"Sec. 1   RCW 60.04.250 and 1990 c 81 s 1 are each amended to read as follows:
     The department of labor and industries shall prepare master documents that provide informational material about:
     (1) Construction lien laws and available safeguards against real property lien claims. The material shall include methods of protection against lien claims, including obtaining lien release documents, performance bonds, joint payee checks, the opportunity to require contractor disclosure of all potential lien claimants as a condition of payment, and lender supervision under RCW 60.04.200 and 60.04.210. The material shall also include sources of further information, including the department of labor and industries and the office of the attorney general.
     (2) The basics of lien law relating to owner-occupied residential improvements and new construction projects, including a list of available safeguards against real property lien claims, which the homeowner must consider, reject, or select. Before any building permit may be issued for the construction of a new owner-occupied single-family residence or for the improvement to an owner-occupied single-family residence for an amount in excess of one thousand dollars, if the construction will involve the services of a prime contractor, the permit issuing agency shall not issue any permit until the homeowner has personally, and not through an agent, acknowledged receipt of the document. When the homeowner completes the document by making selections, as indicated in the document, and submits it to the agency, the permit issuing agency shall maintain a copy of the completed document in the file of the permit issuing agency relating to the homeowner's permit application. The document shall be in substantially the following form and shall also include information describing the scope and limits of state contractor bonding requirements, the provisions of this act, and the availability of further information, including the department of labor and industries and the office of the attorney general.

     Dear Homeowner:
     You must complete the items below and select from the options below what protection, if any, you want against potential lien claims on your property as a result of the construction work for which you are contracting. If your contractor fails to pay subcontractors, suppliers, or laborers or neglects to make other legally required payments, those who are owed money can file a lien against your property for payment, even if you have paid your contractor in full. Anyone filing a valid lien claim may force the sale of your property to recover the unpaid amount. This is true if you have hired a contractor to build a new home or are buying a newly built home. It is also true when you remodel or improve your property.
     People who supply materials or labor ordered by your contractor are permitted by law to file a lien only if they do so within ninety days of cessation of performance or delivery of materials. The time frame is spelled out in RCW 60.04.091.
     If you enter into a contract to buy a newly built home, you may not receive a notice of a lien based on a claim by a contractor or material supplier. You should inquire of your lender and title insurer about title insurance coverage for liens that may arise from the construction of your home, but that are not recorded until after you take possession of your home. Be aware that a lien may be claimed even though you have not received a notice. Before making final payment on the project, obtain a completed lien release form from each contractor and material supplier. A sample of this release of lien form is available from the department of labor and industries, contractor registration section.
     You have final responsibility for seeing that all bills are paid even if you have paid your contractor in full.
     If you are dealing with a lending institution, ask your loan officer what precautions the lending institution takes to verify that subcontractors and material suppliers are being paid when mortgage money is paid to your contractor. You may want to request lender supervision if your lending institution is providing interim or construction financing.
     If you receive a notice to enforce a lien, take the notice seriously. Let your contractor know you have received the notice. Find out what arrangements are being made to pay the sender of the notice.
     When in doubt, or if you need more details, consult your attorney. When and how to pay your contractor is a decision that requires serious consideration. Washington law, RCW 18.27.114, requires contractors to give you this disclosure statement if your contract exceeds one thousand dollars.
     Complete the following information, select below how you want to protect yourself from possible lien claims on your property, and inform your contractor of your selections or discuss your selections with your contractor.
     I, (owner's name) . . . . . . . . . . . . . . . . ,
     am agreeing to have (contractor's name)
     perform the following construction work (basic description)
     at (location of your property using an address, legal description or approximate address)
     in the amount of $ . . . . . . . . including all federal, state, and local taxes, and this amount may be adjusted only if authorized by me in writing.
     To protect myself against possible lien claims in the future for this work, I (select one):
     . . . . . . . . will only issue checks made payable jointly, naming the contractor and the subcontractor or supplier as payees.
     . . . . . . . . will only issue checks to the contractor and subcontractors in the amounts equal to the amounts for which lien releases that release all lien rights to those amounts, as provided by RCW 60.04.071, have been provided to me by each lien claimant requesting payment.
     . . . . . . . . want the contractor to post a bond to assure both performance of this construction work and payment to all subcontractors and suppliers in the amount of (select one) . . . the total contract amount . . . in the amount of $. . . . . . . . (Note: Your contractor may add the cost of this bond to your contract price.)
     . . . . . . . . will be using . . . . . . . . as an escrow agent to disburse construction funds and to protect my interests. (NOTE: Before making this selection, find out whether the escrow agent you plan to use will protect you against liens when disbursing payments. If you are interested in using this alternative, consult your attorney.)
     . . . . . . . . want this contractor to set up a trust account for all funds I pay to this contractor, and the trust funds must be disbursed in accordance with our construction agreement to subcontractors and suppliers.
     . . . . . . . . DO NOT want any of the above protections from potential lien claims against my property as a result of this construction work.
     In addition to the above selection, I choose ONE of the following: . . . WANT . . . DO NOT WANT the prime residential contractor to disclose all potential lien claimants as a condition of payment. (NOTE: A lien claimant must, under RCW 60.04.091, mail by certified or registered mail or by personal service a copy of the claim of lien to the owner within fourteen days of the time the lien is recorded. While an action is ongoing, the law, RCW 60.04.151, allows an owner to withhold from this prime residential contractor the amount of money for which a claim is recorded by a subcontractor, supplier, or laborer.)
     More information about contractors is available by visiting the department of labor and industries on the Internet at www.LNI.wa.gov/SCS/contractors/ or by calling the contractor registration hotline at 1-800-647-0982. You may also call your local department of labor and industries office. See listings under "Washington state of" in the government section or the white pages of the telephone book.
     Signed by (property owner): . . . . . . . . . . . . . . . .
     Date signed: . . . . . . . .

Sec. 2   RCW 18.27.020 and 1997 c 314 s 3 are each amended to read as follows:
     (1) Every contractor shall register with the department.
     (2) It is a gross misdemeanor for any contractor to:
     (a) Advertise, offer to do work, submit a bid, or perform any work as a contractor without being registered as required by this chapter;
     (b) Advertise, offer to do work, submit a bid, or perform any work as a contractor when the contractor's registration is suspended or revoked;
     (c) Use a false or expired registration number in purchasing or offering to purchase an advertisement for which a contractor registration number is required; or
     (d) Transfer a valid registration to an unregistered contractor or allow an unregistered contractor to work under a registration issued to another contractor.
     (3) It is not unlawful for a general contractor to employ an unregistered contractor who was registered at the time he or she entered into a contract with the general contractor, unless the general contractor or his or her representative has been notified in writing by the department of labor and industries that the contractor has become unregistered.
     (4) All ((misdemeanor)) actions under this chapter shall be prosecuted in the county where the infraction occurs.
     (5) A person is guilty of a separate gross misdemeanor for each day worked if, after the person receives a citation from the department, the person works while unregistered, or while his or her registration is suspended or revoked, or works under a registration issued to another contractor. A person is guilty of a separate gross misdemeanor for each worksite on which he or she violates subsection (2) of this section. Nothing in this subsection applies to a registered contractor.
     (6) The director by rule shall establish a two-year audit and monitoring program for a contractor not registered under this chapter who becomes registered after receiving an infraction or conviction under this chapter as an unregistered contractor. The director shall notify the departments of revenue and employment security of the infractions or convictions and shall cooperate with these departments to determine whether any taxes or registration, license, or other fees or penalties are owed the state.

Sec. 3   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 signed by the owner or reputed owner or an affidavit of service.
     In the case of new construction, repair, alteration, or remodel of a single-family residence or garage appurtenant to 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 new construction, repair, alteration, or remodel of ((an existing owner-occupied)) a single-family residence or appurtenant garage:
     (a) Who contract directly with the ((owner-occupier or their)) owner or 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 or their)) owner or 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 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.

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.