AN
ACT Relating to liens on owner's proceeds in favor of commercial real estate
brokers; and adding a new chapter to Title 60 RCW.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW
SECTION. Sec. 1. The
definitions in this section apply throughout this chapter unless the context
clearly requires otherwise.
(1)
"Commercial real estate" means a fee title interest or possessory
estate in real property located in this state except an interest in real
property which is (a) improved with one single-family residential unit or one
multifamily structure with four or less residential units, or (b) unimproved
and the maximum permitted development is one to four residential units or
structures under the county or city zoning ordinances or comprehensive plan
applicable to that real estate, or (c) classified as farm and agricultural land
or timber land for assessment purposes pursuant to chapter 84.34 RCW, or (d)
improved with single‑family residential units such as condominiums,
townhouses, timeshares, or stand-alone houses in a subdivision that may be
legally sold, leased, or otherwise disposed of on a unit-by-unit basis. Real
estate will be considered commercial real estate if the commission agreement so
provides, or if it meets the definition contained in this section on the date
of the disposition.
(2)
"Commission agreement" means a written instrument which meets the
requirements of RCW 19.36.010 signed by the owner, or by a party duly
authorized to sign on behalf of the owner, of commercial real estate, pursuant
to which the owner agrees to pay a broker a real estate commission upon either
the disposition or lease of commercial real estate or upon entering into an
agreement for disposition or lease of commercial real estate. When a broker
and owner execute multiple versions of a commission agreement regarding the
same disposition of commercial real estate, the final written version of the
commission agreement, which incorporates the final agreement between the broker
and the owner, constitutes the "commission agreement" and shall be
used to determine the amount of the lien created by this chapter.
(3)
"Days" means calendar days. However, if a period ends on a day other
than a business day, then the last day shall be the next business day.
(4)
"Disposition" means a voluntary transfer or conveyance of commercial
real estate.
(5)
"Escrow closing agent" means the person or entity who receives
documents and funds for recording and disbursement in completing a transaction
for the disposition of commercial real estate.
(6)
"Lease" means a written agreement which gives rise to a relationship
of landlord and tenant, affecting commercial real estate, such that the holder
of a fee simple interest or possessory estate in commercial real estate permits
another to possess the commercial real estate for a period, and which meets the
requirements of RCW 19.36.010, if applicable.
(7)
"Net rental proceeds" means the base rent paid by the tenant under a
lease, less any amounts currently due under the terms of liens which have
priority over the lien created under this chapter. Base rent is the rent so
designated in a lease as base rent, or a similar term, for the possession and
use of the commercial real estate, but does not include separate payments made
by tenants for insurance, taxes, utilities, or other expenses.
(8)
"Owner" means a person or entity which is vested in record fee title
or a possessory estate in commercial real estate.
(9)(a)
"Owner's net proceeds" means the gross sales proceeds from the
disposition of the commercial real estate described in a notice of claim of
lien against proceeds pursuant to this chapter, less the following: (i)
Amounts necessary to pay all encumbrances and liens which have priority over
the lien created by this chapter other than those permitted to remain by the
buyer; (ii) owner's closing costs, such as real estate excise tax, title
insurance premiums, real estate tax and assessment prorations, and escrow fees
payable by the owner pursuant to an agreement with the buyer; and (iii) amounts
held by a third party for use by the owner to complete an exchange of real
estate which is deferred from federal income tax under section 1031 of the
internal revenue code of 1986, as amended.
(b)
"Owner's net proceeds" shall include any gross sales proceeds which
are held by a third party for purposes of completing an exchange of real estate
which is deferred from federal income tax under section 1031 of the internal
revenue code of 1986, as amended, but are subsequently not used for that
purpose. "Owner's net proceeds" are personal property, upon which
the lien created by this chapter attaches.
(10)
"Real estate broker" or "broker" means the same as defined
in RCW 18.85.010.
(11)
"Real property" means one or more parcels or tracts of land,
including appurtenances or improvements.
NEW
SECTION. Sec. 2. (1)
The lien created under this chapter is a lien upon personal property, not upon
real property.
(2)
A broker has a lien upon the owner's net proceeds from the disposition of
commercial real estate and a lien upon the net rental proceeds from the lease
of commercial real estate in the amount which the owner has agreed to pay the
broker under a commission agreement. The lien under this chapter is available
only to the broker named in the commission agreement, and may not be assigned
voluntarily or by operation of law.
(3)
Subject to the requirements of subsection (4) of this section, the lien created
by this chapter becomes effective on the date of the recording of a notice of
claim of lien upon proceeds pursuant to subsection (6) of this section, and is
perfected by such recording. Recording must be made with the county auditor or
recorder in the county or counties in which the commercial real estate is
located.
(4)
In the case of a disposition of commercial real estate, the lien under this
chapter is not effective unless it is recorded at least thirty days prior to
the date a deed conveying the commercial real estate is recorded in the office
of the county auditor or recorder in the county or counties in which the
commercial real estate is located. In the case of a lease of commercial real
estate, the lien under this chapter is not effective unless it is recorded
within ninety days after the tenant takes possession of the leased commercial
real estate.
(5)
The lien created by this chapter is null and void unless, within ten days of
recording its notice of claim of lien against proceeds, the broker delivers a
copy of the notice of claim of lien against proceeds to the owner of the
commercial real estate in the manner provided in section 8 of this act. In the
case of the disposition of commercial real estate, on or before the date the
deed conveying the commercial real estate is recorded, the broker shall deliver
a copy of the notice of claim of lien against proceeds to the escrow closing
agent closing the disposition in the manner provided in section 8 of this act,
if the identity of the escrow closing agent is actually known by the broker.
(6)
To be effective, the notice of claim of lien against proceeds must state the
following:
(a)
The name, address, and telephone number of the broker;
(b)
The date of the commission agreement;
(c)
The name of the owner of the commercial real estate;
(d)
The legal description of the commercial real estate as described in the
commission agreement;
(e)
The amount for which the lien is claimed, which may be stated in a dollar
amount or may be stated in the form of a formula for how the amount is to be
determined such as a percentage of the sales price;
(f)
The real estate license number of the broker; and
(g)
That the lien claimant has read the claim, knows the contents, and believes the
same to be true and correct, and that the claim is made pursuant to a valid
commission agreement, and is not frivolous, under penalties of perjury.
A
copy of the commission agreement must be attached to the recorded notice of
claim of lien against proceeds. The notice of claim of lien against proceeds
must recite that the information contained in the notice of claim of lien
against proceeds is true and accurate to the knowledge of the signatory. The
notice of claim of lien against proceeds must be acknowledged pursuant to
chapter 64.08 RCW. A notice of claim of lien against proceeds substantially in
the following form is sufficient:
NOTICE
OF CLAIM OF LIEN AGAINST PROCEEDS
PURSUANT
TO CHAPTER 60.-- RCW
(sections
1 through 10 of this act)
Notice
is hereby given that the person named below claims a lien as to owner's net
proceeds or net rental proceeds, but not real property, pursuant to chapter 60.‑-
RCW (sections 1 through 10 of this act). In support of this lien, the
following information is submitted:
1.
Name, telephone number, and address of lien claimant:.....
2.
Washington state broker's license number of lien claimant:
3.
Date of the written commission agreement on which this claim is based:
. . . . . . . . . , a true and
complete copy of which is attached to this notice of claim of lien.
4.
Name of the owner:........................................
5.
Legal description of the commercial real estate described in the commission
agreement:............................................
6.
The amount for which the lien is claimed, which may be stated in a dollar
amount or may be stated in the form of a formula for how the amount is to be
determined such as a percentage of the sales price:
7.
The undersigned lien claimant, being sworn, states: I have read the foregoing
claim, know the contents, and believe the same to be true and correct, and the
claim is made pursuant to a valid commission agreement, and is not frivolous,
under penalty of perjury.
.................................
Signature
of lien claimant
.................................
Name,
Street Address, City, State
of
person signing
.................................
Telephone
Number of person signing
State of Washington .... )
.... ) ss
County
of . . . . . . )
.................................
Subscribed and sworn to, or affirmed, before me on . . .
by . . ..
.................................
Signature
(Seal or stamp) .................................
Title
My
appointment expires . . . . . .
(Add
acknowledgment pursuant to chapter 64.08 RCW)
(7)
Whenever a notice of claim of lien against proceeds is recorded and a condition
or event occurs, or fails to occur, that would preclude the broker from
receiving compensation under the terms of the commission agreement, including
the filing of a notice of claim of lien against proceeds in a manner which does
not comply with this chapter, the broker shall record, within seven days
following demand by the owner, a written release of the notice of claim of lien
against proceeds.
(8)
Whenever the amount claimed in a notice of claim of lien against proceeds is
paid to the lien claimant, the lien claimant shall promptly record a
satisfaction or release of the notice of claim of lien against proceeds on
written demand of the owner no later than five days after receipt of payment.
In the case of a disposition of commercial real estate, the escrow closing
agent is required to pay to the lien claimant the owner's net proceeds up to
the amount claimed in the notice of claim of lien against proceeds. If the
amount claimed in the notice of claim of lien against proceeds is to be fully
or partially paid to the lien claimant by the escrow closing agent, upon such
disposition, then the lien claimant shall submit a release of the notice of
claim of lien against proceeds in the amount of the owner's net proceeds or the
amount of the lien, whichever is smaller, to the escrow closing agent to be
held in escrow pending such disposition and payment. In a suit brought by the
owner to compel delivery of the release by the lien claimant, if the court
determines that the delay was unjustified, the court shall, in addition to
ordering the release of the notice of claim of lien, award the costs of the
action including reasonable attorneys' fees to the prevailing party.
(9)
An owner of commercial real estate may request that a broker waive the rights
to a lien under this chapter, and such a waiver contained in the commission
agreement signed by the broker is effective to waive the broker's rights to a
lien under this chapter. In a suit filed by a broker to recover amounts due
under a commission agreement in which the broker has waived lien rights under
this chapter, if the court finds that payment is due to the broker under the
commission agreement, the court, in addition to awarding normal damages, shall
award to the broker court costs, reasonable attorneys' fees, and statutory
interest, as provided in RCW 19.52.010, from the date the deed is recorded in
the event of a disposition, or from the date the tenant takes possession in the
event of a lease.
NEW
SECTION. Sec. 3. (1)
An owner of commercial real estate subject to a recorded notice of claim of
lien against proceeds under this chapter, who disputes the broker's claim in
the notice of claim of lien against proceeds, may apply by motion to the
superior court for the county where the commercial real estate, or some part
thereof, is located for an order directing the broker to appear before the
court at a time no earlier than seven nor later than fifteen days following the
date of service of the motion and order on the broker, to show cause as to why
the relief requested should not be granted. The motion must state the grounds
upon which relief is asked and must be supported by the affidavit of the owner
setting forth a concise statement of the facts upon which the motion is based.
(2)
The order to show cause must clearly state that if the broker fails to appear
at the time and place noted, the notice of claim of lien against proceeds must
be released, with prejudice, and the broker must be ordered to pay the costs
requested by the owner, including reasonable attorneys' fees.
(3)
If, following a hearing on the matter, the court determines that the owner is
not a party to an agreement which will result in the owner being obligated to
pay to the broker a commission pursuant to the terms of a commission agreement,
the court shall issue an order releasing the notice of claim of lien against
proceeds and awarding costs and reasonable attorneys' fees to the owner to be
paid by the broker. If the court determines that the owner is a party to an
agreement which will result in the owner being obligated to pay to the broker a
commission pursuant to the terms of a commission agreement, the court shall
issue an order so stating and awarding costs and reasonable attorneys' fees to
the broker, to be paid by the owner. Such orders are final judgments.
(4)
Proceedings under this section shall not affect other rights and remedies
available to the parties under this chapter or otherwise.
NEW
SECTION. Sec. 4. (1)
If a broker has a lien on net rental proceeds pursuant to section 2(2) of this
act, and the broker has recorded a notice of claim of lien against proceeds and
otherwise complied with the requirements of this chapter, the broker may apply
by motion to the superior court for the county where the commercial real
estate, or some part thereof, is located, for an order directing the owner to
appear before the court at a time no earlier than seven nor later than fifteen
days following the date of service of the motion and order on the owner, and
show cause as to why the relief requested should not be granted. The motion
must state the grounds upon which relief is asked, and must be supported by the
affidavit of the broker setting forth a concise statement of the facts upon
which the motion is based.
(2)
The order to show cause must clearly state that if the owner fails to appear at
the time and place noted, the broker shall be entitled to an order enjoining
the owner from paying the net rental proceeds from such lease to any party
other than the broker, and that the owner shall be ordered to pay the costs
requested by the broker, including reasonable attorneys' fees.
(3)
If, following a hearing on the matter, the court determines that the owner is,
or was, a party to an agreement for the lease of commercial real estate, which
did or will result in the owner being obligated to pay to the broker a
commission pursuant to the terms of a commission agreement, the court shall
issue an order enjoining the owner from paying the net rental proceeds from
such lease to any party other than the broker. The court shall also order the
owner to pay such net rental proceeds to the broker and award costs and reasonable
attorneys' fees to the broker, to be paid by the owner. If the court
determines that the owner is not, or was not, a party to an agreement for the
lease of commercial real estate, which did or will result in the owner being
obligated to pay to the broker a commission pursuant to the terms of a
commission agreement, the court shall issue an order so stating and awarding
costs and reasonable attorneys' fees to the owner, to be paid by the broker.
Such orders are final judgments.
(4)
Proceedings under this section shall not affect other rights and remedies
available to the parties under this chapter or otherwise.
NEW
SECTION. Sec. 5. All
statutory liens, consensual liens, mortgages, deeds of trust, assignments of
rents, and other encumbrances, including all advances or charges made or
accruing thereunder, whether voluntary or obligatory, and all modifications,
extensions, renewals, and replacements thereof, recorded prior to the recording
of a notice of claim of lien against proceeds have priority over a lien created
under this chapter. A prior recorded lien includes, without limitation, a
valid materialmen's or mechanic's lien claim that is recorded after the
recording of the broker's notice of claim of lien against proceeds but which
relates back to a date prior to the recording date of the broker's notice of
claim of lien against proceeds.
NEW
SECTION. Sec. 6. A
notice of claim of lien against proceeds recorded under this chapter must be
released without further act, upon the recording of a receipt showing the
deposit with the superior court of the county in which the commercial real
estate, or some part thereof, is located, of an amount equal to one and
one-quarter times the amount of the lien claimed. The receipt shall be
recorded in the office in which the notice of claim was recorded. The amount
of the deposit in the superior court shall be held pending a resolution of
amounts due to the broker and the owner.
NEW
SECTION. Sec. 7. The
county auditor or recorder shall record the notice of claim of lien against
proceeds, and any release thereof, in the same manner as deeds and other
instruments of title are recorded under chapter 65.08 RCW. Notices of claim of
lien against proceeds for registered land need not be recorded in the Torrens
register. The county auditor or recorder may not charge a higher fee for
recording a notice of claim of lien against proceeds, or for a release thereof,
than what the county auditor or recorder charges for other documents.
NEW
SECTION. Sec. 8.
Notices to be delivered to a party under this chapter, other than service of
process as required in civil actions, shall be by service of process, or by
registered or certified mail, return receipt requested, or by personal or
electronic delivery and obtaining evidence of delivery in the form of a receipt
or other paper or electronic acknowledgment by the party to whom the notice is
delivered or an affidavit of service. Delivery is effective at the time of
personal service, or personal or electronic delivery, or three days following
deposit in the mail as required by this section. Notice to a broker or owner
may be given to the address of the broker or owner that is contained in the
commission agreement, or such other address as is contained in a written notice
from the broker or owner to the party giving the notice. If no address is
provided in the commission agreement, the notice to the broker may be given to
the broker's address of record with the department of licensing pursuant to
chapter 18.85 RCW and notice to the owner may be given to the address of the
commercial real estate.
NEW
SECTION. Sec. 9. This
chapter applies to lien claims based on a commission agreement entered into on,
or after, the effective date of this act.
NEW
SECTION. Sec. 10. This
chapter may be known and cited as the commercial real estate broker lien act.
NEW
SECTION. Sec. 11.
Sections 1 through 10 of this act constitute a new chapter in Title 60 RCW.
