Common Legal Issues - ACS Lawyers · Common Legal Issues: Topics ... 13 Ground Rules • If in...

Common Legal IssuesCommon Legal IssuesDepartment of Labor & Department of Labor &

IndustriesIndustriesJune 24, 2011June 24, 2011

Presented By:Presented By:Brett M. HillBrett M. Hill

Brett M. HillBrett M. Hill(206) 515(206) 515--22332233 22

Common Legal Issues: TopicsCommon Legal Issues: Topics

Source of Most Legal Issues: Bad Source of Most Legal Issues: Bad Documentation.Documentation.

Preserving Your Lien Rights on Private Projects.Preserving Your Lien Rights on Private Projects. Preserving Your Lien Rights on Public Projects.Preserving Your Lien Rights on Public Projects.


Good Documentation Good Documentation PracticesPractices


Good Documentation Practices Good Documentation Practices Start with a WellStart with a Well--Drafted ContractDrafted Contract


Avoid Disputes with Well Drafted Avoid Disputes with Well Drafted ContractsContracts

Elements of a good Contract:Elements of a good Contract:

••Scope of Work: Clearly define Scope of Work: Clearly define scope of work. Incorporate key scope of work. Incorporate key documents (plans & specs).documents (plans & specs).

••Payment Method: How and Payment Method: How and when will you get paid? Fixed when will you get paid? Fixed price, installments, etc.price, installments, etc.




••Extra Work: Include a change Extra Work: Include a change order clause to define payment order clause to define payment for extras.for extras.

••Dispute Resolution: Define how Dispute Resolution: Define how disputes will be resolved (i.e. disputes will be resolved (i.e. mediation then arbitration).mediation then arbitration).




••Warranty: If you include a Warranty: If you include a warranty clause, use an warranty clause, use an appropriate standard of care.appropriate standard of care.

••Signed: Make sure the owner Signed: Make sure the owner actually signs the contract!actually signs the contract!


Sources for Contract FormsSources for Contract Forms

WSBA Construction SectionWSBA Construction Section

••Free Residential Contract Forms (Fixed price, Free Residential Contract Forms (Fixed price, Cost plus contracts & Design Build (coming Cost plus contracts & Design Build (coming soon)).soon)).

••www.wsba.orgwww.wsba.org/Legal/Legal--Community/Sections/ConstructionCommunity/Sections/Construction--LawLaw


Good Documentation Practices Good Documentation Practices Continue During the ProjectContinue During the Project


Contractor Loses Claim for Failure to Keep Contractor Loses Claim for Failure to Keep Contemporaneous RecordsContemporaneous Records

•• [Lucerne] has failed to establish that the alleged [Lucerne] has failed to establish that the alleged additional costs were the result of Governmentadditional costs were the result of Government--caused delays. . . . In particular, [Lucerne’s] noncaused delays. . . . In particular, [Lucerne’s] non--compliance with certain specifications which compliance with certain specifications which required corrective actions, together with required corrective actions, together with its its failure to offer competent or convincing failure to offer competent or convincing testimony testimony such as daily logs or payroll data such as daily logs or payroll data as to what days work was performed, casts as to what days work was performed, casts a conclusive shadow on its claimsa conclusive shadow on its claims. . Lucerne Lucerne Construction CorporationConstruction Corporation, 82, 82--2 BCA 16,101.2 BCA 16,101.


Contractor Loses Claim for Failure to Keep Contractor Loses Claim for Failure to Keep Contemporaneous RecordsContemporaneous Records

Given the labor overrun that PKC knew had Given the labor overrun that PKC knew had begun very early in the project, we find it begun very early in the project, we find it difficult to believe that the contemporaneous difficult to believe that the contemporaneous documentation contained in the Record documentation contained in the Record would not provide relevant evidencewould not provide relevant evidencesupporting both the fact that an impact on supporting both the fact that an impact on productivity occurred and the extent of that productivity occurred and the extent of that impact. impact. Clark Construction Group, Inc.Clark Construction Group, Inc., 00, 00--1 BCA 1 BCA 30,870.30,870.


How do you avoid losing a claim due to How do you avoid losing a claim due to bad documentation?bad documentation?

Follow the good documentation ground Follow the good documentation ground rules.rules.

Prepare job diaries.Prepare job diaries. Prepare contemporaneous time cards Prepare contemporaneous time cards

(especially on T&M projects).(especially on T&M projects). Properly conduct meetings.Properly conduct meetings.


Ground RulesGround Rules•• If in doubt about the importance of an item, write If in doubt about the importance of an item, write down the details, including the date and time.down the details, including the date and time.

•• If something needs to be recorded, write it down If something needs to be recorded, write it down immediately. immediately. Avoid the temptation to write it Avoid the temptation to write it down later.down later.

•• At the end of each day, review everything you have At the end of each day, review everything you have written down. Refine or expand your notes as written down. Refine or expand your notes as necessary. Make copies as necessary and see that all necessary. Make copies as necessary and see that all copies are securely stored.copies are securely stored.


Good Documentation Ground RulesGood Documentation Ground Rules

AccurateAccurate ObjectiveObjective CompleteComplete UniformUniform CredibleCredible TimelyTimely


How to Document?How to Document?

Pencil and PaperPencil and Paper Computers (Email)Computers (Email) Photographs (Include dates on Photos)Photographs (Include dates on Photos) Video Camera RecorderVideo Camera Recorder Audiotape RecordersAudiotape Recorders Cell phone camerasCell phone cameras


Job DiariesJob Diaries

The single most important documentation on The single most important documentation on a job is the field supervisor’s daily report or a job is the field supervisor’s daily report or job diary.job diary.

A job diary is a daily report which is prepared A job diary is a daily report which is prepared in a consistent format. Its purpose is to in a consistent format. Its purpose is to create a written record of what went on in create a written record of what went on in the field that day:the field that day: crew assignmentscrew assignments quantities of work put in placequantities of work put in place


Job DiariesJob Diaries…… (Cont.)(Cont.) verbal and written orders from owner’s verbal and written orders from owner’s

representativesrepresentatives visitors to the jobsitevisitors to the jobsite unusual conditions, circumstances and unusual conditions, circumstances and

events.events. subcontractor personnel on the jobsubcontractor personnel on the job quality of work put in place by quality of work put in place by

subcontractorssubcontractors


Job DiariesJob Diaries

…… (Cont.)(Cont.) Deliveries of supplies, materials and Deliveries of supplies, materials and

equipment.equipment. Delays encountered and cause.Delays encountered and cause. Extra work ordered and performed, Extra work ordered and performed,

including who ordered extra work.including who ordered extra work. Agreements made with owners, Agreements made with owners,

subcontractors and suppliers.subcontractors and suppliers.


Examples of Items to Include in Job DiaryExamples of Items to Include in Job Diary

Summary of weather conditions at the site. Summary of weather conditions at the site. Including any that may cause delays.Including any that may cause delays.

Conversations in person or by phone with the Conversations in person or by phone with the owner, engineer, subcontractors, suppliers, owner, engineer, subcontractors, suppliers, inspectors or OSHA inspectors. inspectors or OSHA inspectors.

Summarize the conversation and include pertinent Summarize the conversation and include pertinent details, including the name, title and phone number details, including the name, title and phone number of each person you talked with.of each person you talked with.



…… (Cont.)(Cont.) Shop drawings or submittals received or sent, Shop drawings or submittals received or sent,

with notation of action taken.with notation of action taken.

Distribution of crews noting what they are Distribution of crews noting what they are working on.working on.



…… (Cont.)(Cont.) Workers present, workers absent and reasons Workers present, workers absent and reasons

for absence, if known.for absence, if known.

Job progress information, such as yards of Job progress information, such as yards of concrete placed, production schedules met or concrete placed, production schedules met or milestones met.milestones met.


Examples of Items to Include in Job Examples of Items to Include in Job DiaryDiary

…… (Cont.)(Cont.) Accidents, including circumstances, accounts of Accidents, including circumstances, accounts of

event, actions taken, as well as names, event, actions taken, as well as names, addresses, and phone numbers of all addresses, and phone numbers of all witnesses.witnesses.

Phone log, correspondence log.Phone log, correspondence log. Any special problems or unusual events.Any special problems or unusual events.


Time CardsTime Cards

Each employee should complete time cards for Each employee should complete time cards for hours spent on Project.hours spent on Project.

Time card should show employee name, hours Time card should show employee name, hours work, and work performed.work, and work performed.

Time cards should be completed daily and be Time cards should be completed daily and be signed by the employee.signed by the employee.

Time cards are Time cards are articularlyarticularly important on T&M important on T&M contracts and for Change Order work.contracts and for Change Order work.


Conducting and Documenting MeetingsConducting and Documenting Meetings

Have regular meetings at regular times. Have regular meetings at regular times. Do not put them off for anything except Do not put them off for anything except an emergency.an emergency.

Special meetings should be called by Special meetings should be called by note or memo. Verbal notice is not note or memo. Verbal notice is not effective unless the meeting will occur effective unless the meeting will occur within the next half hour.within the next half hour.


Conducting and Documenting MeetingsConducting and Documenting Meetings

…… (Cont.)(Cont.) Start on time, and when you are finished, Start on time, and when you are finished,

break up the meeting.break up the meeting. Prepare a written agenda in advance and Prepare a written agenda in advance and

stick to it. Use photocopies and/or a stick to it. Use photocopies and/or a blackboard (whiteboard) list to keep blackboard (whiteboard) list to keep everyone on the agenda topics.everyone on the agenda topics.

Make sure someone is keeping notes of the Make sure someone is keeping notes of the meeting.meeting.


Effective Meeting MinutesEffective Meeting Minutes

Meeting notes must contain or show the Meeting notes must contain or show the date, time and place of the meeting on each date, time and place of the meeting on each page of notes.page of notes.

Notes must include the name, title and Notes must include the name, title and company affiliation of everyone who attended company affiliation of everyone who attended the meeting, as well as the same information the meeting, as well as the same information about key persons referenced in the meeting about key persons referenced in the meeting but not in attendance.but not in attendance.


Effective Meeting MinutesEffective Meeting Minutes…… (Cont.)(Cont.) Notes must cover all matters discussed at the Notes must cover all matters discussed at the

meeting that relate to the project (six basic meeting that relate to the project (six basic principles “AOCUCT”).principles “AOCUCT”).

Meeting notes should be concise. They do Meeting notes should be concise. They do not need to cover all the discussion, but they not need to cover all the discussion, but they must clearly state the resolution of each must clearly state the resolution of each important point and the key reasons that important point and the key reasons that supported the decision.supported the decision.



…… (Cont.)(Cont.) Any agreement reached should be Any agreement reached should be

specifically noted. If agreement is not specifically noted. If agreement is not reached, the position of each party should reached, the position of each party should be noted. If conclusions or agreements are be noted. If conclusions or agreements are not reached, the notes should show what not reached, the notes should show what each person will do about the unresolved each person will do about the unresolved issue and when they will do it.issue and when they will do it.



…… (Cont.)(Cont.) Ideally, all representatives attending the Ideally, all representatives attending the

meeting should read the notes and initial them meeting should read the notes and initial them at the conclusion of the meeting. at the conclusion of the meeting.

Each meeting attendee should receive a copy of Each meeting attendee should receive a copy of the notes, and a copy should also be included in the notes, and a copy should also be included in a master job file.a master job file.


Liens: Private WorkLiens: Private Work

(206) 287(206) 287--9900 9900 wwwwww.washingtonconstructionlaw.com.washingtonconstructionlaw.com


Benefits of Lien Rights:Benefits of Lien Rights: Secures payment if Owner/Contractor Secures payment if Owner/Contractor

does not have the money.does not have the money. Gives the contractor/supplier the right Gives the contractor/supplier the right

to foreclose the property in order to to foreclose the property in order to obtain payment.obtain payment.

Provides right to recover attorneys fees Provides right to recover attorneys fees and costs.and costs.

Why do I need a lien?Why do I need a lien?


Generally: Contractor, Supplier, Architect Generally: Contractor, Supplier, Architect Engineer, Surveyor who furnishes labor, Engineer, Surveyor who furnishes labor, materials, services, or equipment used in materials, services, or equipment used in improving private real propertyimproving private real property..

Who Has the RightWho Has the Rightto Create a Lien?to Create a Lien?


Activities Creating Liens:Activities Creating Liens: Building and structures Building and structures demolition, demolition,

construction, alteration, or repairconstruction, alteration, or repair Clearing, grading, and fillingClearing, grading, and filling LandscapingLandscaping Architects, surveying, designing, and Architects, surveying, designing, and

engineeringengineering Condominium improvementsCondominium improvements



Environmental Remediation NOT coveredEnvironmental Remediation NOT covered(haul away and dispose of contaminated soil). (haul away and dispose of contaminated soil). TPST Soil RecyclersTPST Soil Recyclers..

Test hole drilling by contractor hired by Test hole drilling by contractor hired by prospective purchaser did not create a lien right. prospective purchaser did not create a lien right. Colorado StructuresColorado Structures. .

Contractors must be registered.Contractors must be registered.


Owner

GeneralContractor

Subcontractor

SubtierSubcontractor

Subcontractor

Supplier Labor

Supplier Labor

1st Tier

2nd Tier

LaborSupplier

3rd Tier

Typical Chain of “Privity” on Construction Typical Chain of “Privity” on Construction ProjectsProjects

3636


Items Covered by the LienItems Covered by the Lien

The labor or professional services, materials,The labor or professional services, materials,or equipment furnished must actually or or equipment furnished must actually or constructively constructively add to or become part of the add to or become part of the propertyproperty..

Lien is for the Lien is for the contract price of labor and contract price of labor and materialsmaterials. . Colorado StructuresColorado Structures..


At the request of Owner or “Construction At the request of Owner or “Construction Agent”Agent”

“Construction Agents”“Construction Agents” Licensed and registered entities Licensed and registered entities

(Contractors, Subcontractor, Architect/(Contractors, Subcontractor, Architect/Engineer = Construction Agents)Engineer = Construction Agents)

Unlicensed or unregistered contractors cannot Unlicensed or unregistered contractors cannot order work. (Your GC must be registered!). order work. (Your GC must be registered!).

Who Can Order the Work that Who Can Order the Work that Gives Right to a Lien?Gives Right to a Lien?


The Claim of Lien must be filed within The Claim of Lien must be filed within ninety (90) daysninety (90) days from the last day labor, from the last day labor, professional services, materials, or professional services, materials, or equipment was supplied to the project.equipment was supplied to the project.

Creation of a LienCreation of a Lien

1/1/2001

First day of Work

Project CompleteLast Day of Laborand Materials

Claim of LienMust Be Filed

90 Days

1/1/2007 90 Days

Extends FilingDeadline

LastPunchlist

Lien Filing Deadlines/PrioritiesLien Filing Deadlines/Priorities

Brett M. HillBrett M. Hill(206) 515(206) 515--22332233

4141


Name, address, and telephone number ofName, address, and telephone number ofthe Claimantthe Claimant

First date labor or materials were furnishedFirst date labor or materials were furnished Last date labor or materials were furnishedLast date labor or materials were furnished

Claim

of LienContents of theContents of theClaim of LienClaim of Lien


…… ContinuedContinued Name of the person and the contract with the Name of the person and the contract with the

ClaimantClaimant Name of the Owner of the propertyName of the Owner of the property Address or description of property (parcel Address or description of property (parcel

number)number) Principal amount for which the lien is claimedPrincipal amount for which the lien is claimed

Contents of theContents of theClaim of LienClaim of Lien


Note: New Acknowledgement

form


Creation of a LienCreation of a Lien

The Claim of Lien must be hand The Claim of Lien must be hand delivered/mailed via certified mail todelivered/mailed via certified mail tothe OWNER within the OWNER within fourteen (14) daysfourteen (14) days of of recording. recording. Failure results in forfeiture of Failure results in forfeiture of attorneys’ fees and costs.attorneys’ fees and costs.


Notice to Owner:Notice to Owner: Applies to suppliers and lowerApplies to suppliers and lower--tier tier

subcontractors.subcontractors. Time of service of noticeTime of service of notice

Commercial projects within sixty (60) days of Commercial projects within sixty (60) days of the first work or material deliverythe first work or material delivery

Residential projects within ten (10) days of Residential projects within ten (10) days of the first work or material deliverythe first work or material delivery

Special Requirements for Suppliers Special Requirements for Suppliers and and LowerLower––Tier Tier SubcontractorsSubcontractors


Special Requirements for Suppliers Special Requirements for Suppliers and and LowerLower--Tier Tier SubcontractorsSubcontractors

Service to Owner and General Contractor Service to Owner and General Contractor (Service on GC only required if GC meets certain (Service on GC only required if GC meets certain posting requirements regarding project posting requirements regarding project information, but send to GC just in case)information, but send to GC just in case)

60 Days

Relation Back

15 Days 20 Days 20 Days 15 Days 20 Days 15 Days 40 Days 90 Days

1st D

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(Not

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)

2nd

Del

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3rd

Del

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4th

Del

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5th

Del

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6th

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Pro

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Com

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Pre

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Commercial ProjectCommercial Project

4949Brett M. HillBrett M. Hill(206) 515(206) 515--22332233

10 Days

Relation Back

5 Days 5 Days 4 Days 5 Days 2 Days 2 Days

1st D

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(Not

Cov

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)

2nd

Del

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3rd

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4th

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Proj

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Com

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5 Days

7th

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Residential ProjectResidential Project

Brett M. HillBrett M. Hill(206) 515(206) 515--22332233

5050


Special Rules for Special Rules for OwnerOwner--Occupied Occupied Residential RemodelsResidential Remodels

FirstFirst--Tier Subcontractors must give the Tier Subcontractors must give the Notice to Owner.Notice to Owner.


Special Notice from Contractors Special Notice from Contractors Required for Certain Residential and Required for Certain Residential and

Commercial ProjectsCommercial Projects

Notice to Customer:Notice to Customer: If the Contractor fails to provide the Customer If the Contractor fails to provide the Customer

with required Notice prior to commencement of with required Notice prior to commencement of the work, the Contractor is barred from the work, the Contractor is barred from maintaining a lien.maintaining a lien.


Special Notice from Contractor Special Notice from Contractor Required for Certain Residential and Required for Certain Residential and


The notice requirement does The notice requirement does notnot apply to the apply to the following:following: Bid price or contract price less than $1,000Bid price or contract price less than $1,000 Contracts for the construction of five (5) or more Contracts for the construction of five (5) or more

residential unitsresidential units


Special Notice from Contractor Special Notice from Contractor Required for Certain Residential and Required for Certain Residential and


The notice requirement also does The notice requirement also does notnot apply to the apply to the following:following: Contractors contracting with other contractorsContractors contracting with other contractors Public works contractsPublic works contracts Contracts on commercial projects with a bid or Contracts on commercial projects with a bid or

contract price in excess of contract price in excess of $60,000$60,000


Generally, contract price / implied contractGenerally, contract price / implied contract Interest (12%)Interest (12%) Special rules for OwnerSpecial rules for Owner--occupied residential occupied residential

models. The amount recoverable is limited to models. The amount recoverable is limited to the dollar amount of the general contract which the dollar amount of the general contract which the Owner has not yet paid the General the Owner has not yet paid the General Contractor when served with a Notice to Owner.Contractor when served with a Notice to Owner.

Amount of Lien ClaimAmount of Lien Claim


Lawsuit must be filed within eight (8) months Lawsuit must be filed within eight (8) months of the filing date of the Claim of Lienof the filing date of the Claim of Lien

Lawsuit must be tried within two (2) years Lawsuit must be tried within two (2) years Expedited ProceduresExpedited Procedures

Payment on foreclosurePayment on foreclosure

How Long Does YourHow Long Does YourLien Last?Lien Last?

Con

tract

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STA

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25 Days 3 Years 30 Days

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90 Days

1/3/00 1/28/00 9/30/03 10/30/03

Effective Date of Lien FilingEffective Date of Lien Filing

6060Brett M. HillBrett M. Hill(206) 515(206) 515--22332233


The Owner can bond around at one and oneThe Owner can bond around at one and one--half (1half (1--1/2) times the lien amount1/2) times the lien amount

Private payment and performance bonds:Private payment and performance bonds: Payment bondsPayment bonds Performance bondsPerformance bonds Contractor registration bondsContractor registration bonds

Bonding Around Liens / BondsBonding Around Liens / Bonds


Stop Notice / Lender to Hold Back Stop Notice / Lender to Hold Back Funds from the Construction LoanFunds from the Construction Loan

General: Notice to construction lender creates General: Notice to construction lender creates potential lender liability for the lien claimpotential lender liability for the lien claim

Procedure: Any lien claimant who has not Procedure: Any lien claimant who has not received payment within five (5) days of the received payment within five (5) days of the date required by the contract may within thirtydate required by the contract may within thirty--five (35) days after payment is due give the five (35) days after payment is due give the lender notice (5 day / 35 day Window)lender notice (5 day / 35 day Window)


…… ContinuedContinued Contents of the NoticeContents of the Notice Filing Requirements: With the lender, owner, Filing Requirements: With the lender, owner,

and prime contractorand prime contractor Effect: If the lender disburses the amount, the Effect: If the lender disburses the amount, the

lender is subordinate to the lien claimantlender is subordinate to the lien claimant

Stop Notice / Lender to Hold Back Stop Notice / Lender to Hold Back Funds from the Construction LoanFunds from the Construction Loan


Remedies for DefectiveRemedies for DefectiveLien ClaimsLien Claims

Frivolous lien claim procedure Frivolous lien claim procedure –– Lien must be Lien must be frivolous and without reasonable causefrivolous and without reasonable cause. Winner . Winner is awarded costs and attorneys’ fees. is awarded costs and attorneys’ fees. Bird Bird ConstructionConstruction case.case.

Consumer Protection Act violation if a contractor Consumer Protection Act violation if a contractor developer discourages another contractor, developer discourages another contractor, subcontractor, or material supplier from filing a subcontractor, or material supplier from filing a Notice to Owner.Notice to Owner.


Public Works BondPublic Works Bondand Retentionand Retention


Bond and Retention ClaimsBond and Retention Claims

Washington public worksWashington public works Retainage Act (RCW 60.28)Retainage Act (RCW 60.28) Bond (RCW 39.08)Bond (RCW 39.08)

Federal Public Works (Miller Act)Federal Public Works (Miller Act)

Is the job a state or federal public works project?


Bond and Retention ClaimsBond and Retention Claims

General Contractors: Private project general General Contractors: Private project general contractors have lien rights against improved contractors have lien rights against improved property property no comparable payment protectionno comparable payment protectionis provided under state or federal statutes on is provided under state or federal statutes on public works projects.public works projects.

Is the job a state or federal public works project? (Continued)


Who Has the Right to Claim Against Who Has the Right to Claim Against RetainageRetainage

All persons who furnished labor and materials or All persons who furnished labor and materials or equipment for use equipment for use in the performance of in the performance of public works projectpublic works project..

Virtually any tier of subcontractor or Virtually any tier of subcontractor or supplier who has filed proper notice has a supplier who has filed proper notice has a claimclaim, however, Courts have held that suppliers , however, Courts have held that suppliers who supply materials to other material suppliers who supply materials to other material suppliers are not entitled to a lien upon retainage funds.are not entitled to a lien upon retainage funds.


Retention: 5% from all of the General Retention: 5% from all of the General Contractor's total job progress payments is Contractor's total job progress payments is withheld as a “fund” for potential subcontractor withheld as a “fund” for potential subcontractor and material supplier claimants.and material supplier claimants.

General Contractors and Subcontractors may General Contractors and Subcontractors may retain from their subretain from their sub--tier subcontractors and tier subcontractors and suppliers.suppliers.

Retainage ClaimsRetainage Claims


Claim Against RetentionClaim Against Retention

PrePre--Claim:Claim: SubSub--tier subcontractors and suppliers tier subcontractors and suppliers to Subcontractors must give notice within to Subcontractors must give notice within sixty sixty (60)(60) days of providing supplies, materials, or days of providing supplies, materials, or equipment to the project (sixty (60) day relation equipment to the project (sixty (60) day relation back).back).



Notice of Claim:Notice of Claim: All retainage fund claimants All retainage fund claimants must provide public works owner notice of their must provide public works owner notice of their claims within claims within fortyforty--five (45)five (45) days after days after “completion of the contract”“completion of the contract” (different from (different from “acceptance” under the bond statute).“acceptance” under the bond statute).



…… ContinuedContinued Duration of a Claim: The claim must be Duration of a Claim: The claim must be

foreclosed within foreclosed within four (4) monthsfour (4) months.. Limitation on Retainage Claim: Recovery is Limitation on Retainage Claim: Recovery is

limited to the limited to the amount of moneyamount of money contained contained in the retention fundin the retention fund..


Bond ClaimBond Claim

Coverage: Persons or entities which supply Coverage: Persons or entities which supply labor, equipment, materials, or supplies in the labor, equipment, materials, or supplies in the furtherance of the contractfurtherance of the contract (not necessarily (not necessarily incorporated into the project or consumed in the incorporated into the project or consumed in the work).work).


Claim Against BondClaim Against Bond PrePre--Claim: SubClaim: Sub--tier subcontractors and tier subcontractors and

suppliers of materials and equipment to suppliers of materials and equipment to Subcontractors must give notice withinSubcontractors must give notice withinten (10) daysten (10) days of first providing suppliesof first providing suppliesor equipment to the project.or equipment to the project.

Notice of Claim: All claimants must, within Notice of Claim: All claimants must, within thirty (30) days of the thirty (30) days of the “acceptance”“acceptance” (an (an affirmative act of a public body) of the work, affirmative act of a public body) of the work, file with the public works owner a notice of file with the public works owner a notice of claim.claim.




Duration of Bond Claim: Three (3) year statute Duration of Bond Claim: Three (3) year statute of limitations on oral contracts, six (6) year of limitations on oral contracts, six (6) year statute of limitations on written contracts.statute of limitations on written contracts.

Retainage and Bond Claim Retainage and Bond Claim Coverage OverviewCoverage Overview

Bond ClaimBond Claim Retention ClaimRetention Claim

PrePre--Claim NoticeClaim Notice 10 days of10 days of 60 days of60 days of1st delivery1st delivery 1st delivery1st delivery

Claim of LienClaim of Lien 30 days of30 days of 45 days after45 days afterWithinWithin acceptanceacceptance completion ofcompletion of

contract workcontract work

CommenceCommence 33--year oralyear oral 4 months4 monthsLawsuitLawsuit contractcontract of Claimof ClaimWithinWithin 66--year writtenyear written of Lienof Lien

contractcontract

Attorneys’ FeesAttorneys’ Fees YesYes YesYes 7777


Practical Advice to EnsurePractical Advice to EnsureCoverage Under Both BondCoverage Under Both Bond

and Retainage Statutesand Retainage Statutes

PrePre--Claim WithinClaim Within 10 days of first delivery10 days of first delivery

Notice of Claim WithinNotice of Claim Within 30 days of completion30 days of completionof workof work

Commence Suit WithinCommence Suit Within 30 days to 4 months of30 days to 4 months ofClaim of LienClaim of Lien


Washington Prompt Washington Prompt Payment ActPayment Act


Prompt Payment ActPrompt Payment Act

General Contractor Payment Rights:General Contractor Payment Rights: General Contractors are entitled to payment General Contractors are entitled to payment

within within thirty (30) days after receipt of invoicethirty (30) days after receipt of invoiceby public body.by public body.


Prompt Payment ActPrompt Payment ActGeneral Contractor Payment RightsGeneral Contractor Payment Rights

If the public body intends to withhold payment, If the public body intends to withhold payment, it must advise the Contractor in it must advise the Contractor in writing within writing within eight (8) dayseight (8) days after receipt of invoice stating:after receipt of invoice stating: specifically why part or all of the payment is specifically why part or all of the payment is

being withheld; andbeing withheld; and what remedial actions must be taken.what remedial actions must be taken.


The amount of withholding is limited to 150% The amount of withholding is limited to 150% of the amount in dispute.of the amount in dispute.

Payment of retainage must be made within Payment of retainage must be made within sixty (60) days following completion of the sixty (60) days following completion of the contract work.contract work.

Failure to comply with the requirements will Failure to comply with the requirements will entitle contractor to interest at one (1%) entitle contractor to interest at one (1%) percent per month and its attorneys' fees.percent per month and its attorneys' fees.

Prompt Payment ActPrompt Payment ActGeneral Contractor Payment RightsGeneral Contractor Payment Rights


Subcontractor, Supplier Prompt Subcontractor, Supplier Prompt Payment Act Payment RightsPayment Act Payment Rights

Progress Payment: Subcontractors must be paid Progress Payment: Subcontractors must be paid no later than no later than ten (10) daysten (10) days after the General after the General Contractor receives payment from the Owner.Contractor receives payment from the Owner.

The maximum amount that can be withheld The maximum amount that can be withheld from a Subcontractor is from a Subcontractor is 150%150% of the amount in of the amount in dispute.dispute.


If the General Contractor intends to withhold If the General Contractor intends to withhold money, the money, the General Contractor must advise General Contractor must advise the Subcontractorthe Subcontractor “as soon as practicable” “as soon as practicable” specifically:specifically:

why part or all of the payment is being why part or all of the payment is being withheld; andwithheld; and

what remedial actions must be taken by what remedial actions must be taken by the Subcontractor / Supplier to receive the Subcontractor / Supplier to receive the withheld amount.the withheld amount.

Subcontractor / Supplier Prompt Subcontractor / Supplier Prompt Payment Act Payment RightsPayment Act Payment Rights


Subcontractor / Supplier Prompt Subcontractor / Supplier Prompt Payment Act Payment RightsPayment Act Payment Rights

If the General Contractor fails to pay within the If the General Contractor fails to pay within the time required, it must pay the Subcontractor / time required, it must pay the Subcontractor / Supplier one percent (1%) per month interest Supplier one percent (1%) per month interest and compensate it for its attorneys' fees.and compensate it for its attorneys' fees.


Lien Waivers / ReleasesLien Waivers / Releases

Common Legal IssuesCommon Legal IssuesDepartment of Labor & Department of Labor &

IndustriesIndustriesJune 24, 2011June 24, 2011

Presented By:Presented By:Brett M. HillBrett M. Hill

Common Legal Issues - ACS Lawyers · Common Legal Issues: Topics ... 13 Ground Rules • If in...

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