BILL REQ. #:  S-1603.3 



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SENATE BILL 6036
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State of Washington60th Legislature2007 Regular Session

By Senators Fraser, Franklin, Weinstein, Kohl-Welles and Hargrove

Read first time 02/14/2007.   Referred to Committee on Labor, Commerce, Research & Development.



     AN ACT Relating to construction liens; amending RCW 60.04.031, 60.04.091, and 18.27.010; and adding new sections to chapter 60.04 RCW.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 60.04 RCW to read as follows:
     Any contract entered into between any person furnishing labor, professional services, materials, or equipment and the owner to construct, alter, repair, or remodel residential property must contain the following provisions:
     (1) That subcontractors must provide the same notice the owner receives from material suppliers under RCW 60.04.031;
     (2) That each time the owner makes a payment to the prime contractor, the prime contractor shall provide to the owner within five days of payments to subcontractors, suppliers, and laborers notice detailing what subcontractors, suppliers, and laborers were paid, how much, and for what work. The prime contractor shall also include with the notice copies of cancelled checks to the subcontractors, suppliers, or laborers or other evidence that the subcontractors, suppliers, and laborers were paid; and
     (3) That failure to follow any provision in the contract waives the lien rights the prime contractor may have against the owner's property and constitutes a breach of contract relieving the owner of any further obligations under the contract.

Sec. 2   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 of a single-family residence, the notice of a right to claim a lien ((may)) shall 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)) the time of service.
     (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 new construction of a residence or 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 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 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 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 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) This notice shall be signed by the owner as proof that he or she has received it. Failure to obtain the owner's signature on the notice waives the right of the contractor to claim a lien against the owner's property and relieves the owner of any further obligations under the contract. The contractor shall keep the signed notice for three years.
     (6) 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))) (7) A lien authorized by this chapter shall not be enforced unless the lien claimant has complied with the applicable provisions of this section.

Sec. 3   RCW 60.04.091 and 1992 c 126 s 7 are each amended to read as follows:
     Every person claiming a lien under RCW 60.04.021 shall 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. The principal amount of the lien shall not include any interest, late fees, costs, attorneys' fees, or similar charges.
     (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 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 . . . . . ., name of person indebted to claimant:


Notice is hereby given that the person named below claims a lien pursuant to chapter ((64.04)) 60.04 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 claim of lien is a period of limitation and no action to foreclose a lien shall be maintained unless the claim of lien is filed for recording within the ninety-day period stated. The lien claimant shall give 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 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. 4   RCW 18.27.010 and 2001 c 159 s 1 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, 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.
     (5) "Partnership" means a business formed under Title 25 RCW.
     (6) "Prime residential contractor" means a prime contractor, as defined in RCW 60.04.011, who is engaged in the business of constructing, altering, repairing, or remodeling residences.
     (7) "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))) (8) "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))) (9) "Residential homeowner" means an individual person or persons owning or leasing real property:
     (a) Upon which one single-family residence is to be built and in which the owner or lessee intends to reside upon completion of any construction; or
     (b) 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))) (10) "Specialty contractor" means a contractor whose operations do not fall within the definition of "general contractor".
     (((10))) (11) "Unregistered contractor" means a person, firm, 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, revoked, or suspended. "Unregistered contractor" does not include a contractor who has maintained a valid bond and the insurance or assigned account required by RCW 18.27.050, and whose registration has lapsed for thirty or fewer days.
     (((11))) (12) "Unsatisfied final judgment" means a judgment that has not been satisfied either through payment, court approved settlement, discharge in bankruptcy, or assignment under RCW 19.72.070.
     (((12))) (13) "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.

NEW SECTION.  Sec. 5   A new section is added to chapter 60.04 RCW to read as follows:
     If an owner has paid a prime contractor for certain work to be done by a subcontractor, or for materials, equipment, or labor to be provided, and the prime contractor has not paid either the subcontractor or for the materials, equipment, or labor in a timely manner, the lien that the prime contractor, subcontractor, supplier, or laborer may file against the owner's property is limited to the amount the owner still owes the prime contractor under the contract.

NEW SECTION.  Sec. 6   A new section is added to chapter 60.04 RCW to read as follows:
     When a subcontractor, supplier, or laborer does work for a prime contractor who does not pay for the work done by the subcontractor, supplier, or laborer and, as a result, the subcontractor, supplier, or laborer files a lien against the homeowner, that subcontractor, supplier, or laborer may not have a lien enforced at a later date against a homeowner if the work performed is for the same prime contractor.

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