It’s difficult to stress how beneficial filing a lien can be for your company when attempting to collect on a non-paying project. However, this begs the very important, and sometimes difficult to answer question: Are you legally entitled to lien?
In virtually every state, including Washington, the lien statutes are drafted with a certain balance. On the one hand, the statutes were created to grant those involved with the construction of a project a privilege on the properties they build or improve. On the other hand, however, the statutes have mechanisms within to protect the property owners from being liened improperly, or otherwise without notice.
Unfortunately, the notice requirements are oftentimes confusing and technical. It is important, however, that your organization understand these requirements. If you lien a project without following these notice procedures, you will have filed an improper lien, and this could subject you to owing the property owner damages, penalties and/or attorneys fees.
The notice requirements in Washington are actually quite clear – the general rule is simply that everyone is required to provide notice to the owner (and/or contractor) except for those who are specifically excluded.
This post breaks the notice requirements into two categories. Category one is the catch-all, and regards all types of projects that do not fall into category two. Category two regards construction projects for the improvement of an existing owner-occupied residential property.
Category One – The “Catch All”
Category one projects are all of those projects that do not fit within category two. This, therefore, includes every commercial project, and virtually every new residential project.
Washington statutes provide that written notice of a right to claim a lien must be given to the owner or reputed owner in every circumstances except:
1) Persons or companies who contract directly with the owner or owner’s agent;
2) Laborers for any claim that is based solely on labor; and
3) Subcontractors who have contracted with the prime contractor
To properly deliver notice, the notice must be in writing and must be given to the owner either through certified or registered mail and/or personally delivered.
For the sake of clean record-keeping, it’s a good practice to send the notice via certified mail with return receipt requested, and to keep record of the certified mail number. If you send the notice via hand delivery, you will want to get signed acknowledgment of receipt to later prove that the notice was sent.
Category two projects are very limited in scope. They include only improvements to existing owner-occupied single family residences.
The following are examples of Category Two projects:
- Improvement of kitchen to existing structure on a single family residence that is owned by the person occupying the home;
- Adding a new room or new addition to existing structure on a single family residence that is owned by the person occupying the home.
The following are examples of projects that are not Category Two projects:
- Improvement of kitchen to an existing structure on a single family residence that is occupied by a tenant, and not the owner of the property;
- New construction of owner-occupied residence.
When a project can be classified as a “Category Two” project, notice is required from the following parties:
1) Persons who do not contract directly with the owner-occupier, or their agent.
Therefore, if you are a handyman and you contracted directly with the owner, you would have the right to file a lien without providing the owner with a notice of lien rights. However, if you are a subcontractor hired by a handyman to do electrical work in a category two project, you would be required to provide notice of lien rights.
The goal of the Washington statute’s notice requirements is to protect the owner from being liened by a contractor who is not authorized to perform work on the property and/or by a contractor with no direct link to the owner.
When a contractor is hired by the owner directly, there is no need for that contractor to notify them that work is being performed at their property; the owner should know this as a result of the contract.
When not hired directly by the owner, however, to satisfy the purposes of the statute the contractor is usually required to provide notice to the owner that work is being performed. There are a few exceptions, as above-noted.
What is Notice?
Washington statutes are very clear about what constitutes notice and what does not – the statutes even provide the public with a preferred form for notice.
The notice from the applicable Washington statutes have been converted to a PDF and properly formatted, and is made available to you on this blog post. You can:
What Happens If I Don’t Provide Notice?
In Washington, notice is a prerequisite to filing a construction lien. Therefore, if you do not file notice, you will not be able to file a valid lien.
It is good practice to send notice of lien rights before work on a construction project begins. This will ensure that you lien rights are protected as to all work performed on the project. However, even if you have not delivered notice at the beginning of the project, you may still have the ability to lien the project to a certain degree.
Regarding Category one projects, a lien can be filed only as to the work, services, materials, etc. performed and/or delivered sixty (60) days before the notice is delivered.
For example, if you started work on January 1st, and delivered notice of lien on August 1st, you could only file a lien on the construction project for work performed in June, July, August and beyond. You would have lost the right to file a lien against the property for work performed between January 1st and June.
While this is the general rule for Category one projects (60 days before notice delivered), there is an exception. In the case of new construction of a single family residence, the lien can be filed only as to the work, services, materials, etc. performed and/or delivered ten (10) days before the notice is delivered. As you can see, this is a significant exception.
Regarding Category two projects, the lien may be satisfied only from amounts not yet paid to the prime contractor by the owner at the time the notice is received. Again, this is a significant exception.
The notice requirements in Washington are important, but also simple. The statutes even provide the public with an acceptable form of notice. Compliance with the statute is only a matter of procedure for your company.
If you are in the business of working on projects where notice is required, its as
simple as dropping a form letter into the mail to preserve your lien rights. Even if you’re not typically required to provide notice, nevertheless you might want to consider sending it as it won’t harm any of your lien rights to over-notify the owner.