Darren R. Krattli Eisenhower Carlson PLLC Mechanics’ and Materialmen’s Liens: Start to Finish RCW Main: (253) Direct: (253) Pacific Ave, Suite 1200 Tacoma, Washington 98402

M&M Liens: What are they? Contract Price = amount agreed upon by the contracting parties OR the customary and reasonable charge therefore Construction Agent = a registered or licensed contractor, subcontractor, architect, engineer, or other person having charge of any improvement to real property, who is deemed the agent of the owner for the limited purpose of establishing liens under Subject of lien = land improved and the improvement Priority = as of commencement of work RCW Any person furnishing: Labor, Professional Services, Materials, or Equipment for the improvement of real property shall have a lien upon the improvement for the contract price of the labor, services, materials, or equipment furnished at the insistence of the owner, or the agent or construction agent of the owner

M&M Liens: Notice Requirements RCW Failure to comply = no lien Prime Contractor = contractor who contracts directly with the owner or the owner’s agent, and assumes primary responsibility for the creation of an improvement Basic Rule – must provide the owner notice in writing of the right to claim a lien Prime Contractor – must also provide to the Prime Contractor if he complies with: RCW (permitting) RCW (jobsite notice) RCW (permit posting)

M&M Liens: Notice Methods RCW (1) Form: RCW (4) Timing – anytime, but only effective 60-days prior to sending (10 days if new SFR construction) Method: Certified or registered mail, or Personal delivery, but need proof (signed acceptance / affidavit of service)

M&M Liens: Notice Exceptions RCW (2) and (3) Prime Contractor Exception Notes: Non-visible = Professional services, and provision of materials or equipment Effective date – Notice to the owner is effective upon receipt (not retroactive) Lien limit – lien is limited to balance remaining due to the prime contractor Exceptions: 1) Deal directly with the owner / common law agent (non contractor) 2) Labor only liens 3) Deal directly with the Prime Contractor – BUT if non-visible work on existing owner-occupied SFR, must notify owner

M&M Liens: Notice Exceptions RCW (5) Professional services = surveying, mapping, inspecting, testing, architectural, engineering, or other similar services Professional Services: No improvement visible – can record notice If not recorded, lien is junior to other interested parties without actual notice of the services Form – RCW (5)

M&M Liens: Claiming the Lien RCW Timing – by structure if residential improvement Details required: Claimant ID Date work began/ended ID of debtor ID of owner Property description (address is OK, but COMPLETE legal description is best) Amount due (by parcel) Timing = within 90 days of completion of work Work in furtherance of original contract can extend completion date (change orders, warranty claims) FILE EARLY – untimely is ineffective Form = RCW (2) Must be signed by the claimant or someone authorized to act on his behalf Must state that the claim has been read Under penalty of perjury Method = Record with county auditor

M&M Liens: Enforcement RCW RCW (3) – Only potential award of attorney’s fees, so be sure to include fee provision in contracts Timing – Must commence action to foreclose within 8 months of recording Venue – Superior court of relevant county Foreclosure suit – similar to judicial mortgage foreclosure: Determine debt due Determine lien priority Sheriff’s sale Excess proceeds go to junior liens

M&M Liens: Risks RCW RCW Release – Must release lien upon payment and upon demand Failure to release = attorney’s fees and damages if delay is unjustified Frivolous claim = lien claim made without reasonable cause OR excessive Can result in attorney’s fee award

M&M Liens: Other issues RCW RCW RCW RCW RCW Retaliation – threats to withhold future contracts made by a contractor to discourage lien filings = Consumer Protection Act Violation – attorney’s fees, treble damages, etc. Assignable – You can sell your rights Withholding: Owner can deduct lien amounts from payments to prime contractor Notice to Lender – Can force lender to withhold amount due from borrower in future loan draws Bond – owner can bond around lien claim, forcing contractor to foreclose to receive recovery

Questions?