As a contractor, you know the blood, sweat, and tears that go into a project are worth the final outcome, but the last thing you want is to lose time, money, and materials on a project because an owner violates a contract and refuses to pay. That’s why, if you acted as the prime contractor on the job, it’s important to protect your right to lien by getting a Notice to Owner, or Model Disclosure Statement, signed by the property owner before work begins.
Sending a lien Notice to Owner is a process that differs from state to state, so, in this blog post, the team at Northwest Lien will be discussing how to send a Washington Notice to Owner. If you’re unfamiliar with the process or need a quick refresher (we won’t blame you if you do – this stuff gets complicated!), this article will be a great starting point to help you understand all the basics — the what, why, and how of filing a Notice to Owner in Washington state.
A Notice to Owner, or Model Disclosure Statement, is a document that prime contractors provide the property owner as a formal announcement that, in the event of a failure to pay, they have the right to file a lien against the property. A Notice to Owner must be signed before work commences; in most cases, prime contractors will prepare and deliver their notice around the same time their contract with the property owner is finalized and signed.
This notice is not to get confused with the Washington Notice of Intent, a document that commercial subcontractors and material suppliers must send to property owners within 60 days of first furnishing to protect their lien rights. Residential subcontractors must send this notice to property owners within 10 days of being on the job site or furnishing supplies/materials to protect their lien rights. For reference, the primary two differences between the Notice to Owner and Notice of Intent are: The timing – Notice to Owners must be signed before work begins, while Notice of Intent documents are required to be sent out certified mail to the property owner within the first 60 days of being on the job site for commercial jobs and within 10 days of being on the job site for residential jobs.
1. The timing – Notice to Owners must be signed before work begins, while Notice of Intent documents are required to be sent out certified mail to the property owner within the first 60 days of being on the job site for commercial jobs and within 10 days of being on the job site for residential jobs.
2. The project roles – Notice of Intent is filed by subcontractors, i.e., contractors who do not have direct contact with property owners. A Notice to Owner/Model Disclosure Statement, however, is filed by contractors who have a direct relationship with the owner.
Because the two notices apply to different roles on a project, prime contractors are exempt from the Notice of Intent. Likewise, subcontractors, suppliers, and laborers do not have to file a Notice to Owner.
Unfortunately, it’s fairly common for contractors, especially new ones, to not know they have to present a Washington Notice to Owner on every project. Not having a signed a Notice to Owner can result in severe penalties, namely losing your right to file a lien. Without your right to file a lien, you lose leverage if the property owner fails to pay what you were contracted to receive. To that effect, a prime contractor without a Notice to Owner risks losing valuable time, money, and materials on a project.
Secondly, contractors in Washington can be fined by the Department of Labor and Industries for not having a signed Notice to Owner. It is legally required in the state, so even if you have good faith in the property owner, you must remember to get the document signed by the property owner to cover yourself in the event of a broken contract.
According to the Revised Code of Washington 18.27.114, you must provide a Notice to Owner for the repair, alteration, or construction of a commercial property costing between $1K and $60K. You must also have this notice signed for a project of four or fewer residential units where the bid is greater than $1K. If you only furnish labor — not materials — you are not required to provide a Washington Notice to Owner. If you provide both labor and materials, and your project meets one of the criteria stated above, you must have a signed Notice to Owner to protect your mechanic’s lien rights.
So, to summarize, you must send a Notice to Owner for:
1. Almost all residential jobs (i.e., any residential jobs over $1,000)
2. Commercial jobs under $60,000
As mentioned, you must have this document signed by the property owner prior to starting work on the project. Add it to your list of pre-construction to-dos!
What information is needed on the Notice to Owner / Model Disclosure Statement? You must include the following information on your Washington Notice to Owner for it to be valid:
Next, you must deliver the notice to the property owner. You may do this via certified or registered mail, or in person. If you deliver the Notice to Owner in person, be sure to ask for an affidavit or acknowledgment receipt signed by the owner; this ensures you have proof of compliance, as mandated by Washington state law.
Lastly, if you have any further questions, Northwest Lien clients are welcome to call us up; we’d be happy to email the document to them for their use. It’s a free document, and does not need to be filed with the county — just sent to, and signed by, the property owner.
If, in the worst-case scenario, you do have to file a Washington mechanic’s lien, you’ll certainly be glad you left yourself the option by filing your Notice to Owner beforehand. Northwest Lien can help you file a lien, and do it on time too; our local team of experts is more than familiar with Washington mechanic’s lien deadlines, and we’re prepared to help you file quickly and effectively.
Being prepared by having a signed Notice to Owner is not only a smart move to protect your mechanic’s lien rights, it is also a legally required document in the state of Washington. Failure to do so can result in the loss of valuable assets, as well as the potential for fines from the government. We hope this article helped clear up some confusion surrounding Washington notices to owners, but you can also consult these Washington construction law payment resources for more information.