Washington Construction Law William G. Fig [email_address] SUSSMAN SHANK  LLP  | (503) 227-1111 | www.sussmanshank.com | ©...
Overview <ul><li>What Is A Construction Lien </li></ul><ul><ul><li>Against Whom Do You Have A Legal Right To Recover? </li...
What Is A Construction Lien? <ul><li>Legal Right To Hold A 3rd Party Liable (Owner) </li></ul><ul><li>Still Maintain Your ...
Prerequisites To Filing A Lien <ul><li>Can You Assert A Lien? </li></ul><ul><li>Preparing For Eventual Lien Claim: Disting...
Can You Assert a Construction Lien <ul><li>RCW 60.04.031 - Provide Labor, Equipment Or Services For The Improvement Of Rea...
Important Distinctions <ul><li>Determine Background Information For Perfection Of A Lien </li></ul><ul><ul><li>Public v. P...
Important Distinctions <ul><li>Determine Background Information For Perfection Of A Lien (cont.) </li></ul><ul><ul><li>New...
What Property is Subject to Construction Lien? <ul><li>Lien Attaches To </li></ul><ul><ul><li>Improvement Into Which The L...
Prerequisites To Filing A Lien Claim <ul><li>What Is The Necessary Information </li></ul><ul><ul><li>Name And Address Of P...
Prerequisites To Filing A Lien Claim <ul><li>Where Can You Get The Necessary Information </li></ul><ul><ul><li>Building Pe...
Prerequisites To Filing A Lien Claim <ul><li>Prelien Notices </li></ul><ul><li>Information Notice To Owner </li></ul><ul><...
Filing The Lien <ul><li>Claim Of Lien </li></ul><ul><ul><li>Must Contain The Following Information (RCW 60.04.091) </li></...
Filing The Lien <ul><li>Claim Of Lien (Cont.) </li></ul><ul><ul><li>When Must It Be Filed With County Auditor </li></ul></...
Filing The Lien <ul><li>Claim Of Lien (Cont.) </li></ul><ul><ul><li>Practical Advice </li></ul></ul><ul><ul><ul><li>Itemiz...
Filing The Lien <ul><li>Notice Of Intent To Foreclose </li></ul><ul><ul><li>A Notice Of Intent To Foreclose Is Not Require...
Foreclosure Of Construction Lien <ul><li>Must File Suit To Foreclose Lien Within 8 Calendar Months After Lien Is Recorded ...
Foreclosure Of Construction Lien <ul><li>Where Do You Sue </li></ul><ul><ul><li>Court Where Property Is Located </li></ul>...
Priority Of Construction Lien to Other Claims <ul><li>Multiple Encumbrances </li></ul><ul><ul><li>Priority </li></ul></ul>...
Priority Of Construction Lien to Other Claims <ul><li>Construction Lien v. Prior Mortgage (RCW 60.04.061) </li></ul><ul><u...
Frivolous Lien Claims <ul><li>Owner (Or Others) May Apply To Court To Have Lien Removed From Property Or Reduced If It Is ...
Notice To Lender - Withholding Of Funds <ul><li>Notice To Lender (RCW 60.04.221) </li></ul><ul><ul><li>The Material Suppli...
Notice To Lender - Withholding Of Funds <ul><li>Notice To Lender (RCW 60.04.221) (Cont.) </li></ul><ul><ul><li>THEN - </li...
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Washington Lien Law

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Washington Lien Law

  1. 1. Washington Construction Law William G. Fig [email_address] SUSSMAN SHANK LLP | (503) 227-1111 | www.sussmanshank.com | © 2004
  2. 2. Overview <ul><li>What Is A Construction Lien </li></ul><ul><ul><li>Against Whom Do You Have A Legal Right To Recover? </li></ul></ul><ul><ul><li>What Are You Entitled To Recover? </li></ul></ul><ul><li>Prerequisites To Filing A Construction Lien </li></ul><ul><li>How And When To Properly File A Construction Lien </li></ul><ul><li>How To Properly Foreclose A Construction Lien </li></ul><ul><li>Priorities </li></ul><ul><li>Summary Of Critical Deadlines </li></ul><ul><li>Other Methods To Help Secure Payment (Notice to Lender; Miller Act; Retainage Claims) </li></ul>1 © SUSSMAN SHANK LLP | www.sussmanshank.com
  3. 3. What Is A Construction Lien? <ul><li>Legal Right To Hold A 3rd Party Liable (Owner) </li></ul><ul><li>Still Maintain Your Contract Right </li></ul><ul><li>Key Players </li></ul><ul><ul><li>Owner </li></ul></ul><ul><ul><li>Common Law Agent </li></ul></ul><ul><ul><li>Statutory Agent </li></ul></ul><ul><ul><li>Prime Contractor </li></ul></ul><ul><ul><li>Subcontractor </li></ul></ul><ul><ul><li>Materialmen/Labor/Professional Services </li></ul></ul>2 © SUSSMAN SHANK LLP | www.sussmanshank.com
  4. 4. Prerequisites To Filing A Lien <ul><li>Can You Assert A Lien? </li></ul><ul><li>Preparing For Eventual Lien Claim: Distinguish The Job, Determine Necessary Notices And Obtain Necessary Information </li></ul><ul><li>Prelien Notice (The 5 &quot;W’s&quot;) </li></ul><ul><ul><li>What Is It? </li></ul></ul><ul><ul><li>Who Gets It? </li></ul></ul><ul><ul><li>When Does It Have To Be Given? </li></ul></ul><ul><ul><li>Where Is It Posted, Filed And Sent? </li></ul></ul><ul><ul><li>Why Is It Done And What Happens If Not Done Correctly? </li></ul></ul><ul><li>Gathering The Information </li></ul>3 © SUSSMAN SHANK LLP | www.sussmanshank.com
  5. 5. Can You Assert a Construction Lien <ul><li>RCW 60.04.031 - Provide Labor, Equipment Or Services For The Improvement Of Real Property </li></ul><ul><li>Registered With DOLI At Time Project Work Begins Or Customer Registered </li></ul><ul><li>Surety Bond With DOLI ($12,000 For General Contractor, $6,000 If Specialty Contractor) </li></ul><ul><li>Get Copy Of Certificate Of Registration (RCW 18.27) </li></ul>4 © SUSSMAN SHANK LLP | www.sussmanshank.com
  6. 6. Important Distinctions <ul><li>Determine Background Information For Perfection Of A Lien </li></ul><ul><ul><li>Public v. Private Jobs </li></ul></ul><ul><ul><ul><li>Public - No Lien Claim </li></ul></ul></ul><ul><ul><ul><li>Private - Lien Claim </li></ul></ul></ul><ul><ul><li>Movable Equipment </li></ul></ul><ul><ul><ul><li>Attached to Real Property - Lien Claim </li></ul></ul></ul><ul><ul><ul><li>Used To Facilitate Work Rather Than Improve Or Enhance Project Value - No Lien Claim </li></ul></ul></ul><ul><ul><li>Type Of Structure/Project </li></ul></ul><ul><ul><ul><li>Residential - A Single-Family Residence Occupied By Its Owner </li></ul></ul></ul><ul><ul><ul><li>Commercial - All Other Structures </li></ul></ul></ul>5 © SUSSMAN SHANK LLP | www.sussmanshank.com
  7. 7. Important Distinctions <ul><li>Determine Background Information For Perfection Of A Lien (cont.) </li></ul><ul><ul><li>New Construction or Alteration/Repair </li></ul></ul><ul><ul><ul><li>New Construction - Building A Structure Where None Existed Before </li></ul></ul></ul><ul><ul><ul><li>Alteration/Repair - Any Change To An Existing Structure </li></ul></ul></ul>6 © SUSSMAN SHANK LLP | www.sussmanshank.com
  8. 8. What Property is Subject to Construction Lien? <ul><li>Lien Attaches To </li></ul><ul><ul><li>Improvement Into Which The Labor/Materials Were Incorporated </li></ul></ul><ul><ul><li>As Much Of The Land Where The Structure Is Located As Is Necessary For The Convenient Use And Occupancy Of The Improvement </li></ul></ul><ul><li>Legal Title Of The Person Who Built The Improvement </li></ul><ul><ul><li>Fee Title v. Lessee </li></ul></ul><ul><ul><li>Condominium Complex Common Areas </li></ul></ul>7 © SUSSMAN SHANK LLP | www.sussmanshank.com
  9. 9. Prerequisites To Filing A Lien Claim <ul><li>What Is The Necessary Information </li></ul><ul><ul><li>Name And Address Of Property Owner </li></ul></ul><ul><ul><li>Name And Address Of Mortgagees Or Trust Deed Beneficiaries </li></ul></ul><ul><ul><li>Legal And Common Description Of Property Where Project Is Located </li></ul></ul><ul><ul><li>Name, Address, Registration Number And Phone Number Of Prime </li></ul></ul><ul><ul><li>Either The Name And Contract Information Or The Lender Or The Surety </li></ul></ul>8 © SUSSMAN SHANK LLP | www.sussmanshank.com
  10. 10. Prerequisites To Filing A Lien Claim <ul><li>Where Can You Get The Necessary Information </li></ul><ul><ul><li>Building Permit Application </li></ul></ul><ul><ul><li>Must Be Posted By Prime If Project Is Greater Than $5k (RCW 60.04.230) </li></ul></ul><ul><ul><li>Must Be Provided By Prime To Any Persons Who Supply Services, Materials, Equipment Or -Subcontractor Once Identity and Mailing Address Is Known To Prime (Mail A Postcard) (RCW 64.04.261) </li></ul></ul><ul><ul><li>Title Insurance Company </li></ul></ul>9 © SUSSMAN SHANK LLP | www.sussmanshank.com
  11. 11. Prerequisites To Filing A Lien Claim <ul><li>Prelien Notices </li></ul><ul><li>Information Notice To Owner </li></ul><ul><ul><li>Who Has To Give It And When </li></ul></ul><ul><li>Notice Of Right To Claim A Lien </li></ul><ul><ul><li>What Is It? </li></ul></ul><ul><ul><li>Who Has To Give </li></ul></ul><ul><ul><li>Who Gets It? (Owner & Prime Contractor) </li></ul></ul><ul><ul><li>When Does It Have To Be Given? - 60/10 Days </li></ul></ul><ul><ul><li>Where Is It Posted, Filed And Sent? </li></ul></ul><ul><ul><li>If Not Done, Lose Lien Rights </li></ul></ul>10 © SUSSMAN SHANK LLP | www.sussmanshank.com
  12. 12. Filing The Lien <ul><li>Claim Of Lien </li></ul><ul><ul><li>Must Contain The Following Information (RCW 60.04.091) </li></ul></ul><ul><ul><ul><li>Claimant’s Name, Phone Number And Address </li></ul></ul></ul><ul><ul><ul><li>First And Last Date Of Benefit Contribution </li></ul></ul></ul><ul><ul><ul><li>Name Of &quot;Person&quot; Indebted To Claimant </li></ul></ul></ul><ul><ul><ul><li>Street Address Or Legal Description </li></ul></ul></ul><ul><ul><ul><li>Owner Or Reputed Owner’s Name </li></ul></ul></ul><ul><ul><ul><li>Principal Amount Of Lien Claim </li></ul></ul></ul>11 © SUSSMAN SHANK LLP | www.sussmanshank.com
  13. 13. Filing The Lien <ul><li>Claim Of Lien (Cont.) </li></ul><ul><ul><li>When Must It Be Filed With County Auditor </li></ul></ul><ul><ul><ul><li>Not Later Than 90 Days After Claimant Last Provided Substantial Benefit or Work </li></ul></ul></ul><ul><ul><ul><ul><li>Deadline Not Extended By </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Trivial Work Or Material </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Punch List Work </li></ul></ul></ul></ul></ul><ul><ul><li>Signed Under Oath By Someone With Knowledge Of The Facts In The Lien Claim </li></ul></ul><ul><ul><li>Failure To Timely File The Lien Results In Loss Of Lien Rights </li></ul></ul><ul><ul><li>Where To File </li></ul></ul><ul><ul><ul><li>County Auditor For County Where All Or Part Of Property Is Located </li></ul></ul></ul>12 © SUSSMAN SHANK LLP | www.sussmanshank.com
  14. 14. Filing The Lien <ul><li>Claim Of Lien (Cont.) </li></ul><ul><ul><li>Practical Advice </li></ul></ul><ul><ul><ul><li>Itemize Your Lien Claim </li></ul></ul></ul><ul><ul><ul><ul><li>Lienable v. Non-Lienable Items </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Priority </li></ul></ul></ul></ul><ul><li>Notice Of Filing Lien </li></ul><ul><ul><li>Within Fourteen (14) Days After Lien Is Recorded </li></ul></ul><ul><ul><li>To The Owner And Prime Contractor And Include A Copy Of The Lien </li></ul></ul><ul><ul><li>Method Of Delivery By Certified Or Registered Mail </li></ul></ul><ul><ul><li>Failure To Do So </li></ul></ul><ul><ul><ul><li>Loss Of Right To Attorney Fees And Costs </li></ul></ul></ul><ul><ul><ul><li>Underlying Lien Is Still Valid </li></ul></ul></ul>13 © SUSSMAN SHANK LLP | www.sussmanshank.com
  15. 15. Filing The Lien <ul><li>Notice Of Intent To Foreclose </li></ul><ul><ul><li>A Notice Of Intent To Foreclose Is Not Required In Washington State </li></ul></ul>14 © SUSSMAN SHANK LLP | www.sussmanshank.com
  16. 16. Foreclosure Of Construction Lien <ul><li>Must File Suit To Foreclose Lien Within 8 Calendar Months After Lien Is Recorded or Claim Of Lien Lapses (RCW 60.04.414) </li></ul><ul><li>Who Do You Sue </li></ul><ul><ul><li>Owner </li></ul></ul><ul><ul><li>Contractor </li></ul></ul><ul><ul><li>Mortgagee </li></ul></ul><ul><ul><li>Landlord And/Or Tenant </li></ul></ul>15 © SUSSMAN SHANK LLP | www.sussmanshank.com
  17. 17. Foreclosure Of Construction Lien <ul><li>Where Do You Sue </li></ul><ul><ul><li>Court Where Property Is Located </li></ul></ul><ul><ul><li>Contract Venue Provisions </li></ul></ul><ul><ul><li>Arbitration Clause </li></ul></ul><ul><li>Damages </li></ul><ul><ul><li>Lien Amount </li></ul></ul><ul><ul><li>Interest </li></ul></ul><ul><ul><li>Court Costs </li></ul></ul><ul><ul><li>Attorney Fees - Reciprocal If Frivolous And Show Cause Hearing </li></ul></ul>16 © SUSSMAN SHANK LLP | www.sussmanshank.com
  18. 18. Priority Of Construction Lien to Other Claims <ul><li>Multiple Encumbrances </li></ul><ul><ul><li>Priority </li></ul></ul><ul><ul><li>Liens Attach On Date Work First Begins </li></ul></ul><ul><li>Construction Lien v. Subsequent Mortgage or Trust Deed </li></ul><ul><ul><li>Lien Has Priority </li></ul></ul>17 © SUSSMAN SHANK LLP | www.sussmanshank.com
  19. 19. Priority Of Construction Lien to Other Claims <ul><li>Construction Lien v. Prior Mortgage (RCW 60.04.061) </li></ul><ul><ul><li>Prior Recorded Mortgage On Trust Has Priority </li></ul></ul><ul><ul><li>Priority Over Unrecorded Liens, Mortgages, Deeds Of Trust Or Other Encumbrances At The Time The Work Started </li></ul></ul><ul><ul><li>Priority Among Lien Claimants (RCW 60.04.181) </li></ul></ul><ul><ul><ul><li>Labor </li></ul></ul></ul><ul><ul><ul><li>Employee Benefit Plan </li></ul></ul></ul><ul><ul><ul><li>Materials/Supplies/Equipment (Third In Line) </li></ul></ul></ul><ul><ul><ul><li>Prime And Professional Services </li></ul></ul></ul><ul><ul><ul><li>Prorata Within Each Class </li></ul></ul></ul><ul><ul><ul><li>Any Fees And Costs Have Same Priority As Class Of Lien To Which Related </li></ul></ul></ul>18 © SUSSMAN SHANK LLP | www.sussmanshank.com
  20. 20. Frivolous Lien Claims <ul><li>Owner (Or Others) May Apply To Court To Have Lien Removed From Property Or Reduced If It Is Frivolous And Made Without Reasonable Cause Or Is Clearly Excessive </li></ul><ul><li>Attorney Fees And Costs To Party That Prevails </li></ul>19 © SUSSMAN SHANK LLP | www.sussmanshank.com
  21. 21. Notice To Lender - Withholding Of Funds <ul><li>Notice To Lender (RCW 60.04.221) </li></ul><ul><ul><li>The Material Supplier's Friend </li></ul></ul><ul><ul><li>IF - </li></ul></ul><ul><ul><ul><li>Interim Or Construction Financing </li></ul></ul></ul><ul><ul><ul><li>No Payment Bond Equal To At Least 50% Of Construction Financing </li></ul></ul></ul><ul><ul><ul><li>No Payment Within 5 Days As Required By Contract, Invoice, PO Or Benefit Plan </li></ul></ul></ul>20 © SUSSMAN SHANK LLP | www.sussmanshank.com
  22. 22. Notice To Lender - Withholding Of Funds <ul><li>Notice To Lender (RCW 60.04.221) (Cont.) </li></ul><ul><ul><li>THEN - </li></ul></ul><ul><ul><ul><li>Notice To Lender Within 35 Days By Certified Mail </li></ul></ul></ul><ul><ul><ul><li>Notice To Owner And Prime By Certified Mail </li></ul></ul></ul><ul><ul><ul><li>Content Similar To Claim Of Lien </li></ul></ul></ul><ul><ul><ul><li>Lender Shall Withhold Funds Claimed In Notice From Subsequent Draws Or Require Payment Bond </li></ul></ul></ul>21 © SUSSMAN SHANK LLP | www.sussmanshank.com

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