How a Mechanics Lien Can Protect Your Business: Insights from a Recent Washington Case
If you are in the construction or development business in Washington, it’s crucial to understand your legal rights and protections. One such protection is the mechanics lien, a powerful tool when clients fail to meet their financial obligations.
For instance, suppose you own a limited liability company that builds and develops homes for property owners. After you supply labor, materials, and services as agreed, the property owner fails to compensate the LLC. Do you have any practical recourse? A mechanics lien, governed by Chapter 60.04 of the Revised Code of Washington (“RCW”) is one available option. The mechanics lien process can be difficult to navigate due to intricate requirements and a long history of case law. How can you manage the complex steps to ensure that your LLC gets paid?
Recently, the Washington Supreme Court addressed some of the nuanced aspects of RCW 60.04 in Velazquez Framing, LLC v. Cascadia Homes, Inc., 540 P.3d 1170 2024.
In Velazquez, Cascadia Homes Inc. (“Cascadia”), purchased a piece of property with the intention of building a home. Cascadia hired a general contractor it had worked with before for this purpose. Velazquez Framing LLC (“Velasquez”) was hired by the general contractor to complete necessary framing work for the home. Which Velazquez did, by supplying labor, professional services, materials, and equipment for the project. Cascadia paid the general contractor but failed to pay Velasquez. Despite several attempts by Velasquez to contact Cascadia directly to collect payment, Velasquez was not successful. Velasquez then filed a mechanics lien on Cascadia’s property. However, Velazquez did not provide the required prelien notice to Cascadia, which became the central issue in the lawsuit.
The Supreme Court addressed the questions of when prelien notice is required and what should happen when there are multiple types of claims involved.
First, the Supreme Court held that, “Velazquez Framing argues that the plain language of RCW 60.04.031 requires that prelien notice be provided for professional services, materials, and equipment, but not for labor. We agree.”
Because the lien filed by Velasquez was for more than just labor, what happens to the claims for services and materials? The Supreme Court found that as to “[C]laimant liens for both labor and material without providing prelien notice, the claimant may enforce that portion relating to labor so long as the court has an evidentiary basis to segregate the value of the labor from materials.” Therefore, Velazquez’ labor lien was still effective, but prelien notice was required for the materials and services lien. Velasquez gave no notice and as a result those liens were not enforceable. This case is illustrative of the complicated aspects that should be considered before filing a mechanics lien. Beresford Booth is here to assist you and your business with this undertaking.
To learn more about Haddox, How a Mechanics Lien Can Protect Your Business: Insights from a Recent Washington Case, please do not hesitate to contact us at info@beresfordlaw.com or by phone (425) 776-4100 for assistance.
