Liens provide a means of recourse for contractors, subcontractors, and suppliers who have not been paid. In Washington, there are specific disclosure requirements that must be met before a licensed and registered contractor is able to record a valid mechanic’s lien for work performed on residential real property. It is imperative that both contractors and homeowners be aware of such obligations in order to protect their rights and prevent a fraudulent and/or invalid lien recording.

There are two separate statutes governing liens in Washington State, and both detail various procedural requirements. However, there is a pre-notice disclosure requirement for contractors who perform work directly with the homeowner or owner of the commercial project that is specifically located in RCW 18.27.114.

RCW 18.27.114includes an example of the required language that must be included in the pre-notice disclosure. It is recommended that contractors simply include the exact language in their contract prior to beginning work to avoid any issue. The provision states:

NOTICE TO CUSTOMER

This contractor is registered with the state of Washington, registration no. . . ., and has posted with the state a bond or deposit of . . . . . for the purpose of satisfying claims against the contractor for breach of contract including negligent or improper work in the conduct of the contractor’s business. The expiration date of this contractor’s registration is . . . . ..

THIS BOND OR DEPOSIT MIGHT NOT BE SUFFICIENT TO COVER A CLAIM THAT MIGHT ARISE FROM THE WORK DONE UNDER YOUR CONTRACT.

This bond or deposit is not for your exclusive use because it covers all work performed by this contractor. The bond or deposit is intended to pay valid claims up to . . . . . that you and other customers, suppliers, subcontractors, or taxing authorities may have.

FOR GREATER PROTECTION YOU MAY WITHHOLD A PERCENTAGE OF YOUR CONTRACT.

You may withhold a contractually defined percentage of your construction contract as retainage for a stated period of time to provide protection to you and help insure that your project will be completed as required by your contract.

YOUR PROPERTY MAY BE LIENED.

If a supplier of materials used in your construction project or an employee or subcontractor of your contractor or subcontractors is not paid, your property may be liened to force payment and you could pay twice for the same work.

FOR ADDITIONAL PROTECTION, YOU MAY REQUEST THE CONTRACTOR TO PROVIDE YOU WITH ORIGINAL “LIEN RELEASE” DOCUMENTS FROM EACH SUPPLIER OR SUBCONTRACTOR ON YOUR PROJECT.

The contractor is required to provide you with further information about lien release documents if you request it. General information is also available from the state Department of Labor and Industries.

I have received a copy of this disclosure statement.

The lien claimant must provide “substantially” the same statement as above and specifically in 12 point, Times New Roman, bolded font.  Most importantly, no contractor may bring a lien claim unless the contractor is able to prove that the proper disclosure statement was provided.

These requirements are designed to ensure transparency and prevent improper liens.  If you need assistance assessing your lien rights or believe a lien has been improperly recorded against your property, feel free to contact Joseph Evans, or any of the lawyers in Lasher’s Business Litigation practice group.