AN ACT Relating to construction liens; amending RCW 19.27.095 and 60.04.230; adding new sections to chapter 60.04 RCW; and repealing RCW 60.04.010, 60.04.020, 60.04.030, 60.04.040, 60.04.045, 60.04.050, 60.04.060, 60.04.064, 60.04.067, 60.04.070, 60.04.080, 60.04.090, 60.04.100, 60.04.110, 60.04.115, 60.04.120, 60.04.130, 60.04.140, 60.04.150, 60.04.160, 60.04.170, 60.04.180, 60.04.190, 60.04.200, 60.04.210, 60.04.220, 60.20.010, 60.20.020, 60.20.030, 60.20.040, 60.20.050, 60.20.060, 60.48.010, and 60.48.020.

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

NEW SECTION. Sec. 1. DEFINITIONS. Unless the context requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Labor" means exertion of the powers of body or mind performed at the site for compensation. "Labor" includes amounts due and owed to any employee benefit plan on account of such labor performed.

(2) "Site" means the real property which is improved.

(3) "Improvement" means: (a) Constructing, altering, repairing, demolishing, clearing, grading, or filling in, of, to, or upon any real property or street or road in front of or adjoining the same; (b) planting of trees, vines, shrubs, plants, hedges, or lawns on any real property; and (c) professional services.

(4) "Furnishing labor, professional services, materials or equipment" means the performance of any labor or professional services, the contribution owed to any employee benefit plan on account of any labor, the provision of any supplies or materials, and the renting, leasing, or otherwise supplying of equipment for the improvement of real property.

(5) "Construction agent" means any registered or licensed contractor, registered or licensed subcontractor, architect, engineer, or other person having charge of improvements to real property, who shall be deemed the agent of the owner for the limited purpose of establishing the lien created by this chapter.

(6) "Contract price" means the amount agreed upon by the contracting parties, or if no amount is agreed upon, then the customary and reasonable charge therefor.

(7) "Mortgagee" means a person who has a valid subsisting mortgage of record or deed of trust of record securing a loan upon land or an improvement.

(8) "Professional services" means surveying, establishing or marking the boundaries of, preparing maps, plans, or specifications for, or inspecting, testing, or otherwise performing any other architectural or engineering services for the improvement of real property.

(9) "Real property lender" means a bank, savings bank, savings and loan association, credit union, mortgage company, or other corporation, association, partnership or individual that makes loans secured by real property located in the state of Washington.

(10) "Interim or construction financing" means that portion of money secured by mortgage, deed of trust, or other encumbrance to finance construction or improvements on, or development of, real property, but does not include:

(a) Funds to acquire real property;

(b) Funds to pay interest, insurance premiums, lease deposits, taxes, assessments, or prior encumbrances;

(d) Funds to pay other customary fees; which pursuant to agreement with the owner or borrower are to be paid by the lender from time to time;

(e) Funds to acquire personal property for which the potential lien claimant may not claim a lien pursuant to this chapter.

(11) "Owner" means the record holder of the legal or beneficial title to the real property to be improved or developed.

(12) "Potential lien claimant" means any person or entity entitled to assert lien rights under this chapter who has otherwise complied with the provisions of this chapter and is registered or licensed if required to be licensed or registered by the provisions of the laws of the state of Washington.

(13) "Draws" means periodic disbursements of interim or construction financing by a lender.

(14) "Prime contractor" includes all contractors, general contractors, and specialty contractors, as defined by RCW 18.27.010 who contract directly with a property owner or their common law agent to assume primary responsibility for the creation of an improvement to real property, and includes property owners or their authorized representatives who are contractors, general contractors, or specialty contractors as defined in RCW 18.27.010 who offer to sell their property without occupying or using the structures, projects, developments, or improvements for more than one year.

(15) "Subcontractor" means a general contractor or specialty contractor as defined by RCW 18.27.010 who contracts for the improvement of real property with someone other than the owner of the property or their common law agent.

(16) "Payment bond" means a surety bond issued by a surety licensed to issue surety bonds in the state of Washington that confers upon potential claimants the rights of third party beneficiaries.

(17) "Owner-occupied" means a single-family residence occupied by the owner as his or her principal residence.

NEW SECTION. Sec. 2. LIEN AUTHORIZED‑-NOTICES‑-EXCEPTIONS. (1) Except as provided in subsection (2) of this section, any person furnishing labor, professional services, materials, or equipment for the improvement of real property shall have a lien upon the improvement for the contract price of labor, professional services, materials, or equipment furnished at the instance of the owner, or the agent or construction agent of the owner.

(2) Persons who furnish labor, professional services, material, or equipment in connection with the repair, alteration, or remodel of an owner-occupied single family residence or appurtenant garage and who contract directly with the owner-occupier shall have a lien for the full amount due under their contract, as provided in subsection (1) of this section. Persons who do not contract directly with the owner-occupier may give notice to the owner-occupier at any time that labor, professional services, materials, or equipment has been or will be provided. Lien claims by persons who do not contract directly with the owner-occupier may only be satisfied from amounts not yet paid to the prime contractor by the owner at the time the notice described in this subsection is received, regardless of whether amounts not yet paid to the prime contractor are due.

(3) In the case of new construction of a single family residence for an owner who will occupy the residence upon completion as his or her principal residence, the notice to owner may be given at any time by those not under contract with the owner and will protect the lien rights of those providing labor, professional services, materials, or equipment for a period of sixty days before the notice is mailed or served.

(4) (a) Except as otherwise provided in this section, every person furnishing professional services, materials, or equipment for the improvement of real property must give the owner or reputed owner notice in writing of the right to a lien. The notice may be given at any time but only protects the right to claim a lien for professional services, materials, or equipment supplied after the date which is sixty days before:

(i) The notice is mailed by certified or registered mail to the owner or reputed owner; or

(ii) By serving the same personally upon the owner or reputed owner and obtaining evidence of such service in the form or a receipt or other acknowledgement signed by the owner or reputed owner.

(b) Notices of a right to claim a lien shall not be required of:

(i) Persons who furnish professional services, material, or equipment directly to the owner at the owners request;

(ii) Laborers whose claim of lien is based solely on furnishing personal labor services; or

(iii) Subcontractors.

(5) The notices described in this section shall include but not be limited to the following information and shall substantially be in the following form:

@lb

NOTICE OF THE RIGHT TO A LIEN

WARNING: READ THIS NOTICE.

PROTECT YOURSELF FROM PAYING TWICE.

!tp1,1 !tlDate of Mailing: @w1

!ix@w1 !tl

!ixOwner

!ix@w1 !tl

!ixOwner's!sc ,1address

!ix@w1 !tl

This is to inform you that ............... has begun to provide !sc_,5(description of professional services, materials, or equipment)!sc_,5 ordered by ......................... for improvements to property you own. The property is located at ............... .

@igA lien may be claimed for all materials, equipment, and professional services furnished after a date that is sixty days before this notice was mailed to you. A lien may be claimed for all labor furnished for improvement of your real property without this notice being sent to you.

@igIf the property referred to in this notice is occupied by you as your principal residence and the work being done is repair, remodel, or alteration, lien claims may only be made against that portion of the prime contract not yet paid to the prime contractor. In the case of all other improvements to real property, for example commercial construction or new residential construction, lien claims may be made and enforced regardless of whether you or your lender have made partial or full payment to the prime contractor.

@igYour prime contractor and your construction lender are required by law to give you written information about lien claims. If you have not received it, ask them for it.

@id!tl!sc ,5THIS IS NOT A LIEN. It is a notice sent to you for your protection in compliance with the construction lien laws of the state of Washington.

@id!tl!sc ,5This notice has been sent to you by:

@id!tl!sc ,5Name: !sc_,35

@id!tl!sc ,5Address: !sc_,32

@id!tl!sc ,5Telephone: !sc_,30

@la

NEW SECTION. Sec. 3. CONTRACTOR REGISTRATION. A contractor or subcontractor required to be registered under chapter 18.27 RCW or licensed under chapter 19.28 RCW shall be deemed the construction agent of the owner for the purposes of establishing the lien created by this chapter only if so registered or licensed. Persons dealing with contractors or subcontractors may rely, for the purposes of this section, upon a certificate of registration issued pursuant to chapter 18.27 RCW or license issued pursuant to chapter 19.28 RCW covering the period when the labor, professional services, material, or equipment shall be furnished, and the lien rights shall not be lost by suspension or revocation of registration or license without their knowledge. No lien rights described in this section shall be lost or denied by virtue of the absence, suspension, or revocation of such registration or license with respect to any contractor or subcontractor not in immediate contractual privity with the lien claimant.

NEW SECTION. Sec. 4. PROPERTY SUBJECT TO LIEN. The lot, tract, or parcel of land which is improved is subject to a lien to the extent of the interest of the person for whom the labor, professional services, equipment, or materials were furnished, as the court deems appropriate for satisfaction of the lien. If, for any reason, the title or interest in the land upon which the improvement is situated cannot be subjected to the lien, the court in order to satisfy the lien may order the sale and removal of the improvement, subject to the lien, from the land.

NEW SECTION. Sec. 5. PRIORITY OF LIEN. (1) The claim of lien created by this chapter upon any lot or parcel of land shall be prior to any lien, mortgage, deed of trust or other encumbrance which attached to the land after or was unrecorded at the time of commencement of labor or professional services or first delivery of materials or equipment by the lien claimant.

(2) Upon payment and acceptance of the amount due to the lien claimant and upon demand of the person making payment, the lien claimant shall prepare and execute a release of all lien rights for which payment has been made, and deliver the release to the person making payment within thirty days of the demand. In any suit to compel deliverance of the release thereafter in which the court determines the delay was unjustified, the court shall, in addition to ordering the deliverance of the release, award the costs of the action including a reasonable attorneys' fee.

NEW SECTION. Sec. 6. RECORDING‑-TIME‑-CONTENTS OF LIEN. Every person claiming a lien under section 2 of this act shall record, in the county where the subject property is located, a notice of claim of lien not later than ninety days after the person has ceased to furnish labor, professional services, materials, or equipment. The notice of claim of lien:

(1) Shall state in substance and effect:

(a) The name and address of the claimant;

(b) The first and last date on which the labor, professional services, materials, or equipment was furnished;

(d) The street address, legal description, or other description reasonably calculated to identify, for a person familiar with the area, the location of the real property to be charged with the lien;

(e) The name of the owner or reputed owner of the property, if known, and, if not known, that fact shall be stated; and

(f) The principal amount for which the lien is claimed.

(2) Shall be signed by the claimant or some person authorized to act on his or her behalf who shall affirmatively state they have read the notice of claim of lien and believe the notice of claim of lien to be true and correct under penalty of perjury. If the claim has been assigned, the name of the assignee shall be stated. Where an action to foreclose the lien has been commenced such notice of claim of lien may be amended as pleadings may be by order of the court insofar as the interests of third parties are not adversely affected by such amendment. A claim of lien substantially in the following form shall be sufficient:

@lb

!sc_,6, claimant, vs !sc_,6.

Notice is hereby given that on the ..... day (date of commencement of performing labor, date contributions to any type of employee benefit plan became due, or date of furnishing material or supplying equipment) ..... at the request of .......... commenced to perform labor (or to furnish material or supply equipment to be used) upon .......... (here describe property subject to the lien) of which property the owner, or reputed owner, is .......... (or if the owner or reputed owner is not known, insert the word "unknown"), the performance of which labor (or the furnishing of which material or supply of which equipment) ceased on the ..... day of .......... ; that said labor performed (the amount of contributions owed or material furnished or equipment supplied) was of the value of .......... dollars, for which labor (or contributions) (or material) (or equipment) the undersigned claims a lien upon the property herein described for the sum of .......... dollars. (In case the claim has been assigned, add the words "and .......... is assignee of said claim", or claims, if several are united.)

!tp1,1 !tl .......... , Claimant.

!tl@w1

!tl(Address, city, and

!tlstate of claimant)

STATE OF WASHINGTON, COUNTY OF

.......... ,ss.

.......... , being sworn, says: I am the claimant (or attorney of the claimant, or administrator, representative, or agent of the trustees of an employee benefit plan) above named; I have read or heard the foregoing claim read and know the contents thereof, and believe the same to be true and correct under penalty of perjury.

!tl@w1

Subscribed and sworn to before me this ..... day of .......... .

!tl@w1

@la The period provided for recording the notice is a period of limitation and no action to foreclose a claim of lien shall be maintained unless the notice is recorded within the ninety day period stated.

NEW SECTION. Sec. 7. SEPARATE RESIDENTIAL UNITS‑-TIME FOR FILING. When furnishing labor, professional services, materials, or equipment for the construction of two or more separate residential units, the time for filing claims of lien against each separate residential unit shall commence to run upon the cessation of the furnishing of labor, professional services, materials, or equipment on each residential unit, as provided in this chapter. A separate residential unit is defined as consisting of one residential structure together with any appurtenant garages or other appurtenant outbuildings.

NEW SECTION. Sec. 8. RECORDING‑-FEES. The county auditor shall record the notice of claim of lien in the same manner as deeds and other instruments of title are recorded under chapter 65.08 RCW. Notices of claim of lien for registered land need not be recorded in the Torrens register. The county auditor shall charge no higher fee for recording notices of claim of lien than other documents.

NEW SECTION. Sec. 9. LIEN‑-ASSIGNMENT. Any lien or right of lien created by this chapter and the right of action to recover therefor, shall be assignable so as to vest in the assignee all rights and remedies of the assignor, subject to all defenses thereto that might be made.

NEW SECTION. Sec. 10. CLAIMS‑-DESIGNATION OF AMOUNT DUE. In every case in which the notice of claim of lien is recorded against two or more separate pieces of property owned by the same person or owned by two or more persons jointly or otherwise, who contracted for the labor, professional services, material, or equipment for which the notice of claim of lien is recorded, the person recording the notice of claim of lien must designate in the notice of claim of lien the amount due on each piece of property, otherwise the lien is subordinated to other liens that may be established under this chapter. The lien of such claim does not extend beyond the amount designated as against other creditors having liens upon any of such pieces of property.

NEW SECTION. Sec. 11. LIEN‑-DURATION‑-PROCEDURAL LIMITATIONS. No lien created by this chapter binds the property subject to the lien for a longer period than eight calendar months after the notice of claim of lien has been recorded unless an action is filed by the lien claimant within that time in the superior court in the county where the subject property is located to enforce the lien, and service is made upon the owner of the subject property within ninety days of the date of filing the action; or, if credit is given and the terms thereof are stated in the notice of claim of lien, then eight calendar months after the expiration of such credit; and in case the action is not prosecuted to judgment within two years after the commencement thereof, the court, in its discretion, may dismiss the action for want of prosecution, and the dismissal of the action or a judgment rendered thereon that no lien exists shall constitute a cancellation of the lien. This is a period of limitation, which shall be tolled by the filing of any petition seeking protection under Title Eleven, United States Code by an owner of any property subject to the lien established by this chapter.

NEW SECTION. Sec. 12. RIGHTS OF OWNER‑-RECOVERY OPTIONS. The lien claimant shall be entitled to recover upon the claim recorded the contract price after deducting all claims of other lien claimants to whom the claimant is liable, for furnishing labor, professional services, materials, or equipment; and in all cases where a notice of claim of lien shall be recorded under this chapter for labor, professional services, materials, or equipment supplied to any lien claimant, he or she shall defend any action brought thereupon at his or her own expense; and during the pendency of the action, the owner may withhold from the prime contractor the amount of money for which a claim is recorded by any subcontractor, supplier, or laborer; and in case of judgment against the owner or the owner's property, upon the lien, the owner shall be entitled to deduct the principal amount of the judgment from any amount due or to become due from him or her to the lien claimant plus such costs, including interest and attorneys' fees, as the court deems just and equitable, and he or she shall be entitled to recover back from the lien claimant the amount for which the lien is established in excess of any sum that may remain due from him or her to the lien claimant.

NEW SECTION. Sec. 13. BOND IN LIEU OF CLAIM. Any owner of real property subject to a recorded notice of claim of lien under this chapter, or the contractor or subcontractor who disputes the correctness or validity of the notice of claim of lien may record, either before or after the commencement of an action to enforce the lien, in the office of the county recorder or auditor in the county where the notice of claim of lien was recorded, a bond issued by an insurance company authorized to issue surety bonds in the state. The surety shall be listed in the latest federal department of the treasury list of surety companies acceptable on federal bonds, published in the Federal Register, as authorized to issue bonds on United States government projects with an underwriting limitation, including applicable reinsurance, equal to or greater than the amount of the bond to be recorded. The bond must contain a description of the notice of claim of lien and real property involved, and is in an amount equal to the greater of five thousand dollars or two and one-half times the amount of the lien claimed if it is twenty thousand dollars or less, and in an amount equal to or greater than two times the amount of the lien if it is in excess of twenty thousand dollars. If the notice of claim of lien affects more than one parcel of real property and is segregated to each parcel, the bond may be segregated the same as in the notice of claim of lien. A separate bond shall be required for each notice of claim of lien. The condition of the bond shall be to guarantee payment of any judgment upon the lien in favor of the lien claimant entered in any action to recover the amount claimed in a notice of claim of lien, or on the claim asserted in the notice of claim of lien. The effect of recording a bond shall be to release the real property described in the notice of claim of lien from the lien and any action brought to recover the amount claimed. Unless otherwise prohibited by law, if no action is commenced to recover on a lien within the time specified in section 11 of this act, the surety shall be discharged from liability under the bond. If an action is timely commenced, then on payment of any judgment entered in the action or on payment of the full amount of the bond to the holder of the judgment, whichever is less, the surety shall be discharged from liability under the bond.

NEW SECTION. Sec. 14. FORECLOSURE‑-PARTIES. The lien provided by this chapter, for which claims of lien have been recorded, may be foreclosed and enforced by a civil action in the court having jurisdiction in the manner prescribed for the judicial foreclosure of a mortgage. The court shall have the power to order the sale of the property. In any action brought to foreclose a lien, the owner shall be joined as a party. All other persons who, prior to the commencement of the action, have legally recorded claims of lien against the same property, or any part thereof, should be joined as parties, either plaintiff or defendant. If they are not joined no foreclosure action can foreclose or affect their lien claim.

A person shall not begin an action to foreclose a lien upon any property while a prior action begun to foreclose another lien on the same property is pending, but if not made a party plaintiff or defendant to the prior action, he or she may apply to the court to be joined as a party thereto, and his or her lien may be foreclosed in the same action. The court shall grant the application unless to do so would create undue delay or cause hardship to any party. An action to foreclose a lien shall not be dismissed at the instance of a plaintiff therein to the prejudice of another party to the suit who claims a lien.

NEW SECTION. Sec. 15. RANK OF LIEN‑-APPLICATION OF PROCEEDS‑-ATTORNEYS' FEES. (1) In every case in which different construction liens are claimed against the same property, the court shall declare the rank of such lien or class of liens, which liens shall be in the following order:

(a) Liens for the performance of labor;

(b) Liens for contributions owed to employee benefit plans;

(d) Liens for subcontractors, including but not limited to their labor and materials; and

(e) Liens for prime contractors, or for professional services.

(2) The proceeds of the sale of property must be applied to each lien or class of liens in order of its rank and, in an action brought to foreclose a lien, pro rata among each claimant in each separate priority class. A personal judgment may be rendered against any party personally liable for any debt for which the lien is claimed. If the lien is established, the judgment shall provide for the enforcement thereof upon the property liable as in the case of foreclosure of judgment liens. The amount realized by such enforcement of the lien shall be credited upon the judgment. The deficiency, if any, remaining unsatisfied, shall stand as a personal judgment, and may be collected by execution against any party liable therefor.

(3) The court may allow the prevailing party in the action, whether plaintiff or defendant, as part of the costs of the action, the moneys paid for recording the notice of claim of lien, costs of title report, bond costs, and attorneys' fees and necessary expenses incurred by the attorney in the superior court, court of appeals, supreme court, or arbitration, as the court or arbitrator deems reasonable.

(4) Real property against which a lien under this chapter is enforced may be ordered sold by the court and the proceeds deposited into the registry of the clerk of the court, pending further determination respecting distribution of the proceeds of the sale.

NEW SECTION. Sec. 16. EFFECT OF NOTE‑-PERSONAL ACTION PRESERVED. The taking of a promissory note or other evidence of indebtedness for any labor, professional services, material, or equipment furnished for which a lien is created by this chapter does not discharge the lien therefor, unless expressly received as payment and so specified therein.

Nothing in this chapter shall be construed to impair or affect the right of any person to whom any debt may be due for the furnishing of labor, professional services, material or equipment to maintain a personal action to recover the debt against any person liable therefor.

NEW SECTION. Sec. 17. MATERIAL EXEMPT FROM PROCESS‑-EXCEPTION. Whenever material is furnished for use in the improvement of property subject to a lien created by this chapter, the material is not subject to attachment, execution, or other legal process to enforce any debt due by the purchaser of the material, except a debt due for the purchase money thereof, so long as in, good faith, the material is about to be applied in the construction, alteration, or repair of such property.

NEW SECTION. Sec. 18. LIEN‑-EFFECT ON COMMUNITY INTEREST. The claim of lien, when filed as required by this chapter, shall be notice to the husband or wife of the person who appears of record to be the owner of the property sought to be charged with the lien, and shall subject all the community interest of both husband and wife to said lien.

NEW SECTION. Sec. 19. NOTICE TO LENDER‑-DUTY TO WITHHOLD. Any lender providing interim or construction financing shall observe the following procedures and the rights and liabilities of the lender and potential lien claimant shall be affected as follows:

(1) Any potential lien claimant who has not received a payment within five days after the date required by their contract, employee benefit plan agreement, or purchase order may within thirty-five days of the date required for payment of the contract, employee benefit plan agreement, invoice or purchase order, file a notice as provided in subsection (2) of this section of the sums due and to become due, for which a potential lien claimant may claim a lien under this chapter.

(2) The notice must be filed in writing with the lender at the office administering the interim or construction financing, with a copy furnished to the owner and appropriate prime contractor. The notice shall state in substance and effect as follows:

(a) The person, firm, trustee, or corporation filing the notice is entitled to receive contributions to any type of employee benefit plan or has furnished labor, professional services, materials, or equipment for which a right of lien is given by this chapter.

(b) The name of the general contractor, agent, or person ordering the same.

(d) The name, business address, and telephone number of the lien claimant.

The notice to the lender may contain additional information but shall be in substantially the following form:

@lb

@beNOTICE TO LENDER@ee

(Authorized by RCW .......... )

!tp1,1,1,1 TO:!sc ,1@w1

!tl(Name of Lender)

!ix@w1

!tl(Administrative Office-Street Address)

!ix@w1

!tl(City)!sc ,1(State)!sc ,1(Zip)

!ixAND TO:!sc ,1@w1

!tl(Owner)

!ixAND TO:!sc ,1@w1

!tl(Prime Contractor - If Different Than Owner)

!ix@w1

!tl(Name of Laborer, Materials, or Equipment Supplier)

!ixwhose business address is ......................... , did at the property located at ......................... .

(Check appropriate box)!sc ,1¨!sc ,1furnish labor!sc ,1¨!sc ,1provide supplies!sc ,1¨!sc ,1supply equipment as follows:

@w1

@w1,

which was ordered by @w1

!tj1!tl(Name of Person)

.......... , whose address was stated to be @w1

@w1.

@igThe amount owing to the undersigned according to contract or purchase order for labor, supplies, or equipment (as above mentioned) is the sum of ......................... Dollars

($ .......... ). Said sums became due and owing as of

@w1

!tp1,1!tc(State Date)!te

@w1, .......... .

@igYou are hereby required to withhold from any future draws on existing construction financing which has been made on the subject property (to the extent there remain undisbursed funds) the sum of ......................... Dollars

($ .......... ).

@beIMPORTANT@ee

!ixFailure to comply with the requirements of this notice may subject the lender to a whole or partial compromise of any priority lien interest it may have pursuant to section 20 of this act.

!tp1,1,1 !tlDATE: @w1 !tl

!tj1!tl@w1

!tj1!tlBy: @w1

!tj1!tlIts: @w1

@la (3) After the receipt of the notice, the lender shall withhold from the next and subsequent draws the amount claimed to be due as stated in the notice. Alternatively, the lender may obtain from the general contractor or borrower a payment bond for the benefit of the potential lien claimant in an amount sufficient to cover the amount stated in the potential lien claimant's notice. The lender shall be obligated to withhold amounts only to the extent that sufficient interim or construction financing funds remain undisbursed as of the date the lender receives the notice.

(4) Sums so withheld shall not be disbursed by the lender, except by the written agreement of the potential lien claimant, owner, and general contractor in such form as may be prescribed by the lender, or the order of a court of competent jurisdiction.

(5) In the event a lender fails to abide by the provisions of subsections (3) and (4) of this section, then the mortgage, deed of trust, or other encumbrance securing the lender will be subordinated to the lien of the potential lien claimant to the extent of the interim or construction financing wrongfully disbursed, but in no event more than the amount stated in the notice plus costs as fixed by the court, including reasonable attorneys' fees.

(6) Any potential lien claimant shall be liable for any loss, cost, or expense, including reasonable attorneys' fees and statutory costs, to a party injured thereby arising out of any unjust, excessive, or premature notice filed under purported authority of this section. "Notice" as used in this subsection does not include notice given by a potential lien claimant of the right to claim liens under this chapter where no actual claim is made.

NEW SECTION. Sec. 20. FINANCIAL ENCUMBRANCES‑-PRIORITIES. Except as otherwise provided in section 5 or 19 of this act, any mortgage or deed of trust shall be prior to all liens, mortgages, deeds of trust, and other encumbrances which have not been recorded prior to the recording of the mortgage or deed of trust to the extent of all sums secured by the mortgage or deed of trust regardless of when the same are disbursed or whether the disbursements are obligatory.

NEW SECTION. Sec. 21. PROMPT PAYMENT‑-REMEDIES‑-PENALTY. (1) For the purposes of this section, "contract" means an agreement, express or implied, between an owner, owner's agent or construction agent, and another person for the improvement of the owner's real property including the furnishing of labor, materials, equipment, or professional services.

(2) For the purposes of this section, "undisputed amount" means an amount owed on a contract for which there is no good faith dispute, including retainage withheld.

(3) Any person, who performs under a contract, shall be entitled to prompt payment of undisputed amounts as provided by this section:

(a) If the contract is with an owner or the owner's agent and no specific dates or times for payment are specified in the contract, payment shall be made within the earlier of thirty days after the owner or owner's agent takes possession, thirty days after the occupancy permit is granted, or thirty days after performance under the contract by the contractor or subcontractor is virtually complete. If the contract provides for specific dates or times for payment, payment shall be made within seven days of the date or time specified.

(b) If the contract is not with an owner or owner's agent, payment of undisputed amounts shall be made within seven days after receipt of the payment by the prime contractor or subcontractor from which payment to its subcontractor is to be appropriately made.

(c) Failure of owners, contractors, and subcontractors to make prompt payments of undisputed amounts within twenty-one days shall result in a late payment penalty amounting to one percent of the contract amount for each additional day late. Unless otherwise ordered by a court of competent jurisdiction, the late payment penalty will be limited to fifteen percent of the contract amount.

(4) (a) In addition to any other remedy provided under any other provision of law, a court of competent jurisdiction, for good cause shown, may award any equitable relief for prompt payment of undisputed amounts that it considers necessary, including the enjoining of further violations; and in any action, award to the prevailing party:

(i) Interest from the date the court determines that the amount owed was due; and

(ii) Any reasonable costs incurred.

(b) If a court determines that an owner, contractor, or subcontractor has acted in bad faith by failing to pay any undisputed amounts owed as required under this section, the court shall award to the prevailing party reasonable attorneys' fees.

NEW SECTION. Sec. 22. CAPTIONS‑-NOT PART OF LAW. Section headings as used in sections 1 through 22 of this act do not constitute any part of the law.

Sec. 23. Section 1, chapter 104, Laws of 1987 and RCW 19.27.095 are each amended to read as follows:

(1) A valid and fully complete building permit application for a structure, that is permitted under the zoning or other land use control ordinances in effect on the date of the application shall be considered under the building permit ordinance in effect at the time of application, and the zoning or other land use control ordinances in effect on the date of application.

(2) The requirements for a fully completed application shall be defined by local ordinance but must include:

(a) For any construction project costing more than five thousand dollars:

(i) The legal description, the street address if available, and any other identification of the construction site by the prime contractor;

(ii) The property owner's name, address, and phone number;

(iii) The prime contractor's business name, address, phone number, current state contractor registration number and identification; and

(iv) Either:

(A) The name, address, and phone number of the office of the lender administering the interim construction financing; or

(B) The name and address of the firm that has issued a payment bond on behalf of the prime contractor for the protection of the owner, if the bond is for an amount not less than fifty percent of the total amount of the construction project;

(b) The information required by (a) of this subsection and shall be set forth on the building permit document which is issued to the owner and shall be posted at the construction site; and

(c) The information required by (a) of this subsection shall be kept on record in the office where building permits are issued and made available to any person on request. If a copy is requested, a reasonable charge may be made.

(3) The limitations imposed by this section shall not restrict conditions imposed under chapter 43.21C RCW.

Sec. 24. Section 3, chapter 202, Laws of 1984 and RCW 60.04.230 are each amended to read as follows:

(1) For any construction project costing more than five thousand dollars ((~~where the primary use of the improvements on the real property is for one or more residences~~)) the prime contractor shall post in plain view for the duration of the construction project a legible notice at the construction job site containing the following:

(a) The legal description, the street address if available, and any other identification of the construction site by the prime contractor;

(b) The property owner's name, address, and phone number;

(c) The prime contractor's business name, address, phone number, current state contractor registration number and identification; and

(d) Either:

(i) The name, address, and phone number of the office of the lender administering the interim construction financing; or

(ii) The name and address of the firm that has issued a payment bond on behalf of the prime contractor for the protection of the owner if the bond is for an amount not less than fifty percent of the total amount of the construction project.

(2) For any construction project ((not subject to subsection (1) of this section costing more than five thousand dollars, the prime contractor shall post in plain view for the duration of the construction project a legible notice at the construction job site containing the following:

~~(a) The legal description or the street address and any other identification of the construction site by the prime contractor;~~

~~(b) The property owner's name, address, and phone number;~~

~~(c) The prime contractor's business name, address, phone number, current state contractor registration number and identification.~~

~~(3)~~)) which requires a building permit under local ordinance, compliance with the posting requirements of RCW 19.27.095 shall constitute compliance with this section. Otherwise, the information shall be posted as set forth in this section.

(3) Failure to comply with this section is a gross misdemeanor.

NEW SECTION. Sec. 25. Sections 1 through 22 of this act are each added to chapter 60.04 RCW.

NEW SECTION. Sec. 26. The following acts or parts of acts are each repealed:

(1) Section 1, chapter 24, Laws of 1893, section 1, chapter 116, Laws of 1905, section 1, chapter 279, Laws of 1959, section 2, chapter 94, Laws of 1971 ex. sess., section 3, chapter 34, Laws of 1975 and RCW 60.04.010;

(2) Section 1, chapter 45, Laws of 1909, section 1, chapter 77, Laws of 1911, section 1, chapter 214, Laws of 1957, section 1, chapter 278, Laws of 1959, section 2, chapter 279, Laws of 1959, section 1, chapter 98, Laws of 1965, section 1, chapter 84, Laws of 1969 ex. sess., section 1, chapter 57, Laws of 1977 ex. sess., section 4, chapter 202, Laws of 1984 and RCW 60.04.020;

(3) Section 2, chapter 24, Laws of 1893, section 2, chapter 116, Laws of 1905 and RCW 60.04.030;

(4) Section 3, chapter 24, Laws of 1893, section 1, chapter 230, Laws of 1929, section 3, chapter 279, Laws of 1959, section 3, chapter 94, Laws of 1971 ex. sess., section 4, chapter 34, Laws of 1975 and RCW 60.04.040;

(5) Section 1, chapter 179, Laws of 1986 and RCW 60.04.045;

(6) Section 4, chapter 24, Laws of 1893, section 4, chapter 279, Laws of 1959, section 5, chapter 34, Laws of 1975 and RCW 60.04.050;

(7) Section 5, chapter 24, Laws of 1893, section 1(5a), chapter 217, Laws of 1949, section 5, chapter 279, Laws of 1959, section 1, chapter 94, Laws of 1971 ex. sess., section 6, chapter 34, Laws of 1975 and RCW 60.04.060;

(8) Section 1(5b), chapter 217, Laws of 1949, section 6, chapter 279, Laws of 1959 and RCW 60.04.064;

(9) Section 1(5c), chapter 217, Laws of 1949, section 7, chapter 279, Laws of 1959, section 7, chapter 34, Laws of 1975 and RCW 60.04.067;

(10) Section 6, chapter 24, Laws of 1893, section 2, chapter 217, Laws of 1949, section 10, chapter 44, Laws of 1985 and RCW 60.04.070;

(11) Section 7, chapter 24, Laws of 1893 and RCW 60.04.080;

(12) Section 8, chapter 24, Laws of 1893, section 8, chapter 279, Laws of 1959 and RCW 60.04.090;

(13) Section 9, chapter 24, Laws of 1893, section 1, chapter 209, Laws of 1943, section 1, chapter 231, Laws of 1975 1st ex. sess. and RCW 60.04.100;

(14) Section 10, chapter 24, Laws of 1893, section 9, chapter 279, Laws of 1959, section 8, chapter 34, Laws of 1975 and RCW 60.04.110;

(15) Section 4, chapter 314, Laws of 1986 and RCW 60.04.115;

(16) Section 11, chapter 24, Laws of 1893 and RCW 60.04.120;

(17) Section 12, chapter 24, Laws of 1893, section 10, chapter 279, Laws of 1959, section 1, chapter 38, Laws of 1969, section 129, chapter 81, Laws of 1971, section 9, chapter 34, Laws of 1975 and RCW 60.04.130;

(18) Section 14, chapter 24, Laws of 1893, section 11, chapter 279, Laws of 1959 and RCW 60.04.140;

(19) Section 15, chapter 24, Laws of 1893 and RCW 60.04.150;

(20) Section 16, chapter 24, Laws of 1893 and RCW 60.04.160;

(21) Section 17, chapter 24, Laws of 1893 and RCW 60.04.170;

(22) Section 13, chapter 24, Laws of 1893, section 12, chapter 279, Laws of 1959 and RCW 60.04.180;

(23) Section 1, chapter 47, Laws of 1973 1st ex. sess., section 1, chapter 202, Laws of 1984 and RCW 60.04.200;

(24) Section 2, chapter 47, Laws of 1973 1st ex. sess., section 10, chapter 34, Laws of 1975, section 2, chapter 202, Laws of 1984 and RCW 60.04.210;

(25) Section 3, chapter 47, Laws of 1973 1st ex. sess. and RCW 60.04.220;

(26) Section 1, chapter 18, Laws of 1943 and RCW 60.20.010;

(27) Section 2, chapter 18, Laws of 1943 and RCW 60.20.020;

(28) Section 3, chapter 18, Laws of 1943, section 1, chapter 239, Laws of 1955 and RCW 60.20.030;

(29) Section 4, chapter 18, Laws of 1943 and RCW 60.20.040;

(30) Section 5, chapter 18, Laws of 1943 and RCW 60.20.050;

(31) Section 6, chapter 18, Laws of 1943 and RCW 60.20.060;

(32) Section 1, chapter 107, Laws of 1931 and RCW 60.48.010; and

(33) Section 2, chapter 107, Laws of 1931 and RCW 60.48.020.