Every contractor, supplier and design professional has a story about not getting his money on a project because of a minor technical slip-up in complying with Washington's lien laws.
As if it were not difficult enough to get paid in the current economic environment, the Washington Court of Appeals has made it even more difficult for those working in the construction industry.
A recent decision from Division Two of the Washington Court of Appeals (Williams v. Athletic Field Inc.) held that the lien claimant must strictly comply with all statutory requirements or risk losing its lien rights on the project. In this case, the issue was whether the correct form of notary attestation and acknowledgement was used on the claim of lien filed with the county auditor's office. The court ruled that by using an individual form of attestation and acknowledgment rather than a corporate form of attestation and acknowledgement, the lien claimant had not complied with the statutory requirements and as a consequence the lien was invalid. All because of an incorrect notary blurb.
Lien statutes, as a derogation of common law, are strictly construed by the courts, in spite of the legislative admonition in the construction lien statute that the provisions are to be liberally construed to provide security for all parties intended to be protected by the statute.
The case of Williams v. Athletic Field Inc. underscores the need not only to review in exacting detail your policies and procedures to make certain all required lien forms and notices are sent, filed and recorded, but also that each of the forms and notices must perfectly mirror the statutory requirements. Many companies get complacent when using a form or notice that has "always been used" by the company.
While the basic statutory lien scheme has been with us for more than 20 years, the legislature does have the habit of continually tweaking and modifying provisions of the law. Consequently, it's advisable to undertake a review of your process every few years, especially after the legislature has been in session.
Most recently, the legislature amended the lien statute to provide that the community property interest of domestic partners is now subject to the lien. Thus, it is essential to know to whom to send required notices and to whom to name on the claim of lien and lien foreclosure, if it becomes necessary to enforce.
Numerous resources are available to help us stay current with the statutory lien requirements. The Washington State Department of Labor and Industries provides up-to-date information for both consumers and contractors. Legal document preparation services are also available to assist with the preparation and filing of required notices and claim of lien. However, it's important to keep in mind these resources are not liable or responsible if a mistake is made in perfecting lien rights.
Given the severe consequences of improperly perfecting lien rights, it's advisable to consult with counsel if there are any questions or concerns regarding any step of the construction lien process.
Thomas B. ("Brad") Eriksen represents business and corporate clients in all aspects of business operations. His practice also includes executive and deferred compensation planning for nonprofit entities, such as credit unions and governmental entities. You can contact Brad at 360-567-3903 or at brad.eriksen@jordanschrader.com
