The clock won't stop running. You have 4 months to enforce your lien
I have talked about filing a lien, or claim, against a public works project. My posts include a discussion of how to protect your right to file aclaim and a discussion of how to file your claim.
Remember that a different set of rules applies to public projects. Your understanding of liens on private construction projects does not apply to your public works project.
In both my previous articles, I have laid out definitions of the two statutes providing you as a contractor, with a right to a claim. It is important to know both your obligations and other contractors’ rights.
Lets briefly re-hash our explanations from my past articles:
RCW 39.08 – The General Contractors Payment Bond
Title 39 obligates a public entity to require any general contractor who is awarded with a public contract, to supply and provide a performance and payment bond for the benefit of the state (subject to few exceptions for small projects).
The bond is required because RCW 39.08.080 provides a sub-tier contractor with a lien against the contract sums due to the general contractor, for the value of that sub-tier contractor’s material and labor.
RCW 60.28 – The General Contractor’s Retainage
In addition to requiring a performance and payment bond under 39.08, the state also obligates its public agencies to retain a percentage of every contract payment, not to exceed 5%, for the payment of sub-tier contractor claims and taxes due to the state from the general contractor.
If at the end of the project there are no claims within the window for making such a claim, the general contractor shall be paid its retainage and the project will close. Otherwise, the 5% retainage can be used to offset sub-tier contractor liens. If liens exceed the value of the retainage, the payment bond under RCW 39.08 may be leveraged.
Now that you know what claims you might have and how to file those claims – how do you enforce them?
Part 3: Enforcing Your Claim
(1) What the Statutes Say
If you have proceeded to timely file a Notice of Claim against both the contractor’s bond and the contractor’s retainage, you are in good position to file an action to “foreclose” your claim.
Under RCW 39.08.030(1), there is no specific limitation on how long you have to bring a suit to “foreclose” your claim against the contractor’s bond. However, there is a limitation on how quickly you can bring it. If you bring your action less than thirty (30) days from the date you served your claim, you will lose your right to recover attorneys fees. Thus, your right to enforce a claim against the bond does not arise until thirty (30) days after you file your Notice of Claim, and does not expire until the time provided on the bond itself.
***Bonds are contractual devices between the contractor and the surety, which benefit a third party (you! and the government). A bond likely contains a clause which prevents claimants from bringing a suit past a particular date (i.e. 6 months, 1 year from the date of the Notice of Claim) If you file a claim against the bond, you should acquire a copy of the bond from the governing authority and review its terms to determine the statute of limitations for filing a lawsuit.***
Unlike RCW 39.08, the contractor’s lien statute, RCW 60.28 includes a statute of limitations for the enforcement of your lien against the contractor’s retainage.
A lawsuit must have been filed within four (4) calendar months from the date of your filing your Notice of Claim. A claimant is entitled to recover its legal fees in such an action, if timely filed.
(2) The Rules You Should Live By
Here are the four rules you should adhere to in enforcing your lien claim against a Washington public works contract:
- File your suit between 30 days and 4 months from the date you filed your Notice of Claim.
- File your suit in the Superior Court of the county in which the work was completed.
- File your suit to enforce both claims against the retainage and the bond.
- Request attorneys fees under RCW 39.08.030 and RCW 60.28.030.
Of course, we recommend that you consult your construction counsel to assist you with this legal action. The information provided above is intended to provide you with a set of rules to adhere to internally, so that you are aware of when to contact your counsel and file your claim.
