AGC Seeks to Preserve Contractors' Lien Rights Endangered by Williams Case

By John Riper Ashbaugh Beal LLP

(Editor’s Note: John Riper and AGC’s Government Affairs Director Rick Slunaker testified during a Feb. 2 House Labor and Workforce Development Committee hearing in strong support of House Bill 1708. Watch their testimony via embedded link at end of this article.)

One of the unheralded successes of Washington construction law has been until recently the States mechanics lien statute. In 1991 the legislature amended the statute to include a safe harbor form for lien claimants. The law promised that a lien claim using that form would be sufficient. For the next two decades contractors subs and suppliers all adopted that form as a routine part of their accounts receivable management. Lien filing services cropped up to prepare and file liens for a modest fee as a service to contractors.

In all of that time no one ever thought there was anything wrong with the safe harbor form. Then last year the Court of Appeals published a new opinion in Williams v. Athletic Fields declaring that the lien claim in that case (which had faithfully adopted the safe harbor form) was invalid because it didnt include some notary language that could only be found in an entirely different statute. Even more disturbing the court of appeals logic would require every lien claim to have notary certification language different from what the safe harbor form requires. As a result anyone using the safe harbor form would be vulnerable to a lawsuit challenging their lien as invalid.

In the wake of the Williams decision property owners lenders and others filed suits contesting tens of millions of dollars in recorded contractor liens asking courts to declare them invalid and causing forfeiture of the contractors lien rights.

The AGC has been at the forefront of efforts to correct the problems created by the Williams case. The AGCs Legal Affairs Committee joined together with the contractor in the Williams case and successfully persuaded the Washington Supreme Court to review the case. The Supreme Courts decision will replace (and hopefully overrule) the court of appeals decision.

But the Supreme Court likely will not issue its decision until 2012. In the meantime many suits are pending in the trial and appellate courts contesting existing lien claims on the basis of the court of appeals decision in Williams. So the AGC is working with Representative Jim Moeller who is sponsoring a legislative amendment to clarify that the extraneous notary language from outside the mechanics lien statute is not required for lien claims that the safe harbor form is sufficient for all lien claims and that the entire mechanics lien statute should be liberally construed by the courts to avoid forfeiture of lien rights on technical grounds.

So far House Bill 1708 is unopposed and while the legislature is largely fixated this session on budget issues the AGC is hopeful that this nonpartisan statutory amendment will be enacted.

John Riper is Managing Partner for Ashbaugh Beal LLC and a member of AGC’s Legal Affairs Committee.