SENATE BILL REPORT

SSB 6569

BYSenate Committee on Economic Development & Labor (originally sponsored by Senators West, Warnke and Anderson)

Providing consumers with information on construction liens.

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):February 1, 1988; February 5, 1988

Majority Report:  That Substitute Senate Bill No. 6569 be substituted therefor, and the substitute bill do pass.

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

Senate Staff:Dave Cheal (786-7576)

                  March 5, 1988

House Committe on Commerce & Labor

AS PASSED SENATE, FEBRUARY 12, 1988

BACKGROUND:

Individuals and families who build or buy new houses or who have substantial remodeling done to their home are often unaware of the hazards of construction liens which can cause them to have to pay for part or all of the job twice.  Several techniques for protection are available, but require a basic understanding of construction liens and how to use the protective techniques.

SUMMARY:

Real property lenders which include banks, savings and loan associations, savings banks, credit unions, and mortgage companies, must provide information to all residential mortgage loan applicants which will provide the applicant with basic knowledge of construction lien laws and certain available safeguards.  The protection methods of obtaining lien release documents, using joint payee checks, lender supervision, and requiring the contractor to disclose potential lien claimants, must be covered by the material.

Responsibility for composing the educational brochure is delegated to the attorney general.  The state and real property lenders are insulated from suit based on the provisions of the bill.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: Duke Schaub, AGC (for); Enid Layes, BIAW (for); Larry Shannon, Washington Mortgage Bankers Association; Tom Oldfield, Supervisor of Banking; Doug Bohlhe, SMACNA/CBIC (for); Gary Smith, IBA (for)

HOUSE AMENDMENT:

The Department of Labor and Industries is given the responsibility for preparing the educational document instead of the Attorney General.  In addition to banks, contractors are required to provide the brochure to their customers. The measure takes effect on July 1, 1989.