What is the difference between a warranty deed and a quit claim deed?
In Washington, deeds are defined by statute, and not all deeds are equal. A warranty deed includes warranties that the grantor owns all the rights to the property, has the power to convey it, that the property is free from encumbrances, and that the grantee’s title and right to possession will not be challenged. If title or possession is challenged, the grantor will defend the grantee’s title. A quit claim deed contains no similar promises or warranties. However, either type of deed effectively transfers title to the real estate.
If my spouse dies, do I need to do something to change the title to our home or other real property?
Yes, you do need to take some action to let the entire world know that you now own the property as a single person. That can be done by either probating a Will, recording a Community Property Agreement, or by administering the estate of your deceased spouse in a legal proceeding.
I am buying a piece of property from my neighbor who I have known for many years. Should I get a policy of title insurance when I close the sale?
Yes, it is always advisable to order a commitment for title insurance and carefully examine the commitment prior to closing the purchase. On closing you should purchase an owner’s policy of title insurance to ensure that there are no judgments, tax liens, or other encumbrances on the property.
Do both spouses need to sign a real estate purchase and sale agreement to buy or sell real estate?
In almost all cases in Washington, both a husband and wife must sign any agreement to list, buy, or sell real estate, and both must also sign the deed to the property on closing. Exceptions exist for property owned by only one of the spouses.
In a deed granting a life estate, who is the owner?
The grantee, or the one receiving the property described in the deed, is the owner of the property during his or her life. At that person’s death, the property is owned by whoever was to receive the remainder interest under the deed.
Do I need to possess a title, deed, or some legal document to show I own my house?
No, not generally. Deeds to real property are usually recorded as part of the escrow closing. Once recorded with the county auditor, the original deed has no legal significance. Title will be determined by the records in the county auditor’s office.
What is the difference between “tenants in common” and “joint tenants”?
When people own property as joint tenants, it is presumed they each own an equal share. Upon the death of the first of them to die, the survivor gets title to 100% of the property. On the death of a tenant in common, however, that co-owner’s interest in the property would go to his or her heirs or as directed in that person’s Will.
My neighbor tore down a fence between our properties and is now building a new fence three feet closer to my house. Can I do anything to stop this?
If you object to the relocation of the fence, you should contact a real estate attorney immediately. Legal remedies may be available to restrain the relocation of the fence and have the property boundary restored to its former location.
What is the difference between a judicial and non-judicial foreclosure?
In Washington most loans on real estate are secured by a Deed of Trust. A Deed of Trust may be foreclosed by the holder of the debt in an out of court process by providing notice to the property owner and the public of a sale date and selling the property at a public auction. The holder of the debt also has the option of filing a lawsuit to collect on the note, obtaining a judgment against the borrower, and after obtaining a judgment, asking the Sheriff to sell the property to apply to the judgment. In addition to, or instead of selling the property, the debt holder can take any other collection measures such as garnishment of wages or bank accounts to collect the debt.
How many years can my real property taxes go unpaid until I will be in jeopardy of losing the property?
In Washington, if real estate taxes go unpaid for three years, the county treasurer may file a lawsuit to have the property sold at a public auction.
What is a “lease to own” transaction?
In Washington, “lease to own” is accomplished when a buyer first becomes a tenant under a written lease that includes as one of its terms an option to purchase the property at some time in the future on specified terms. The lease and option must be drawn carefully and precisely for these transactions to be enforceable and successful.
Who does the escrow company or title insurance company closing a real estate transaction represent?
An escrow company or title insurance company does not and cannot represent any party throughout the closing. The must remain neutral and not provide legal advice to either party to a real estate transaction. It is important to note that even an attorney employed by an escrow or title insurance company cannot represent you. Only an attorney you hire can represent you throughout your transaction.
Should I hire an attorney before I sign my Purchase and Sale Agreement?
A buyer or seller has the right to consult an attorney prior to signing. Although many realtors understand the clauses in the Agreement, they are not allowed to explain the legal ramifications to you. We can protect your interests better and help negotiate a specific term the earlier you contact us. We can also provide your realtor with a contingency allowing us to review your Agreement after you sign it.
What is a due-on-sale clause?
A due-on-sale clause is a clause in a real estate loan agreement (mortgage, deed of trust, or real estate contract) that says the lender can demand full payment of the loan if the property is transferred. Transfers can include sales, some lease-to-own agreements, transfer of a controlling interest in the entity that owns the property (such as a corporation), some transfers to trusts, and transfers to family or friends.
However, under federal law, lenders are prevented from enforcing a due-on-sale clauses under certain circumstances. Some such circumstances include:
- A transfer by devise, descent, or operation of law on the death of a joint tenant.
- A lease for less than 3 years that does not include an option to purchase.
- A transfer at death where the transferee is a person who occupies or will occupy the property, and is a relative of the deceased owner.
- A transfer where the spouse or child(ren) becomes an owner of the property following the owner’s death.
- A transfer resulting from a decree of dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement by which the spouse becomes an owner of the property.
- A transfer to a trust as long as the person making the transfer is also the beneficiary of the trust. As a condition of this type of transaction, the lender can require assurances that the lender will be notified if the beneficiary is ever changed.
Must a buyer hire an attorney for a real estate closing?
It is not a requirement that an attorney conduct a closing. However, since the cost of title insurance or an escrow does not increase when an attorney represents you at a closing, many buyers hire one to review the closing documents beforehand. While escrow and title insurance companies are generally reliable and efficient, their services are limited to conducting the closing and they cannot offer you legal advice.
What closing costs is a buyer required to pay at closing?
For the most part, the payment of closing costs is a negotiable term under your real estate agreement However, it is customary in Pierce County and elsewhere in Washington that the buyer pays the following costs at closing:
- Wood Destroying Organism (pest) Reports and Home or other Special Inspections.
- Costs Associated with Mortgage Financing. If you are financing your purchase, your lender will provide you with a Good Faith Estimate of Closing Costs. The Good Faith Estimate will include the above described costs as well as the Lender’s costs. (See HUD Web site for guide book http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/rmra/res/settlement-cost-booklet03252010)
- Recording Fees to record Deeds and Mortgages (Deed of Trust) in the Public Records.
- One-half of the escrow fee.
- A lenders policy of title insurance.
What is Title Insurance and must I have it as a buyer?
A title insurance policy provides protection for an insured buyer up to the amount of the policy against loss resulting previously unreported land title defects, such as forgeries, deeds by persons without authority, missing heirs and other title defects, liens and encumbrances existing as of the date of the purchase and not excepted from coverage (discovered and disclosed to the buyer). It is a rare transaction where buyer’s title insurance is not recommended by us. If you are financing your purchase, your lender will require that you purchase title insurance insuring the mortgage given at the closing will have a valid lien. Generally the buyers and lenders insurance is issued by the same company simultaneously.
What types of claims would a Title Insurance Policy guard against?
There are many claims covered under a typical Title Insurance Policy. A few are listed below:
- False impersonation of a seller or other persons previously in title;
- Improperly executed Deeds;
- Deeds executed without a required spouse’s signature;
- Undisclosed heirs or descendants of former owners of your property that might have had an interest;
- Survey matters;
- Liens appearing after closing but prior to recording of instruments.
I will need to bring funds to my real estate purchase closing. What forms of payment are generally acceptable in Washington?
We generally recommend that you have your closing funds wire transferred to the escrow account the day before closing to ensure that escrow can disburse timely. Most escrow companies also accept bank certified or cashier’s checks. Consult the closer for instructions.
What costs can a real estate seller expect to pay at closing?
The payment of closing costs is a negotiable term under your real estate contract. However, the seller generally pays the following fees:
- Excise Tax on the amount of the sale. This is typically equal to 1.78% of the sales price.
- Cost of the buyer’s title insurance policy and any costs associated with clearing title defects. These costs may include obtaining and recording documents such as Affidavits, Satisfactions or Releases.
- Some seller’s agree to pay a portion of the buyer’s closing costs.
Attorney’s fees. If the seller hires his or her own attorney to review the closing documents, this charge will generally appear on the closing statement.
What is a 1031 Exchange and under what circumstances may a seller benefit from one?
A 1031 exchange is a vehicle under the Internal Revenue Code that allows a seller to use the proceeds from the sale of investment property for the purchase of replacement investment (“like kind”) property. As long as the rules are strictly adhered to, the procedure allows a seller to defer the payment of capital gains taxes. A seller desiring to do these needs to include specific language in the sale and purchase agreement and we recommend using a “1031 Exchange Facilitator” which is a special type escrow closer.
The buyer of my property has hired a home inspector and asked me to make numerous repairs to the property. Which repairs am I the seller required to make?
The terms of your contract dictate which repairs are required. Your contract also specifies a time frame in which you must respond to the buyer’s request. You should consult a real state attorney for assistance in interpreting your contract.
I owe more on my mortgage than my home is worth. A friend suggested that I consider a “short sale”. What is involved?
A short sale is when a mortgage lender agrees to satisfy a mortgage for less than the full loan amount owed on a property. While each mortgage lender has a slightly different approval process, there are some similarities. First, your lender will ask you to submit general financial information including but not limited to bank statements, tax returns, pay stubs and a budget. Next, your lender will ascertain the value of your property. If you intend on attempting to “short sell’ your property we recommend obtain the services of a real estate broker experienced with short sales and consult your tax accountant for advice on possible adverse tax consequences.
Do I need a land trust?
Whether you need a land trust depends on what you hope to accomplish by having one. For most people, a land trust is unnecessary or does not accomplish what they think it will. Following are some reasons often identified for setting up a land trust.
Limited Liability in Case of Personal Injury
Some people want to set up a land trust believing it will limit their liability in the event anyone is hurt on the property. At a minimum, the trust will still be liable for such injuries. For public policy reasons a court may also disregard the trust, finding liability on the part of the true owner. In any event, the best protection from personal injury liability is to purchase liability insurance. Since even a trust should purchase personal injury liability insurance, the cost of setting up and maintaining a land trust may be outweighed by the perceived benefits.
To Avoid a Due-on-Sale Clause
Most loans in Washington – whether documented by a mortgage, note and deed of trust, or real estate contract – contain something called a due-on-sale clause. This clause provides that if the owner ever transfers the property, the full amount of the loan must be paid. Some people believe by setting up a land trust, the beneficial ownership of the property can be transferred without triggering the due-on-sale clause or alerting the bank to the transfer. Although it is true a trust may make it more difficult for the bank to learn of the transfer, many due-on-sale clauses are drafted to provide that transfer of a beneficial interest in a trust is a “transfer” triggering the due on sale clause.
To Avoid Probate
A land trust can be used to avoid probate. But to make this work properly, the owner really should consult with an attorney to ensure that this is done as part of a comprehensive estate plan. If land is included in a trust, but other probate assets are not, a probate will still be necessary. Even then, this may not be the best approach for everyone. Probate in Washington does not need to be a difficult or expensive process. In contrast, the cost of setting up and maintaining a trust can sometimes exceed the cost of a probate. Also, the complexities of maintaining the trust during one’s lifetime may outweigh the benefits.
To Avoid Judgment Liens
Some people want to put their land in a trust to avoid a lien in case they are sued. However, transferring property with intent to avoid a creditor may be a violation of Washington’s Fraudulent Transfer Act, even if the transfer took place prior to the lawsuit. If the Fraudulent Transfer Act has been violated, then the transfer can be undone, among other things.
If done correctly and for the right purposes, a land trust may be useful. However, there are often misconceptions about what a land trust can accomplish. In some situations, a land trust may not be the right solution to a given problem. Before setting up a land trust it is a good idea to discuss your goals and options with a real estate attorney.
Can a real estate purchase and sale agreement be cancelled by the seller? Can it be cancelled by the Purchaser? Is there a cooling off period after signing the contract?
Like any other contract, a real estate purchase and sale agreement cannot be unilaterally cancelled by either party unless the agreement specifically allows for it. Such a blanket provision is unlikely and if it was included it would likely not be an enforceable agreement at all but what the law refers to as an “illusory promise”. However, most properly drafted real estate purchase and sale agreements have written contingencies allowing one party to terminate the contract for a failure of a contingency. For example, an agreement to purchase a home might be contingent on a satisfactory inspection. If the property failed to pass the inspection, the agreement could be terminated for that reason. There is no “cooling off “or “I changed my mind” period for the seller or the purchaser after signing an otherwise valid purchase and sale agreement.
Does the 3-day “cooling off” statute apply to cancelling a lease of real property?
Answer: Probably not. A lease is a contract and should be entered into on careful reflection. There is often confusion about statutes giving a consumer the right to cancel a contract within 72 hours of its making. There are several circumstances when the right to rescind a contract is available under federal law or equivalent state law. The one relating real estate is when a consumer enters into a transaction where she is placing a non-purchase money security interest in her primary residence (like a second mortgage to secure the transaction). Another 3 day to cancel transaction is when a consumer enters into an installment contract to purchase a product for a “door to door” salesperson. Some others with varying number of days to “cool off” are Health Club Memberships, Business Opportunity purchases; Credit Repair services, Hearing Aid purchases, Camping Clubs and trade show purchases. One should always check their paper work and if in doubt consult an attorney before attempting to cancel a non-cancellable contract.
How do I end a one-year lease agreement due to tenants paying rent late constantly and causing damage to the home.
There are a couple different options for terminating a lease in these circumstances. First, if rent is being paid late you can serve the tenant with a three-day notice to pay rent or vacate. If the tenant does not pay rent within three days of receiving the notice, you can start an eviction.
If the tenants pay rent but continue to cause damage to the property, that is probably a breach of terms in the lease agreement. It is also a violation of Washington law for a tenant to negligently or purposefully destroy or cause damage to the premises. The landlord can give the tenant notice of the non-conformance and either demand repairs, or eventually perform the repairs and charge the tenant for the cost of repairs – to be paid with the next rent payment. The landlord can also begin an eviction if the tenant has not substantially complied with a request to make repairs after 30 days. But if the tenant makes the repairs prior to entry of a judgment in the eviction action, the court may allow the tenant to remain if the initial term of the lease has not expired.
Do I have to accept a full-price real estate offer?
Generally there is no requirement that a seller of real estate accept a full-price offer. There may be many terms other than price that justifiably cause a seller to reject a full-price offer. These may include representations or warranties the buyer wants the seller to make, financing terms, inspections, or any other number of conditions. However, if the seller is represented by a real estate agent, the seller may have agreed with the agent to sell a home under certain circumstances. These circumstances are generally spelled out in the Listing Agreement with the agent. If the seller receives an offer that meets all the conditions set forth in the Listing Agreement and refuses to accept the offer, the agent may be entitled to a sales commission under the Listing Agreement.
We are being sued by the subcontractor of the developer that sold us our home. How can this happen?
Washington law protects contractors and subcontractors from non-payment by permitting them to lien real property they have improved. If the subcontractor is properly licensed, gave all required notices, and filed a proper lien against the property, the subcontractor is entitled to file suit to foreclose against the property and owners. You may have a claim yourself against the contractor or seller who put you in this situation. Also, these situations can often be avoided by purchasing a policy of title insurance when purchasing the home. A policy of title insurance often turns up liens like this, and also may help compensate you if it should have been found by a title search but was not.
Who is considered a “contractor” in Washington State?
Washington defines a contractor broadly. A contractor is any individual or entity that, for a business purpose, undertakes or offers to undertake any project that affects real property. This includes the construction, alteration, repair, improvement, development, movement, wrecking, or demolition of buildings, highways, roads, railroads, or the excavation of anything attached to real property. The statute also specifically includes consultants hired to assist with such projects.
What is a General Contractor?
A General Contractor is any individual or entity who uses more than one building trade or craft on a single project or under a single building permit. It also includes any individual or entity that supervises or consults on such a project.
What is a Specialty Contractor?
A Specialty Contractor is a contractor who employs only one building trade or craft on a single project or under a single building permit. Further, a Specialty Contractor is not permitted to hire subcontractors unless such subcontracted work is incidental to the Specialty Contractor’s work.
What is required to lawfully work as a contractor in Washington State?
A contractor (general or specialty) must be registered with the State of Washington Department of Labor and Industries to lawfully work in the state. To become registered, a contractor must submit an application to the Department of Labor and Industries along with evidence of an acceptable type of workers’ compensation insurance for the contractor’s employees, a surety bond, and liability insurance.
The surety bond must be in the amount of $12,000 for a General Contractor, and $6,000 for a Specialty Contractor. As an alternative to a surety bond, a contractor may file an assigned savings account with the Department of Labor and Industries. Liability insurance must be in the minimum amount of $50,000 for property damage and $200,000 for public liability, or $250,000 combined single limit coverage.
Washington State Department of Labor and Industries contractor registration forms: http://www.lni.wa.gov/TradesLicensing/Contractors/HowReg/default.as
What happens if I am doing work or offering to do work as a contractor but have not registered with the Department of Labor and Industries?
It is a gross misdemeanor to offer to work, submit a bid, advertise, or do work as a contractor in the State of Washington without being registered. A conviction is punishable by up to one year in jail and a $5,000 fine.
Failure to register also subjects the contractor to a possible Consumer Protection Act claim, which can include treble damages (up to a maximum of $10,000) and an award of attorney fees and costs.
Further, an unregistered contractor is not permitted to bring or maintain suit for compensation, breach of contract, or any other claim arising from the activity for which the contractor should have been registered.
Are there any exceptions to the requirement to be registered?
Yes. Because the definition of contractor is so broad in Washington, there are quite a few statutory exceptions to the registration requirement. The exceptions include:
- representatives of federal, state or local government entities;
- officers of a court;
- public utilities;
- the sale of finished products that do not become fixtures (as that term is defined under common law);
- owners working on personal property (such as a mobile home);
- contractors working within the boundaries of an area under the jurisdiction of the federal government;
- a person or entity supplying materials, supplies, or equipment to a project who did not fabricate them into the project themselves;
- projects of a minor, casual, or inconsequential nature so long as the total price of labor, materials, and all other items does not exceed $500, and so long as such person does not advertise or indicate to the public he, she, or it is a contractor;
- construction projects incidental to irrigation and drainage, farming, or fire prevention;
- an owner of land who hires a general contractor, unless the owner is hiring the contractor for the purpose of leasing or selling the property (see the following question);
- a person working on his or her own property or personal residence, unless that person is intending to sell, demolish, or lease the property (see the following question);
- an owner maintaining or repairing their own property who uses his or her own employees for such purpose;
- a licensed architect, engineer, electrician, or plumber who is otherwise licensed or certified under the laws of the state of Washington and is acting solely in their professional capacity;
- an employee of a registered contractor;
- contractors working on highway projects that have been prequalified with the state Department of Transportation;
- mobile/manufactured home dealers or manufacturers who subcontract the installation, set-up or repair of mobile/manufactured homes;
- individuals or entities holding a valid electrical contractor’s license that employ a certified electrician or journeyman to perform plumbing work incidental to replacement of household appliances. Many judicial decisions further refine/explain these exceptions.
I am the owner of the property I am improving and intend to “flip” it for a profit, do I have to have a contractor’s license?
Generally, yes. Clearly such a project meets the “business purpose” portion of the definition of contractor. Further, the property owner exceptions to registration mentioned in the previous question specifically do not include individuals or entities performing contractor type work with the intention of leasing or selling improved property that he, she, or it has owned for less than twelve months.
Who may file a lien on improved property and under what circumstances?
Anyone furnishing labor, professional services, materials, or equipment for the improvement of real property may file a lien against the real property such labor, services, material, or equipment was supplied to (excluding public works projects in which case a retainage claim may arise).
However, such labor, services, material or equipment must have been supplied at the request of the owner, owner’s agent, or owner’s construction agent. Further, the person claiming the lien must be registered as a contractor if that is required under Washington law, and must have provided a Notice to Owner or Notice to Customer if that was required by law. Otherwise a lien cannot be filed.
When is a “Notice to Owner” required?
Anyone furnishing professional services, materials, or equipment for the improvement of real property must provide the property owner (and in some circumstances the prime contractor) a Notice to Owner unless:
- the lien claimant contracted directly with the owner or owner’s common law agent;
- the lien claimant is a laborer whose claim is based solely upon performing labor; or
- the lien claimant is a subcontractor contracting directly with the prime contractor (except in the case of improvements to an existing owner-occupied single family residence or appurtenant garage, in which case a notice to the owner-occupier must be provided).
When should a “Notice to Owner” be given?
The Notice to Owner can be given at any time, but it only authorizes the lien claimant to claim a lien for services, materials, or equipment supplied in a given period of time.
With new construction on a single-family residence, only services, materials, and equipment supplied after providing the notice, and for the ten (10) days before the notice, can serve as the basis for a lien. In all other cases, the lien can be claimed for services, materials, and equipment supplied after the notice and for the sixty (60) day period before providing the notice.
When is a “Notice to Customer” required?
Prior to starting work on a project, a contractor offering to perform a contracting project is required to provide the customer (person hiring him/her/it) a Notice to Customer in two circumstances:
- Residential. When the project is for the repair, alteration, or construction of four (4) or fewer residential units or accessory structures and the bid or contract price exceeds $1,000.
- Commercial. When the project is for the repair, alteration or construction of a commercial project and the bid or contract price is between $1,000 and $60,000. Commercial projects less than $1,000 or more than $60,000 do not require the notice.
The Notice to Customer need not be given when the contractor is working for another contractor. But failure to provide the Notice to Customer, when required, is an infraction.
Sample Notice to Customer: http://www.lni.wa.gov/IPUB/625-115-000.pdf
How should a “Notice to Owner” or “Notice to Customer” be delivered?
Notice to Owner. A Notice to Owner should either be (1) mailed by certified or registered mail to the owner or reputed owner, or (2) delivered or personally served upon the owner or reputed owner, with the lien claimant obtaining evidence of delivery (such as a receipt, affidavit of service, or acknowledgement signed by the owner or reputed owner).
Notice to Customer. The contractor must keep a copy of the Notice to Customer signed by the customer and retain it for at least three years. The Department of Labor and Industries can require a contractor to produce a copy of the Notice to Customer signed by the customer.
If I meet all the requirements to file a lien, were do I file it and what do I need to include in it?
A lien is filed in the Auditor’s office of the county where the real property is located. The lien must contain:
- the lien claimant’s name, address, and phone number;
- the first and last date on which labor, professional services, materials, or equipment were furnished or employee benefits were due;
- the name of the person indebted to the claimant;
- the street address, legal description, or other description reasonably describing the real property being liened;
- the name of the owner or reputed owner of the property, if known;
- the principal amount for which the lien is claimed;
- a statement from the claimant, under penalty of perjury, that the claim is true and correct; and
- the name of the assignee if the lien has been assigned.
Are there time limits on when I can file and serve a lien?
A claim of lien can only be filed within ninety (90) days of the last day the lien claimant provided labor, professional services, material, or equipment, or the last day employee benefit contributions were due. Liens filed after that time are invalid.
Within fourteen (14) days of filing the lien, the lien must also be personally served on the owner or reputed owner, or mailed to the owner or reputed owner by certified or registered mail. Failure to deliver or mail the claim of lien within fourteen (14) days of filing bars the claimant from recovering attorney fees, and costs.
What property is subject to the lien?
The piece of land that was improved is subject to the lien. But the lien only extends to the interest in the land held by the person who authorized the work. So if a tenant orders work, in many cases only the tenant’s leasehold interest can be liened.
Under the statute, a common law agent can bind the owner. Consequently, in the example of the tenant, under certain circumstances it has been held that a tenant can expose the landlord’s interest in the property to a lien if the tenant was acting as a common law agent of the landlord in ordering the work or improvements. If the property is not subject to a lien, the court can order the improvement removed from the property.
How long is my claim of lien good for?
A claim of lien is good for eight (8) months from the date of recording/filing with the county Auditor. To preserve its lien rights, a lien claimant must commence an action to foreclose on the lien prior to the expiration of the eight (8) month period. Any complaint to foreclose the lien must be served within ninety (90) days of filing the complaint.
Further, the court action must be prosecuted to judgment within two (2) years of filing the complaint or the action will be dismissed for want of prosecution. The statute provides that these time limitations will be tolled during any period of time the property owner is in bankruptcy.
What if I included inaccurate information in my claim of lien?
There is an implied right to amend a lien if doing so can be accomplished within ninety (90) days of the last day the lien claimant provided labor, professional services, material, or equipment, or the last day employee benefit contributions were due.
Case law also suggests that the mistake in the original lien had to have been made in good faith. Amendments to correct deliberate, fraudulent, or grossly negligent errors may not be permitted.
What if the Claim of Lien is filed without having first provided a required Notice to Owner or Notice to Customer, if it is filed more than 90 days after the last day of work, or if the amount stated in the Claim of Lien exceeds what is actually owed?
If the Claim of Lien was frivolous and made without reasonable cause (as determined by the court), or was excessive, a summary procedure allows the property owner to have the lien removed or reduced. Under such circumstances the lien claimant will be liable for the owner’s damages, attorney fees, and costs.
Are there any other construction project posting requirements?
Yes. For example, for any construction project costing more than $5,000, the prime contractor is required to post at the project for the duration of the project a notice containing:
- the legal description or tax parcel number, and street address of the construction site;
- the property owner’s name, address, and telephone number;
- the prime contractor’s business name, address, phone number, Washington state contractor’s registration number; and
- either (a) the name, address, and phone number of the lender administering the construction financing, if any, or (b) the name and address of the firm that issued a payment bond, if any.
Further, if the contractor is required to provide a Notice to Customer, the contractor is also supposed to provide customers with informational material published by the state Department of Labor and Industries relating to lien laws. The informational materials can be found at: http://www.lni.wa.gov/IPUB/625-017-000.pdf.
What sort of warranty obligations do I have as a contractor under Washington law?
Washington law imposes an implied warranty of habitability on new home builders. The warranty generally exists between the home builder-vendor and the original purchaser of a new home. To violate the warranty, the defects must be so substantial as to make the home uninhabitable.
Does a contractor have the right to cure if the customer/owner has a complaint about the work?
No. However, before bringing a lawsuit against a contractor or construction professional for construction defects, Washington law requires the customer/owner to provide written notice of any alleged construction defects at least forty-five (45) days prior to commencing suit.
Within twenty-one (21) days after receiving such a notice the contractor or construction professional can offer to inspect the property, repair the work, compromise the claim (monetarily), or dispute the claim. But there is nothing requiring the customer/owner to accept the contractor or construction professional’s offer to repair or compromise any claim. These notice requirements only apply to new construction or substantial remodels (defined as a remodel costing more than one-half (1/2) of the tax assessed value of the real property).
What does a contractor or construction professional have to do in order to be given notice and an opportunity to inspect, repair, compromise or dispute a claim prior to being sued?
Upon entering into a contract for the sale, construction, or substantial remodel of a residence, the contractor or construction professional must provide the owner a notice in the following form:
CHAPTER 64.50 RCW CONTAINS IMPORTANT REQUIREMENTS YOU MUST FOLLOW BEFORE YOU MAY FILE A LAWSUIT FOR DEFECTIVE CONSTRUTION AGAINST THE SELLER OR BUILDER OF YOUR HOME. FORTY-FIVE DAYS BEFORE YOU FILE YOUR LAWSUIT, YOU MUST DELIVER TO THE SELLER OR BUILDER A WRITTEN NOTICE OF ANY CONSTRUCTION CONDITIONS YOU ALLEGE ARE DEFECTIVE AND PROVIDE YOUR SELLER OR BUILDER THE OPPORTUNITY TO MAKE AN OFFER TO REPAIR OR PAY FOR THE DEFECTS. YOU ARE NOT OBLIGATED TO ACCEPT ANY OFFER MADE BY THE BUILDER OR SELLER. THERE ARE STRICT DEADLINES AND PROCEDURES UNDER STATE LAW, AND FAILURE TO FOLLOW THEM MAY AFFECT YOUR ABILITY TO FILE A LAWSUIT.
If this notice is provided upon entering into the contract, notice of a construction defect to the contractor or construction professional by the owner is a pre-requisite to a lawsuit. If the notice is not provided by the contractor or construction professional, no notice need be given to the contractor or construction professional prior to filing suit.