Brave the snow and check the mailbox. Lien notices are important to your project.
What is it about the Holidays that seems to rile up residential disputes? Every year Thanksgiving through New Years, my phone rings off the hook with disputes between contractors and homeowners. End of the year accounting, paying for Christmas gifts, what have you – its a popular time of the year to call your attorney. The biggest question: Does the contractor have a claim? Lets discuss.
One of the most prominent disputes is when a homeowner receives, or a contractor or supplier sends, a lien notice. The parties are constantly wondering if their is a claim floating out there. With a little observation of the Washington lien statutes, you can determine whether the homeowner is in the clear, or whether he or she might be shelling out double payment (thats right!).
Washington statutory law requires that all lower-tier subcontractors and material suppliers provide a notice of their right to file a lien. We have discussed the deadlines for filing a notice of lien rights on the Builders Counsel, but the law is situated in RCW 60.04.031. As a contractor or project owner, you should expect to see lien notices within 10 days (for new residential construction) and 60 days (for other projects) from delivery of materials or services.
A notice of lien rights is intended to advise the owner and contractor of another person’s claim. Failing to ensure that the claimant gets paid for its services or goods, may result in the owner (or the contractor) having to pay twice. In fact, there is no defense to a claim that the owner paid the contractor in full, or that the contractor paid a subcontractor in full. The notice makes you responsible.
What do you do when you receive a notice of lien rights in the mailbox?
Well, many contractors ignore them. There are contractors out there that believe that these notices become the owner’s problem. But, the owner’s payment to you is likely conditioned on ensuring that you get all potential claimants paid; some might argue that as a contractor, you are holding these funds in trust for those claimants.
The more prevalent problem is the emergence of a contractual dispute with the owner. A contract dispute might cause your final payments to be withheld to cover claims or a lawsuit.
The lien notice statute was created, in virtually every state, with the purpose of providing information to the paying parties about potential claimants. The notice lets you know who they are, who they were contracted by, what they are providing, and their costs. The beauty of this lien notice is that it gives the contractor the opportunity to use joint checks and to collect lien waivers in exchange for payment to its subcontractors.
So, how do you get started?
The solution
- All contractors should be sure that they comply with RCW 60.04.230, which requires them to post pertinent job information at the site. This information advises all materials suppliers and sub-subcontractors that you are the general contractor. By posting this information, you are entitled to be provided with a lien notice. Otherwise, the owner is the only one that will be provided with the notice.
- All contractors and owners should be sure to keep a record of all claimants on the job. Use this record to ensure that you procure lien waivers from all claimants. Each time that a payment is delivered to the contractor, an owner should inquire about waivers. Each time that a contractor issues a payment to its subcontractor, the contractor should inquire about waivers.
- All contractors should keep a keen eye on how a subcontractor is using its payments. Remember that as an owner or contractor, you should be empowered to deliver a joint check to multiple claimants. In fact, this right should be outlined in the contract. The power of a joint check is well-documented by the courts. Once the recipient of a joint check endorses the check, he is deemed to be paid.
the solution is great:) well written