1) The department may not accept education requirements from providers that are not approved by the department.

(2) To receive departmental approval, individuals and organizations desiring to provide the education courses required by this section must submit an agreement with the department prior to offering the sixteen hours of education. The provider agreement includes, but shall not be limited to:

(a) The name, address, contact information, and name of the responsible administrator of the education provider;

(b) Evidence that all its instructors have at least two years' total experience either teaching adults or working in the instructor's subject area or a combination of the two, including the submission of instructor resumes or work history summaries.

(3) No provider may instruct any part of the sixteen‑hour course until there is a fully executed accreditation agreement.

NEW SECTION. Sec. 17. A new section is added to chapter 18.27 RCW to read as follows:

The department may evaluate and approve courses based on written evaluation criteria approved by the construction contractor advisory committee and made available to providers. The department may revoke a provider's approval if a provider's courses do not meet the approved criteria. The department is authorized to adopt rules establishing the qualifications and requirements of providers and shall set fees by rule for the administration of this chapter. The fees shall cover but not exceed the costs of issuing the certificate of registration and of administering and enforcing the requirements of this chapter.

NEW SECTION. Sec. 18. RCW 18.27.075 (Limit on fees for issuing or renewing certificate of registration) and 1983 c 74 s 2 are each repealed.