BILL REQ. #:  H-3202.1 

Read first time 01/16/14.   Referred to Committee on Business & Financial Services.

     AN ACT Relating to allowing appraisers to place a lien on property for unpaid balances for services rendered; amending RCW 60.04.011, 60.04.031, 60.04.051, and 60.04.255; and adding a new section to chapter 60.04 RCW.

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

Sec. 1   RCW 60.04.011 and 1992 c 126 s 1 are each amended to read as follows:
     Unless the context requires otherwise, the definitions in this section apply throughout this chapter.
     (1) "Construction agent" means any registered or licensed contractor, registered or licensed subcontractor, architect, engineer, or other person having charge of any improvement to real property, who shall be deemed the agent of the owner for the limited purpose of establishing the lien created by this chapter.
     (2) "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.
     (3) "Draws" means periodic disbursements of interim or construction financing by a lender.
     (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) "Improvement" means: (a) Constructing, altering, repairing, remodeling, 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, or providing other landscaping materials on any real property; and (c) providing professional services upon real property or in preparation for or in conjunction with the intended activities in (a) or (b) of this subsection.
     (6) "Interim or construction financing" means that portion of money secured by a mortgage, deed of trust, or other encumbrance to finance improvement of, or to 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;
     (c) Funds to pay loan, commitment, title, legal, closing, recording, or appraisal fees;
     (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.
     (7) "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.
     (8) "Mortgagee" means a person who has a valid mortgage of record or deed of trust of record securing a loan.
     (9) "Owner-occupied" means a single-family residence occupied by the owner as his or her principal residence.
     (10) "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.
     (11) "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.
     (12) "Prime contractor" includes all contractors, general contractors, and specialty contractors, as defined by chapter 18.27 or 19.28 RCW, or who are otherwise required to be registered or licensed by law, 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 common law agents who are contractors, general contractors, or specialty contractors as defined in chapter 18.27 or 19.28 RCW, or who are otherwise required to be registered or licensed by law, who offer to sell their property without occupying or using the structures, projects, developments, or improvements for more than one year.
     (13) "Professional services" means surveying, establishing or marking the boundaries of, preparing maps, plans, appraisals, reports, or specifications for, or inspecting, appraising, testing, or otherwise performing any other architectural, appraisal, inspection, or engineering services for the improvement of real property.
     (14) "Real property lender" means a bank, savings bank, savings and loan association, credit union, mortgage company, appraisal management company, or other corporation, association, partnership, trust, or individual that makes loans secured by real property located in the state of Washington.
     (15) "Site" means the real property which is or is to be improved.
     (16) "Subcontractor" means a general contractor or specialty contractor as defined by chapter 18.27 or 19.28 RCW, or who is otherwise required to be registered or licensed by law, who contracts for the improvement of real property with someone other than the owner of the property or their common law agent.

Sec. 2   RCW 60.04.031 and 1992 c 126 s 2 are each amended to read as follows:
     (1) Except as otherwise provided in this section, every person furnishing professional services, materials, or equipment for the improvement of real property shall give the owner or reputed owner notice in writing of the right to claim a lien. If the prime contractor is in compliance with the requirements of RCW 19.27.095, 60.04.230, and 60.04.261, this notice shall also be given to the prime contractor as described in this subsection unless the potential lien claimant has contracted directly with the prime contractor. 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:
     (a) Mailing the notice by certified or registered mail to the owner or reputed owner; or
     (b) Delivering or serving the notice personally upon the owner or reputed owner and obtaining evidence of delivery in the form of a receipt or other acknowledgment signed by the owner or reputed owner or an affidavit of service.
     In the case of new construction of a single-family residence, the notice of a right to claim a lien may be given at any time but only protects the right to claim a lien for professional services, materials, or equipment supplied after a date which is ten days before the notice is given as described in this subsection.
     (2) Notices of a right to claim a lien shall not be required of:
     (a) Persons who contract directly with the owner or the owner's common law agent;
     (b) Laborers whose claim of lien is based solely on performing labor; or
     (c) Subcontractors who contract for the improvement of real property directly with the prime contractor, except as provided in subsection (3)(b) of this section.
     (3) Persons who furnish professional services, materials, or equipment in connection with the repair, alteration, financing, valuation, or remodel of an existing owner-occupied single-family residence or appurtenant garage:
     (a) Who contract directly with the owner-occupier or their common law agent shall not be required to send a written notice of the right to claim a lien and shall have a lien for the full amount due under their contract, as provided in RCW 60.04.021; or
     (b) Who do not contract directly with the owner-occupier or their common law agent shall give notice of the right to claim a lien to the owner-occupier. Liens of persons furnishing professional services, materials, or equipment who do not contract directly with the owner-occupier or their common law agent may only be satisfied from amounts not yet paid to the prime contractor by the owner at the time the notice described in this section is received, regardless of whether amounts not yet paid to the prime contractor are due. For the purposes of this subsection "received" means actual receipt of notice by personal service, or registered or certified mail, or three days after mailing by registered or certified mail, excluding Saturdays, Sundays, or legal holidays.
     (4) The notice of right to claim a lien described in subsection (1) of this section, shall include but not be limited to the following information and shall substantially be in the following form, using lower-case and upper-case ten-point type where appropriate.

DUAL PAYCHECKS (Joint Checks): When paying your contractor for services or materials, you may make checks payable jointly to the contractor and the firms furnishing you this notice.

LIEN RELEASES: You may require your contractor to provide lien releases signed by all the suppliers and subcontractors from whom you have received this notice. If they cannot obtain lien releases because you have not paid them, you may use the dual payee check method to protect yourself.

NEW SECTION.  Sec. 3   A new section is added to chapter 60.04 RCW to read as follows:
     A lender, mortgage broker, or appraisal management company required to be registered under chapter 18.310 or 19.146 RCW or Title 30 RCW or otherwise required to be registered or licensed by law, is the lender agent of the owner for the purposes of establishing the lien created by this chapter only if so registered or licensed. Persons dealing with lenders, mortgage brokers or appraisal management companies may rely, for the purposes of this section, upon a certificate of registration issued pursuant to chapter 18.310 or 19.146 RCW or Title 30 RCW, or other certificate or license issued pursuant to law, covering the period when the labor, professional services, material, or equipment is furnished, and the lien rights are not lost by suspension or revocation of registration or license without their knowledge. Lien rights under this chapter are not lost or denied by virtue of the absence, suspension, or revocation of registration or license with respect to any contractor or subcontractor not in immediate contractual privity with the lien claimant.

Sec. 4   RCW 60.04.051 and 1992 c 126 s 5 are each amended to read as follows:
     The lot, tract, or parcel of land which is improved is subject to a lien to the extent of the interest of the owner at whose instance, directly or through a common law or construction agent or lending agent, 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 from the land which is subject to the lien.

Sec. 5   RCW 60.04.255 and 1988 c 270 s 2 are each amended to read as follows:
     (1) Every real property lender shall provide a copy of the informational material described in RCW 60.04.250 to all persons obtaining loans, the proceeds of which are to be used for residential construction or residential repair or remodeling or refinancing.
     (2) Every contractor shall provide a copy of the informational material described in RCW 60.04.250 to customers required to receive contractor disclosure notice under RCW 18.27.114.
     (3) No cause of action may lie against the state, a real property lender, or a contractor arising from the provisions of RCW 60.04.250 and this section.
     (4) For the purpose of this section, "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 in this state.