HOUSE BILL REPORT

SSB 6569

As Amended by the House

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

Providing consumers with information on construction liens.

House Committe on Commerce & Labor

Majority Report:  Do pass with amendments.  (10)

      Signed by Representatives Wang, Chair; Cole, Vice Chair; Fisher, Jones, R. King, O'Brien, Patrick, Sanders, C. Smith and Walker.

House Staff:Chris Cordes (786-7117)

AS PASSED HOUSE MARCH 5, 1988

BACKGROUND:

Consumers who build or buy new houses or who have substantial remodeling done to their homes may be unaware that the home may be subject to construction liens.  If a supplier of materials or a subcontractor has not been paid by the contractor, the supplier or subcontractor may file a lien against any improvement to real property for which he or she has supplied materials or labor. If the consumer has paid the general contractor, but the general contractor has not paid the supplier or subcontractor, the consumer may pay twice if a lien is filed.  Although protective measures are available to consumers, the consumer must possess a basic understanding of construction liens and know how to use the protective measures.

SUMMARY:

The Department of Labor and Industries is required to prepare a master document of informational material about construction lien laws and available safeguards against real property lien claims.  The information contained in the document will include methods of protection that a consumer might use and sources of further information, including the Department of Labor and Industries and the Attorney General.

The informational document will be distributed by both real property lenders and contractors.  For lenders, the document must be given to persons who obtain loans to be used for residential construction, repair or remodeling.  Contractors must provide the document to customers who are required to receive the statutory contractor disclosure notice.  No cause of action lies against either the lender or the contractor arising from the provisions of the bill.

Fiscal Note:      Requested February 12, 1988.

Effective Date:The bill takes effect on July 1, 1989.

House Committee ‑ Testified For:    Larry Sundquist, Washington State Building Industry; Doug Bohlke, Contractors Bonding and Insurance Company; Gary Smith, Independent Business Association; and Mark Triplett, Homebuilders Association of Washington.

House Committee - Testified Against:      Don Brazier, Washington Savings League; Gayle McElroy, Washington Bankers Association; and Joe Brennan, Seattle-First National Bank.

House Committee - Testimony For:    There is a need for public education so that consumers can protect themselves against construction liens.

House Committee - Testimony Against:      The lenders are not the most appropriate entities to provide consumer education about construction lien laws.