Scott & Hookland LLP

SUMMARY OF STEPS NECESSARY TO PERFECT A CONSTRUCTION LIEN IN WASHINGTON

By Douglas R. Hookland

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Table of Contents

Summary of Steps to Perfect A Lien in Washington
When to Send Notice of Right to a Lien in Washington
Considerations
Washington Construction Lien Checklist

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SUMMARY OF STEPS TO PERFECT A LIEN IN WASHINGTON

1. Pre-Claim Notices

When	Who	Action Required
Before commencing construction.	All original contractors required to be registered under RCW 18.27 working directly for owners on: (a) the repair, alteration or construction of four or fewer residential units or accessory structures on residential property when the bid or contract price totals $1,000 or more, or (b) the repair, alteration or construction of a commercial building when the bid or contract price totals $1,000 or more, but less than $60,000.	Provide Notice to Customer; no special delivery method is required, so delivery can be by regular mail or delivery. However, because lien rights depend on proof that the owner received the notice before work started, we recommend obtaining the owner's signature acknowledging receipt of the notice.
New construction of single family residence: within 10 days (including weekend and holidays) of first supplying services, materials or equipment. Commercial projects and Remodels or repairs of existing owner-occupied single family residences: within 60 days of first supplying professional services, materials or equipment.	All material and equipment suppliers who do not contract directly with the owner. (There are exceptions, but for the purposes of material and/or equipment suppliers, they should always provide the preclaim notice unless they are contracting directly with the owner).	Provide preclaim notice to all owners and the prime contractor. Lenders do not have to receive this preclaim notice. Preclaim notice must be provided by certified or registered mail, or by serving the notice personally and obtaining evidence of service in the form of a receipt of other acknowledgment.
Between 6 and 35 days after payment is due the claimant under the claimant's contract or invoice.	All providers of professional services, original contractors, subcontractors, and suppliers. On all projects not having a payment bond of at least 50% of the amount of construction financing.	Provide a notice to real property lender ("stop notice") to the interim or construction financing lender at its office that administers the interim or construction financing. The notice must also be provided to the owner and appropriate prime contractor. The notice must be given by certified or registered mail to the lender, owner and appropriate prime contractor, or delivering or serving the notice personally and obtaining evidence of delivery in the form of a receipt or acknowledgment signed by the lender, owner and appropriate contractor.

2. The Claim

When	Who	Action Required
Within 90 days of last substantial original performance of labor, delivery or materials, or rental of equipment.	All providers of professional services, original contractors, subcontractors, and suppliers.	Record claim of lien in county auditor or recorder's office where the subject property is located.

3. Post-Claim Notices

When	Who	Action Required
Within 14 days after lien recording.	All providers of professional services, original contractors, subcontractors, and suppliers who have recorded a claim of lien.	Provide a copy of the claim of lien to all owners by certified mail, registered mail or by personal service.

4. The Action

When	Who	Action Required
Within 8 months after recording of the claim of lien.	All providers or professional services, original contractors, subcontractors and suppliers who have filed a claim of lien.	File suit to foreclose claim of lien.

CONDOMINIUMS:

If labor, material, equipment or professional services are provided prior to the declaration of condominium being recorded, then the above rules are the same as if the project was not a condominium.

If, however, the services are provided after the condominium declaration is recorded, then a lien may be created only against individual units, and only after the owners of the individual units or their agents or construction agents request that the services be performed. In these situations, the notice to customer and preclaim notices must be furnished to the owner(s) of each individual unit. The claim of lien must also identify the individual units and their owner(s). Furthermore, the notice that a lien claim has been recorded must be provided to the owner(s) of the individual units within 14 days of the recording date.

WHEN TO SEND NOTICE TO OWNER (PRECLAIM NOTICE OF RIGHT TO A LIEN)

YOUR PROVIDE:	AND your contract is with all owner(s).	AND your contract is with a prime first tier contractor.	AND your contract is with a first or lower tier subcontractor.
	Send notice?	Send notice?	Send notice?
MATERIAL ONLY Residential Improvement Commercial Improvement	No No	Yes Yes	Yes Yes
ON-SITE LABOR AND MATERIALS Residential Improvement Commercial Improvement	No No	No Yes* No Yes*
ON-SITE LABOR ONLY Residential Improvement Commercial Improvement	No No	No No No No
RENTAL EQUIPMENT ONLY Residential Improvement	No	Yes	Yes

NOTES:

1) For repair, alteration or remodel of owner-occupied single family residences or appurtenant garages: Providers of professional services, materials or rental equipment to one other than the owner-occupier or his common law agent must provide the preclaim notice to owner to have lien rights. Such provider's lien claim may be satisfied only from the amount not yet paid the prime contractor by the owner-occupier at the time preclaim notice is received by the owner-occupier. The preclaim notice relates back 60 days from the date sent to protect professional services, materials, and rental equipment furnished during the 60 day period. The labor portion of any claim does not require a preclaim notice and is not limited to the amount not yet paid the prime contractor by the owner-occupier at time preclaim notice is received by the owner-occupier.

2) There can be more than one owner on any given property. You may have a contact with one owner and not another, so you may have to look at the above chart two or three times, depending on the number of owners.

3) If you contract with all of the owner(s), you may not have to provide the preclaim notice to owners, but may be required to provide the "Notice to Customer."

4) Even though Mortgagees do not receive the notice to owner, if a mortgagee's trust deed of mortgage was recorded before the lien claimant began providing professional services, on site labor, materials or rental equipment, the mortgagee must receive the Notice to Real Property Lender ("Stop Notice") in order for the lien claimant to possibly have priority over the mortgagee.

*The notice to owner should be sent to at least protect the material portion (and any rental equipment) of the claim.

Washington Construction Lien Checklist

To Do	Consider
1. Lien Claimant's Name:	Call Secretary of State (360) 753-7115; Department of Labor and Industries (360) 902-5226 (for other than electrical contractors) or (360) 902-5269 (for electrical contractors). RCW 18.27.080; 60.04.041 (Prohibition on unregistered contractors filing liens).
2. Lien Claimant registered as contractor? Yes ____ No ____ If Yes, registration #:	See 1 above. RCW 18.27 or 19.28 (for electrical contractors - Department of Labor and Industries: (360) 902-5226 (for other than electrical contractors) or (360) 902-5269 (for electrical contractors)
3. Name of person/entity that employed Lien Claimant:	See 1 above. Also review contracts, invoices, credit applications and payments.
4. Contractor's Registration number of person/entity employing Lien Claimant:	See RCW 60.04.041. Call Department of Labor and Industries: (360) 902-5226 (for other than electrical contractors) or (360) 902-5269 (for electrical contractors). No lien rights unless person/entity employing lien claimant is registered.
5. Name of Owner(s) of property subject to lien:	See 1 above. Also review lien notices and title information.
6. Name of mortgagee(s) of property subject to lien:	See 1 above.
7. All names confirmed with Secretary of State and Department of Labor and Industries? ____ Yes ____ No.	Is the information the same? Are there any registration or non-registration issues?
8. Type of construction: ___ Residential ___ Commercial
9. Claimant provided: Labor ____ Materials ____ Rental Equipment ____ Professional Services ____ (Engineer or Architect)	Review RCW 60.04.031 and 60.04.011.
10. Date of Claimant's bid/contract: Date Claimant started working:	See 1 above for registration issues. Review RCW 18.27.
11. Notice to Customer required? ____ No ____ Yes	Review RCW 18.27.114.
12. If 11 is yes, give date of delivery of Notice to Customer and attach a copy.	See RCW 18.27.114.
13. Preclaim Notice of Right to Claim a Lien Required? ___ No ____ Owners	Review RCW 60.04.031.
14. Date of mailing or service preclaim Notice of Right to Claim a Lien: Is there a receipt?	Review 60.04.031.
15. Has Claimant served a Stop Notice? ___ No ___ Yes; if yes, when? Has Lender paid any subsequent draw requests? ___ No ___ Yes	Review RCW 60.04.221.
16. Date project completed:
17. Claimant's last day of work on the project:	Even repair, punchlist or trifling work; not just substantial original work. Do not consider warranty work.
18. Claimant's last day of substantial original work on the project (different than date in question 17 above?).	Only substantial original work; not any repair, warranty, punchlist or trifling work.
19. 90 days from Claimant's last day is:	Review RCW 60.04.091(2). Do not extend by agreement.
20. Original contract amount: $___________ Less payments of $___________ Change orders: +/- $____________ Backcharges: +/- $______________ Extra work orders: $_____________	Review dates, amounts and applications for payment.
21. Total remaining owing: $______________ $______________ for labor $______________ for materials $______________ for rental equipment $______________ for services (Arch/Eng'r) $______________ for sales tax	Review RCW 60.04.091. Avoid non-segregated items, and do not overstate. Review RCW 60.04.081.
22. Claimant is entitled to _____% interest per annum beginning: ___________________	Review contract. Pacific Erectors v. Gall Landau Young, 62 Wn App 158 (1991) (for contract rate). Review RCW 19.52.010 (statutory interest)
23. Address of property subject to lien:	Review preclaim notices, title information and building permits.
24. Legal or other description of property subject to lien (include county):	See 23 above.
25. Who will sign the lien? Title:	RCW 60.04.091(2). Attorneys should not sign liens; personal knowledge/verification issue and witness issue.
26. Date Lien recorded: Document No:	See 19 above! Revivew RCW 60.04.091(2). Make a copy of lien before recording.
27. 8 calendar months from recording date is:	Review RCW 60.04.141. Last day to file foreclosure suit. Do not extend by agreement.
28. 14 days from recording is:	Review 60.04.191(2). Notice of lien recording and copy of lien must be served on all owners by personal service, certified mail, or registered mail within 14 days of lien recording in order to preserve right to attorney fee recovery in any foreclosure suit.
29. Date Notice of lien recording sent: Receipts:	See 28 above.