Owners Can Bond Off Liens & Contest Frivolous Liens

In Washington, Owners Can Bond Off Liens & Contest Frivolous Liens

In Washington Mechanic’s Liens: How Recent Changes Impact Contractors, author Marti McCaleb not only provides an overview of the steps required to secure a mechanic’s lien in Washington, but also answers the question “What if someone files a lien against me?”

Washington’s preliminary notice requirements may seem a bit confusing. Although today’s post isn’t going to review Washington’s statute in depth, here’s a quick look at information on the Notice to Customer and the Notice to Owner.

Information courtesy of The National Lien Digest©:

Notice to Customer: On small commercial projects (small = general contract value of $1,000-$60,000, or 4 or fewer unit residential projects where the general contract is more than $1,000), contractors who contract directly with the owner must serve a Notice to Customer upon the owner and obtain a signed copy prior to first furnishing materials or services.

Notice to Owner: On commercial, multi-family, or small commercial projects, serve notice upon the owner and prime contractor within 60 days from first furnishing materials or services. A late notice may be served, but the lien, when later filed, will only be effective for materials and services provided 60 days prior to serving the notice and thereafter. No Notice to Owner is required for subcontractors contracting directly with the prime contractor, laborers, and those contracting directly with the owner.

Beyond the basic information above, there are additional guidelines based on whether the project is new construction on a single-family residence or construction on an existing single-family residence.

The section of McCaleb’s article I found most interesting is the information she provides to project owners on what they can do once a lien has been filed on their property.

Up first: bond off the lien.

“An owner or prime contractor can bond around a lien by obtaining a surety bond under the following requirements:

– If the disputed amount is $10,000 or over, then 150% of the lien amount.

– If the disputed amount is $10,000 or less, then $5,000 or twice the amount of the lien.

The lien attaches to the bond and releases the property. The lien foreclosure proceeds as normal; however, the surety must be added as a party to the lien foreclosure action.”

McCaleb also explains frivolous liens and provides defense options. According to McCaleb, a frivolous lien is a lien that “presents no debatable issue and is devoid of merit that it has no possibility of success.”

“In response to a lien that appears to be frivolous, a party can request a show cause hearing where the applicant must show that the lien is frivolous and “made without reasonable cause” or is “clearly excessive.” If the lien claimant fails to show, the lien will be released.”

I’ve reviewed several cases where the lien was questioned based on an exaggerated or excessive claim amount. In a general sense, an exaggerated lien could be deemed a frivolous lien. This should serve as a reminder that a lien claimant needs to have documentation to support its claim.

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