SENATE BILL REPORT

SB 6435

BYSenators Lee and Owen

Changing provisions relating to disclosure by contractors.

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):January 22, 1988; February 3, 1988

Majority Report:  That Substitute Senate Bill No. 6435 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Lee, Chairman; Anderson, Vice Chairman; Cantu, Conner, Deccio, McMullen, Saling, Smitherman, Warnke, West, Williams.

Senate Staff:Dave Cheal (786-7576)

                  February 4, 1988

AS REPORTED BY COMMITTEE ON ECONOMIC DEVELOPMENT & LABOR, FEBRUARY 3, 1988

BACKGROUND:

Any contractor building improvements on real property totaling $1,000 or more is required to supply the customer with a disclosure statement designed to alert the customer to the hazards of construction lien claims. The penalty for failing to provide the disclosure is that the contractor may not bring or maintain any action in any court of the state for collection of amounts due under the contract.  An inadvertent omission of the disclosure to a sophisticated customer could result in the customer refusing to pay without any other justification.  Thus the penalty probably goes too far, and creates a trap for the unwary that was not intended.

SUMMARY:

The penalty is amended to provide that a contractor who fails to provide the required disclosure may not make a claim based on the lien laws, but is not precluded from bringing an ordinary collection action.

EFFECT OF PROPOSED SUBSTITUTE:

The $1,000 threshold is raised to $5,000.  Limiting the disclosure reference to residential construction is clarified.  An incorrect reference to Chapter 39.08 RCW is corrected to refer to Chapter 39.04 RCW, dealing with public works.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: Duke Schaub, AGC (for); Bohlke, WMACNA (for); Glenn H. Belisle, eastern Washington (for)