Can a Washington contract make a contractor or subcontractor give up its payment protections in advance?
On public works, no. RCW 39.04.900 provides that the rights provided in chapter 223, Laws of 1992 may not be waived by the parties and that a contract provision providing for waiver of those rights is void as against public policy, and that the chapter is to be liberally construed. RCW 39.04.901 makes RCW 39.76.011, 60.28.011, 60.28.021, 60.28.051, 39.04.250 and 39.04.900 applicable to all public works contracts entered into on or after September 1, 1992. Among those sections, RCW 60.28.011(2) gives every person performing labor or furnishing supplies toward completion of a public improvement contract a lien upon the retainage the public body reserves, with notice of the lien due within forty-five days of completion of the contract work. The retainage those liens attach to is bounded: public improvement contracts "must provide, and public bodies must reserve, a contract retainage not to exceed five percent of the moneys earned by the contractor as a trust fund" for claims under the contract and for state taxes (RCW 60.28.011(1)(a)). A contractor may instead submit a bond for all or any portion of that retainage, and the bond "and any proceeds therefrom are subject to all claims and liens and in the same manner and priority as set forth for retained percentages in this chapter" (RCW 60.28.011(6)). The release clock is in subsection (3): the contractor "at any time may request the contract retainage be reduced to one hundred percent of the value of the work remaining on the project"; after completion of all contract work other than landscaping it may request release, and sixty days later the public body must release and pay in full "(other than continuing retention of five percent of the moneys earned for landscaping)"; and sixty days after completion of all contract work the public body must release and pay in full, subject to chapter 39.12 RCW and this chapter (RCW 60.28.011(3)).
The trap
This is a PUBLIC WORKS rule. Washington's private construction lien chapter, RCW 60.04, contains no provision on advance waiver of lien rights (all thirty-three of its sections carry no "waiv" at all), so the chapter's only word on giving up a private lien is RCW 60.04.191: taking a promissory note "does not discharge the lien therefor, unless expressly received as payment and so specified therein". What the code does show is that the legislature speaks to the question expressly when it means to, and both ways: a contract "may not waive or require an employee to waive the right to a wage lien under this chapter" and a provision that does "is void as against the public policy of this state" (RCW 60.90.110), while a commercial-real-estate owner "may request that a broker waive the rights to a lien under this chapter, and such a waiver contained in the commission agreement signed by the broker is effective" (RCW 60.42.010(9)). Note also that where a public improvement contract is "funded in whole or in part by federal transportation funds" there is no retainage for the lien to attach to: those contracts "must rely upon the contract bond as referred to in chapter 39.08 RCW", and that bond "must remain in full force and effect until, at a minimum, all claims filed in compliance with chapter 39.08 RCW are resolved" (RCW 60.28.011(1)(b)).
13 authorities
- statuteRCW 39.04.900enactment date not established
The words that state the rule
(1) The rights provided in chapter 223, Laws of 1992 may not be waived by the parties and a contract provision that provides for waiver of the rights provided in chapter 223, Laws of 1992 is void as against public policy. (2) Chapter 223, Laws of 1992 is to be liberally construed to provide security for all parties intended to be protected by its provisions.
- statuteRCW 39.04.901enactment date not established
The words that state the rule
RCW 39.76.011, 60.28.011, 60.28.021, 60.28.051, 39.04.250, and 39.04.900 are applicable to all public works contracts entered into on or after September 1, 1992, relating to the construction of any work of improvement.
- statuteRCW 60.28.011enactment date not established
The words that state the rule
(2) Every person performing labor or furnishing supplies toward the completion of a public improvement contract has a lien upon moneys reserved by a public body under the provisions of a public improvement contract. However, the notice of the lien of the claimant must be given within forty-five days of completion of the contract work, and in the manner provided in RCW 39.08.030.
- statuteRCW 60.28.011enactment date not established
The words that state the rule
(1)(a) Except as provided in (b) of this subsection, public improvement contracts must provide, and public bodies must reserve, a contract retainage not to exceed five percent of the moneys earned by the contractor as a trust fund for the protection and payment of: (i) The claims of any person arising under the contract; and (ii) the state with respect to taxes, increases, and penalties imposed pursuant to Titles 50, 51, and 82 RCW which may be due from such contractor.
- statuteRCW 60.28.011enactment date not established
The words that state the rule
(b) Public improvement contracts funded in whole or in part by federal transportation funds must rely upon the contract bond as referred to in chapter 39.08 RCW for the protection and payment of: (i) The claims of any person or persons arising under the contract to the extent such claims are provided for in RCW 39.08.010; and (ii) the state with respect to taxes, increases, and penalties incurred on the public improvement project under Titles 50, 51, and 82 RCW which may be due. The contract bond must remain in full force and effect until, at a minimum, all claims filed in compliance with chapter 39.08 RCW are resolved.
- statuteRCW 60.28.011enactment date not established
The words that state the rule
(3) The contractor at any time may request the contract retainage be reduced to one hundred percent of the value of the work remaining on the project. (a) After completion of all contract work other than landscaping, the contractor may request that the public body release and pay in full the amounts retained during the performance of the contract, and sixty days thereafter the public body must release and pay in full the amounts retained (other than continuing retention of five percent of the moneys earned for landscaping) subject to the provisions of chapter 39.12 RCW and this chapter. (b) Sixty days after completion of all contract work the public body must release and pay in full the amounts retained during the performance of the contract subject to the provisions of chapter 39.12 RCW and this chapter.
- statuteRCW 60.90.110enactment date not established
The words that state the rule
A contract between an employer and employee may not waive or require an employee to waive the right to a wage lien under this chapter. A provision of a contract made in violation of this section is void as against the public policy of this state.
- statuteRCW 60.42.010enactment date not established
The words that state the rule
(9) An owner of commercial real estate may request that a broker waive the rights to a lien under this chapter, and such a waiver contained in the commission agreement signed by the broker is effective to waive the broker's rights to a lien under this chapter.
- statuteRCW 60.28.011enactment date not established
The words that state the rule
(6) A contractor may submit a bond for all or any portion of the contract retainage in a form acceptable to the public body and from an authorized surety insurer. The public body may require that the authorized surety have a minimum A.M. Best financial strength rating so long as that minimum rating does not exceed A-. The public body must comply with the provisions of RCW 48.28.010. At any time prior to final formal acceptance of the project, a subcontractor may request the contractor to submit a bond to the public owner for that portion of the contractor's retainage pertaining to the subcontractor in a form acceptable to the public body and from a bonding company meeting standards established by the public body. The contractor may withhold the subcontractor's portion of the bond premium. Within thirty days of receipt of the request, the contractor shall provide and the public body shall accept a bond meeting these requirements unless the public body can demonstrate good cause for refusing to accept it, the bond is not commercially available, or the subcontractor refuses to pay the subcontractor's portion of the bond premium and to provide the contractor with a like bond. The contractor's bond and any proceeds therefrom are subject to all claims and liens and in the same manner and priority as set forth for retained percentages in this chapter. The public body must release the bonded portion of the retained funds to the contractor within thirty days of accepting the bond from the contractor. Whenever a public body accepts a bond in lieu of retained funds from a contractor, the contractor must accept like bonds from any subcontractors or suppliers from which the contractor has retained funds. The contractor must then release the funds retained from the subcontractor or supplier to the subcontractor or supplier within thirty days of accepting the bond from the subcontractor or supplier.
- statuteRCW 60.28.011enactment date not established
The words that state the rule
(10) Contracts on projects funded in whole or in part by farmers home administration and subject to farmers home administration regulations are not subject to subsections (1) through (9) of this section.
- statuteRCW 60.28.011enactment date not established
The words that state the rule
(11) This subsection applies only to a public body that has contracted for the construction of a facility using the general contractor/construction manager procedure, as defined under RCW 39.10.210. If the work performed by a subcontractor on the project has been completed within the first half of the time provided in the general contractor/construction manager contract for completing the work, the public body may accept the completion of the subcontract. The public body must give public notice of this acceptance. After a forty-five day period for giving notice of liens, and compliance with the retainage release procedures in RCW 60.28.021, the public body may release that portion of the retained funds associated with the subcontract. Claims against the retained funds after the forty-five day period are not valid.
- statuteRCW 60.28.011enactment date not established
The words that state the rule
(12) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise. (a) "Contract retainage" means an amount reserved by a public body from the moneys earned by a person under a public improvement contract. (b) "Person" means a person or persons, mechanic, subcontractor, or materialperson who performs labor or provides materials for a public improvement contract, and any other person who supplies the person with provisions or supplies for the carrying on of a public improvement contract. (c) "Public body" means the state, or a county, city, town, district, board, or other public body. (d) "Public improvement contract" means a contract for public improvements or work, other than for professional services, or a work order as defined in RCW 39.10.210.
- statuteRCW 60.04.191enactment date not established
The words that state the rule
The taking of a promissory note or other evidence of indebtedness for any labor, professional services, material, or equipment furnished for which a lien is created by this chapter does not discharge the lien therefor, unless expressly received as payment and so specified therein. Nothing in this chapter shall be construed to impair or affect the right of any person to whom any debt may be due for the furnishing of labor, professional services, material, or equipment to maintain a personal action to recover the debt against any person liable therefor. [ 1991 c 281 s 19.]
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.