It’s a contractor’s worst nightmare. After months of hard labor, modifications, negotiations and out of pocket expenses, the owner or general contractor of a project now refuses to pay you.
What is a lien?
A lien is a “hold” on property, real or personal, which serves to make that property act as a form of collateral against monies or services owed to another person. Lien laws are statutory, meaning they derive from laws enacted by the Washington State Legislature. Copies of the Washington lien laws are available at the public library or on the Internet.
Who can lien property for services rendered?
Generally speaking, anyone who furnishes labor, professional services, materials or equipment for the improvement of real property has the right to file a lien on the improvement. In order to recover the contract price of these services rendered, materials and equipment, the following requirements must be met: the labor, materials and equipment must have been provided at the request of the owner or his agent, and it must directly benefit the property.
The burden of proof rests on the contractor or subcontractor to establish that she has actually performed the services or provided the materials she is now attempting to recover.
Notice requirement for liening property
Since owners often do not work with subs directly, and would have no way of knowing about a lien until after it is recorded, notice must be provided to the owner before a lien is filed. Failure to provide notice of the lien may result in unintended infractions of contractor licensing statutes.
Generally, the notice must be delivered in hand or by mail to the owner of the property or president of the company against which you are filing a lien. Keep in mind that the notice must be filed as soon as possible – for commercial projects, notice protects the right to lien for services and equipment provided for sixty days prior to receipt of the notice. For new single-family homes, it’s only ten days.
Take note that there are exceptions to rules governing pre-claim notices for liens. Providers who contract directly with the owner and laborers are exempt, and do not need to provide a pre-claim notice. If you are uncertain about whether or not an exception applies in your case, err on the side of caution and adhere to the pre-claim notice rule.
The final step
A lien must be recorded in the county where the work was performed within 90 days of completion of the work. After recording, only registered contractors and their subs are allowed to foreclose the lien. To foreclose, the contractor must file a foreclosure action against the property owner in the court. The customary period of time in which to foreclose on the lien before it expires is eight months.
Lien laws require advance notice to the owner or general contractor, and filing a lien requires planning. However, this option provides a more efficient, cost-effective solution for contractors, laborers and service providers to recover payments for work and services provided on a contract.
Keeping in mind that an improperly filed lien can result in a lawsuit against you, comply with the prescribed guidelines and regulations. After learning more about liens, and if required, you may just find yourself “liening” towards using them on your next project.
Phil Haberthur is an attorney with Schwabe, Williamson & Wyatt. He specializes in land use, real estate and litigation. He can be reached at philliph@schwabe.com.
