S-1240               _______________________________________________

                                                   SENATE BILL NO. 5726

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State of Washington                               51st Legislature                              1989 Regular Session

By Senators Lee and Warnke

Read first time 2/3/89 and referred to Committee on  Economic Development & Labor.

AN ACT Relating to lien claim indemnification; and adding new sections to chapter 60.04 RCW.

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

NEW SECTION. Sec. 1.     In the case of the construction, alteration, or repair of any single family residence or garage, funds received by an owner from a construction lender or by a contractor or subcontractor from an owner or general contractor are held in trust for the benefit of contractors, subcontractors, laborers, or suppliers they employ or from whom they receive material until payment is made according to the contract price or, if the price is in dispute, until payment is made pursuant to a settlement or judicial resolution of the dispute.  These funds are not part of the estate of the person or entity holding them as a trustee under this section.

NEW SECTION. Sec. 2.     In the case of the construction, alteration, or repair of any single-family residence or garage, corporate officers of the prime contractor are personally liable for indemnification of owners of the residence in the event a lien claim is made against the property as a result of the prime contractor's failure to pay amounts due and owing to the lien claimant for material supplied or work done on the single-family residence or garage.  Indemnification shall include reasonable attorneys' fees.

NEW SECTION. Sec. 3.     Sections 1 and 2 of this act are each added to chapter 60.04 RCW.