This is the next post in my series on how contractors can deal with construction-related disputes which arise in the state of Washington. My last article discussed how a properly drafted contract can help to prevent construction disputes. Such disputes become less likely when the parties have clearly defined their expectations and duties by having a complete and unambiguous written agreement. In this article, we will discuss how to get paid. Sometimes, despite the work being done and done well, and despite payment being due, an owner does not pay or short-pays their contractor. That is a breach of contract, but a lawsuit for breach of contract is not the only arrow in the contractor’s quiver. A contractor can also record a Mechanic’s Lien to secure and obtain payment. If you are a small company who has not been paid and wants assistance, then contact my Olympia office today to speak with a lawyer. We also serve Tacoma and other portions of the state.
When a contractor provides materials and/or performs work, they expect to be paid. Under RCW 60.04.021, such a company has a right to record lien against the property (like a mortgage), but they must take steps to create and enforce it. When done right, these liens are very powerful ways to ensure payment, but, when done wrong, they can be worse than useless, exposing contractors to attorney’s fees even if they prove that they are owed money. This lien is called a “Mechanic’s Lien.”
Contractors are entitled to be paid for their work. Generally, if the owner is going to pay, they pay fairly quickly or provide good assurances, including an acknowledgement that they owe the money. Sometimes owners fail to pay their debts. We recommend that a contractor give an owner no longer than thirty days to pay, even if the owner is providing assurances. To have a valid lien, a contractor must record the lien within ninety days of the last date of work (not the invoice date or date of nonpayment). Further, the contractor has a right to recover attorney’s fees in a lien foreclosure action if the contractor sends a copy of the lien to the owner by certified or registered mail within fourteen days of recording. Then, if the owner still does not pay, the contractor must file a lawsuit for breach of contract and lien foreclosure within eight months of the recording date.
A Mechanic’s Lien is not meant to be a permanent encumbrance upon a property. Its purpose is to provide protection to the contractor for a limited amount of time. If the owner does not pay the amount due, the contractor may file a lawsuit to enforce their lien rights. If the property owner wishes to sell, mortgage, or otherwise encumber the parcel, while the lien is in place, then the lien must be satisfied before the sale may be completed. (This sometimes results in prompt payment, even of disputed amounts, without a lawsuit.)
If a Mechanic’s Lien is not properly noticed and recorded, then it will not be considered effective or enforceable. Liens also must contain very special language and be notarized in ways that don’t really make sense. The lien forms provided by stationary stores frequently don’t work and expose contractors to liability when used. Similarly, lien services, especially those not based in Washington, often make fatal mistakes when handling Washington liens. I regularly handle such matters on behalf of Olympia and Tacoma businesses. Contact my office today to schedule an initial consultation with a lawyer. Our firm also serves the Thurston County cities of Lacey, Tumwater, and Yelm, the Pierce County cities of Puyallup, and Lakewood, the Lewis County cities of Centralia, Chehalis, the King County cities of Seattle, Auburn, Bellevue, Burien, and Federal Way, as well as other areas in Washington, including Grays Harbor, Mason, Cowlitz, and Pacific Counties.