SENATE BILL REPORT

SB 5339

BYSenators Talmadge, Newhouse, Halsan and Nelson

Revising provisions relating to mechanics' liens.

Senate Committee on Judiciary

Senate Hearing Date(s):February 5, 1987; February 16, 1987

Majority Report:  Do pass as amended.

      Signed by Senators Talmadge, Chairman; Halsan, Vice Chairman; McCaslin, Nelson, Newhouse.

Senate Staff:Jon Carlson (786-7459)

                  February 16, 1987

AS REPORTED BY COMMITTEE ON JUDICIARY, FEBRUARY 16, 1987

BACKGROUND:

An owner or developer of real property subject to a recorded claim of lien may record a bond issued by an insurance company that is acceptable to the lien claimant.  The effect of recording a bond is to release the real property from the claim of lien and any action brought to recover the amount claimed.  However, the current statute does not provide standards to ensure that the surety has sufficient assets to back up the bond.  This uncertainty makes lien claimants reluctant to approve the surety, and deprives the statute of much of its intended usefulness.

SUMMARY:

Surety bonds that are recorded to release real property from a claim of lien must be issued by an insurance company contained in the latest federal Department of the Treasury list of approved surety companies.  In addition, the company must be authorized to issue bonds on U.S. government projects in an underwriting limitation of $500,000 or more.

SUMMARY OF PROPOSED COMMITTEE AMENDMENT:

The federally approved surety company must either:  (1) be authorized to issue bonds on U.S. government projects in an underwriting limitation of $500,000 or more; or (2) have had its loss revenues actuarially certified within the previous year as reasonably sufficient by an independent actuary.

Fiscal Note:      none requested

Senate Committee - Testified: Doug Bohlke, Contractors Bonding and Insurance Company; Steve Gains, Contractors Bonding and Insurance Company; Betty Schall, Washington Land Title Association