SENATE BILL REPORT

SB 6436

BYSenators Lee and Owen

Establishing a defense on lien foreclosure proceedings on residences.

Senate Committee on Economic Development & Labor

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

Majority Report:  Do pass.

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

Senate Staff:Dave Cheal (786-7576)

                  February 3, 1988

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

BACKGROUND:

Under the Construction Lien laws of this state a supplier of materials or a subcontractor may file a lien against any improvement to real property for which he or she has supplied labor or materials in the event the subcontractor or supplier has not been paid.  In some cases the customer of the general contractor has paid the general contractor who in turn has failed to pay the suppliers or subcontractors.  In this situation the home owner/consumer may end up paying for part of the new home twice.

Approximately half of the states have a system where subcontractors and suppliers may file a direct lien.  The other half of the states have lien laws which provide that when a customer has paid the general contractor, he/she has a complete defense against all lien claims.  Subcontractors and suppliers in those states may still file lien claims, but they must look to any amounts unpaid when their notice of lien claim is filed for satisfaction of their claim.

SUMMARY:

In the foreclosure of a lien claim on a single-family residence, a complete defense is provided in the event the general contractor has been fully paid under the contract.

Lien claimants may look to amounts not paid, whether or not due, at the time they serve notice of their lien claim for payment of the claim.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: Duke Schaub, AGC; Artie Robersen, L&I; Doug Bohlke, CBIC