Chapter Two: The Elements of a Construction Lien

1. Introduction.

   RCW 60.04.021 provides that “any person furnishing labor, professional services, materials, or equipment for the improvement of real property shall have a lien upon the improvement for the contract price of labor, professional services, materials, or equipment furnished at the instance of the owner, or the agent or construction agent of the owner.”  Four distinct elements of a construction lien can be distinguished: (1) the claimant has furnished labor, professional services, materials, or equipment; (2) for improvement of real property; (3) at a contract price;  and (4) at the instance of the owner or owner’s agent.[1]  These and other matters are discussed below, in particular:

   • Section 2:  Furnishing Labor, Professional Services, Materials, and Equipment.
   • Section 3:  The Improvement of Real Property.
   • Section 4:  The Contract Price.
   • Section 5:  Work Authorized by the Owner.
   • Section 6:  Contractor Registration.
   • Section 7:  Property Interests Subject to Construction Liens.

   As noted earlier, Washington courts require strict compliance with the lien statute when deciding whether a particular claimant is entitled to lien rights.[2]  We will see that principle at work in the following sections.

2. Furnishing Labor, Professional Services, Materials, and Equipment.

   The lien statute defines “furnishing labor, professional services, materials, or equipment” broadly as “the performance of any labor or professional services, the contribution owed to any employee benefit plan on account of any labor, the provision of any supplies or materials, and the renting, leasing, or otherwise supplying of equipment for the improvement of real property.”[3]  Although the definition is broad, there are limits.  Moreover, it may be important to determine whether particular work counts as labor or professional services or the supply of materials or equipment because the classification may impact not only the priority of a lien[4] but also the need to give a pre-claim notice.[5]

   “Labor” is defined to include “exertion of the powers of body or mind performed at the site for compensation.”[6]  Individuals performing manual labor at a project site (“mechanics” in the old sense) are included.  Individual liens are uncommon today.  Most claimants are business entities.  If a business entity provides labor, it may be entitled to a labor lien.[7]

   1. Labor.

      A laborer (individual) is often the employee of a contractor or subcontractor, but the statute does not require this.  Under RCW 60.04.021, “any person” providing labor is entitled to lien rights.[8]  This presumably includes employees of a contractor, employees of the owner, and independent contractors of either.[9]

      Generally, labor must occur at the project site and it must contribute directly to the physical improvement being constructed.  It has been held that the cost of field foremen and payroll taxes may be included as costs of “labor” for purposes of the lien statute.[10]  By contrast, a company that offered “temporary labor services” in the form of writing paychecks for laborers, but exercised no onsite supervision, was held not to have a labor lien.[11]  Management and coordination services do not constitute “labor” if the services are performed away from the improved property.[12]

      Sometimes, lienable work appears to cover more than one category.  In that case, the most dominant category may be applied, or it may be appropriate to allocate the work among different categories.  The following cases may be illustrative, though none involved construction liens; all involved the somewhat different provisions of the public bond and retainage statutes.

      • Campbell Crane & Rigging Services, Inc. v. Dynamic International AK, Inc., 145 Wash. App. 718, 186 P.3d 1193 (2008). Campbell was hired to supply and operate cranes on a construction site.  The Court of Appeals held that Campbell’s work was fundamentally to provide crane lifting services, a form of labor for purposes of the public project bond and retainage statutes.  The fact that the work required specialized tools (cranes) did not prevent it from being labor.  Campbell’s invoices did not distinguish between a price for crane rental and a price for crane operation; the two went together.
      • National Concrete Cutting, Inc. v. Northwest GM Contractors, Inc., 107 Wash. App. 657, 27 P.3d 1239 (2001). The reasoning and outcome were similar to those of Campbell Crane & Rigging Servs., Inc., 145 Wash. App. 718, except that the claimant provided concrete cutting and coring services rather than crane services.
      • LRS Electric Controls, Inc. v. Hamre Construction, Inc., 153 Wash. 2d 731, 107 P.3d 721 (2005). The HVAC subcontractor, Tyko, allocated its contract price between materials and labor.  The Supreme Court respected Tyko’s allocation and upheld the labor portion of Tyko’s lien but invalidated the remainder for lack of pre-claim notice under the public project bond and retainage statutes.

      Although the definition of “labor” requires it to occur “at the site,” the definition of “improvement” permits lienable work to be done in a “street or road in front of or adjoining” the property being improved.[13]  Thus, labor performed in a right of way adjacent to a property development may create a lien on the individual lots if it contributes to the improvements made on the lots.[14]

      The issue of offsite labor has also arisen where materials have been assembled, prefabricated, or prepared before transportation to and incorporation into the improvement.  In other states, courts have allowed labor liens for work on materials that can fairly be regarded as offsite construction.  One early Washington case seems to have favored this approach in dictum.[15]  However, a later case holds that it is “well established that labor performed upon material before delivery is not lienable as a labor lien,” even if materials have been specially fabricated for a particular project.[16]

      Labor performed in the transportation of materials is generally treated as part of the cost of the material, as discussed below.  If transport is provided by someone other than the material supplier, an argument could be made that the transport should be lienable as labor.  However, this argument contends with the statutory definition of “labor” as occurring “at the site” and with the very limited exceptions to this definition permitted in the Washington cases.  Alternatively, a transporter could be a subcontractor (if not working for the material supplier).

      The definition of “furnishing labor” includes “the contribution owed to any employee benefit plan on account of any labor.”[17]  Thus, the statute appears to give employee benefit plans a right to pursue a labor lien to collect unpaid contributions.[18]

   2. Professional Services.

      “Professional services” are defined to include “surveying, establishing or marking the boundaries of, preparing maps, plans, or specifications for, or inspecting, testing, or otherwise performing any other architectural or engineering services for the improvement of real property.”[19]  Although the definition appears to be limited to the work of architects, engineers, and surveyors, all of whom are required to be licensed under Washington law, it has been held that a contractor marking property boundaries to prepare for clearing and grubbing met the definition of “professional services.”[20]  There is no requirement that professional services must be performed at the project site for a lien to arise.  The lien statute contemplates that professional services may be performed in such a way that an examination of the project site will fail to detect them.[21]

      It has been held that construction management is not a professional service because it is not listed in the statutory definition.[22]

      Under earlier versions of the statute, some professionals were given no lien rights unless the planned improvement was built.  The current statute changes this rule.  “Improvement” is defined to include the provision of professional services “in preparation for” construction.[23]  The pre-claim notice statute contemplates that lien rights for professional services may arise even though no improvement has been commenced.[24]  Although dicta in one recent case support the older rule,[25] the dicta conflicts with the statute and with another case where it was acknowledged that a surveying firm could acquire lien rights even though no planned improvements were ever built.[26]

   3. Materials.

      Materials are not defined in the lien statute.  “Furnishing . . . materials” is defined to include “the provision of any supplies or materials . . . for the improvement of real property.”[27]  Earlier versions of the statute contained narrower language, and several cases discussed whether claimants had liens for “materials.”  The current statute has broader language, but no reported case has clarified the meaning.  The following considerations, based on older cases, are offered as a guide:

      • Materials provided by the claimant and incorporated into a physical improvement to real property should remain lienable.^[28]
      • Materials provided by the claimant and delivered to the job site for incorporation into a physical improvement should remain lienable, even if work stops before they are incorporated; it does not matter whether the claimant personally delivers the materials.^[29]
      • Things sent to a project that is intended to remain personal property and not be physically incorporated into the improvement are not lienable. Whether materials have been delivered for incorporation into the improvement is determined by the intent of the parties.^[30]
      • The cost of transporting materials to the project site is properly considered part of the material cost, not a separate labor item.^[31]
      • Although the statute now refers to “supplies or materials” and not just “materials,” it does not follow that consumables like gasoline or small tools, which are used on the job but are not incorporated into the real estate, are lienable materials.^[32] However, one old case held that concrete forms that were used and then removed as waste were lienable materials.[33]
      • An old federal case (applying Washington law) has held that materials specially fabricated for a particular project and offered for delivery to the owner are also lienable, even if the owner chooses not to have them delivered.[34]
      • A person who provides materials and does no work at the site is a material supplier, not a laborer or contractor, even if that person expends labor offsite to fabricate, prepare, or deliver the materials.[35]
      • A person who provides materials and labor at the site and who allocates the contract price between these as separate items may have separate liens for materials and labor.[36]
      • A person who supplies materials to another material supplier has no lien for materials.[37]
   4. Equipment.

      Equipment is not defined in the lien statute.  “Furnishing . . . equipment” includes “the renting, leasing, or otherwise supplying of equipment for the improvement of real property.”[38]  It appears that “equipment” is intended to mean tools (like bulldozers and cranes) that are used during construction but not physically incorporated into the improvement.  Equipment that is incorporated into the improvement (e.g., HVAC equipment) counts as “materials” under this classification.  Equipment that remains on the project but does not become a fixture (e.g., washing machines, dryers, and dishwashers) is not lienable.[39]

      We have seen that, for purposes of the lien statute, labor is (generally) limited to work “at the site” and materials are (generally) limited to things delivered at the site.  Professional services are not so limited; they can occur away from the project site.  What about equipment? Although no published Washington case addresses this question directly, the likely answer is that only equipment working at the site of the improvement is lienable.  If equipment is used, for example, to prepare a staging yard on a different property, that activity contributes only indirectly to improving the project property.  If equipment is used offsite to prepare materials for incorporation into the project (e.g., casting concrete beams), we have already seen that labor performed to prepare materials offsite is not lienable.[40]  The same reasoning would support the conclusion that equipment used to prepare materials offsite is not lienable.  There is one limited exception:  because the definition of “improvement” permits lienable work to be done in a “street or road in front of or adjoining” the property being improved,[41] it would make sense that equipment used in a right of way adjacent to a property development may create a lien on the individual lots if it contributes to the improvements made on the lots.

      We have seen that, when equipment and equipment operators are furnished together, the work may be analyzed as labor.[42]  A different outcome is possible under a contract that separates equipment rental from operator labor.[43]

3. The Improvement of Real Property.

   For lien rights to arise, the claimant’s work (labor, professional services, materials, or equipment) must be “for the improvement of real property.”[44]  This concept has been touched on above (e.g., in the requirement that materials must be delivered for physical incorporation into the real estate).

   Washington cases have historically invoked “strict construction” to limit lien rights to activities that satisfy the definition of “improvement.”  This made sense when “improvement” meant a building or another physical structure.[45]  Since the 1992 amendments, however, the statute allows liens for activities that do not result in a physical structure, such as demolishing, clearing, grading, planting trees, and providing professional services.[46]  Nevertheless, Washington courts have continued to refer to and enforce “strict construction.”  The following cases are illustrative.

   • TPST Soil Recyclers of Wash., Inc. v. W.F. Anderson Construction, Inc.[47] TPST was hired to haul away and dispose of contaminated soil.[48]  TPST claimed a lien.  The Court of Appeals reviewed cases from other jurisdictions and then concluded that TPST’s work did not constitute a physical “improvement” to the property.  The reasoning was questionable (since the statute no longer seems to require a physical improvement), but the outcome was probably correct because TPST provided little or no labor at the project site.
   • Henifin Construction, LLC v. Keystone Construction, G.W., Inc.[49] The court held that work to remove wet soil and replace it with new material was an improvement to the property.  In that case, disposal of the soil was incidental to other work on the site.
   • Pacific Industries, Inc. v. Singh.[50] It was held that performing development services such as acquiring permits and negotiating contracts for work to be done did not constitute “improvements” because they were only indirectly connected with the actual work of physically altering the property.  The court also held that development services were not “labor” because they were performed offsite.
   • McAndrews Group, Ltd. v. Ehmke.[51] The court discussed RCW 60.04.031(5), which provides that a lien claimant providing professional services “where no improvement . . . has been commenced” may file a pre-claim notice.  The court held that this provision applied because the claimant’s work, setting survey stakes and control points, did not constitute an improvement to the property because it did not fit into the list of examples in RCW 60.04.011(5) (constructing, altering, repairing, remodeling, etc.).  The surveyor did have a lien, presumably on the underlying land, because no improvement had been built.
   • Colorado Structures, Inc. v. Blue Mountain Plaza, LLC.[52] The court, relying in part on McAndrews, held that digging test pits to find the groundwater level was not an improvement to the property because the pits were not part of anything permanently affixed to the property.[53]
   • Shelcon Construction Group, LLC v. Haymond, 187 Wash. App. 878, 906, 351 P.3d 895 (2015). The contractor’s marking of property boundaries gave rise to a lien because it was “for an immediate purpose of beginning an improvement,” and it was “‘part of a larger, lienable, labor and materials contract.’” (Citation omitted.)

   The foregoing cases reflect the continuing importance of the idea that an “improvement” to property must usually be a permanent structure of some kind.  While the current statute permits lien rights to arise in the absence of any permanent structure, Washington courts are likely to construe those exceptions to the general rule narrowly.

   In general, Washington law requires materials for which a lien is sought to have become a fixture, permanently annexed to the improved property.[54]  The fact that the person ordering the work intends to remove those materials at a later date is not dispositive of whether they have become a fixture for purposes of the lien statute.[55]

   A distinction between improvement and maintenance is likely to have continued vitality under the current statute.  In Howe v. Myers[56] and Michaud v. Burbank Co.[57] liens were not allowed for cultivating agricultural lands, even though the work may have resulted in a higher value for the land.  In both cases, the court noted that cultivation was not in the same class of activities as the improvements listed in the statute.  The Howe court noted that some cases in other states had allowed liens for planting trees or vines,[58] but pointed out that those cases involved “a connected and completed operation,” while maintenance work was indefinite in scope and duration.[59]  Allowing a lien for maintenance work that could occur sporadically over a long period with no clear endpoint would “seriously affect the stability of real estate titles, and result in endless confusion.”[60]

   The improvement/maintenance distinction applies outside the agricultural context, as illustrated in a case from another jurisdiction cited in TPST Soil Recyclers of Washington, Inc.[61] In Haz-Mat Response, Inc. v. Certified Waste Services Ltd.,[62] a Kansas case, the claimant removed hazardous waste contained in tanks used by an industrial company.  The court held that this work did not improve the property.  Instead, removing waste was a maintenance activity because the landowner continually generated similar waste from its ongoing operations.[63]  A Washington court would probably reach the same conclusion.[64]

   The paradigmatic case of an improvement is the construction of a building on vacant property.  The farther the facts depart from this paradigm, the more questionable the lien rights become.  A lien is more likely if the work is of a kind listed in the statute or if the work is an integral part of a plan to construct a physical improvement on the land.

4. The Contract Price.

   The measure of a lien is the “contract price” for the lienable work.[65]  The contract price is defined as “the amount agreed upon by the contracting parties, or if no amount is agreed upon, then the customary and reasonable charge therefor.”[66]

   The contract price for a claimant working for a contractor is determined by the claimant’s contract, without the need for any consent from the owner.  The owner need not even be aware that the claimant has been hired.[67]  It follows from this that, even if the owner has a defense to payment under the prime contract, this defense does not defeat the lien of a person working for the contractor.[68]

   For example, in Henifin Construction LLC v. Keystone Construction, G.W., Inc.,[69] the contractor had increased the lien claimant’s subcontract amount without the owner’s approval.  The owner objected to the lien because it was based on an agreement to which the owner was not a party.  The court held that, once it was established that the contractor was the owner’s construction agent, it followed that the claimant had a lien for its contract price, which was a matter of agreement between the contractor and the claimant; the owner’s consent was not necessary.[70]  This was the case even though the prime contract prohibited any increases to subcontracts without the owner’s approval.  The court noted that this might give rise to a claim of breach by the owner against the prime, but it did not affect the “contract price” measure of the lien claim.[71]

   One consequence of the “contract price” language is that the lien claimant must have a contract to perform the work for which a lien is claimed.[72]

   In the case of lump sum construction contracts, the determination of the initial “contract price” should be straightforward, though there can be disputes about the percentage of work completed, claims for additional work, offsets for defective work, and the like.[73]  In the case of contracts where compensation is based on actual time and materials expended, again the determination of the price should be straightforward, although there may be disputes about whether the work performed has been adequately documented.  In some cases, construction contracts will call for “equitable adjustments” to the contract price, such as in the case of changes to the work caused by circumstances beyond the contractor’s control.  In such cases, the court may need to determine an equitable adjustment, as it would in a non-lien case.  The statute contemplates that if the claimant’s contract does not set a price for her work, then the proper measure is the “customary and reasonable charge” for that work.[74]

5. Work Authorized by the Owner.

   A person performing lienable work to improve real property can claim a lien on the improvement, but only to the extent her work was “furnished at the instance of the owner, or the agent or construction agent of the owner.”[75]  The term “owner” is not defined in the statute, suggesting that the ordinary meaning of the term is intended.  Of course, more than one person can own an interest in real property.  The lien law accommodates this possibility.

   The simplest case is this:  X owns a parcel of land and personally hires Y to build a house on that parcel.  In that situation, Y has a lien on the house and probably on the underlying land as well.[76]  But at least two kinds of complexity can arise.  First, the owner may not personally hire Y; this is discussed in the remainder of this section.  Second, the owner may have only a limited interest in the improvement or the underlying property; this is discussed in Section 7, Property Interests Subject to Construction Liens, below.

   1. Work Authorized by Owner’s (Common Law) Agent.

      The statute contemplates that work may be authorized by the owner’s “agent.”[77]  “Agent” is not defined, so presumably the ordinary meaning is intended.  The common law of agency is outside the scope of this book, but clearly, common law agents have the power to bind their principals under the lien law.[78]  After all, owners who are business entities cannot act except through agents.  Whether or not someone has an express common law agency relationship may be disputed as a matter of fact, but it does not present any distinctive issues under the lien law.

      Lien law does contain some distinctive rules about the implied agency.  For example, if a lease or an executory real estate sales contract requires the lessee or vendee to improve the property, the lessee or vendee will be deemed implied agents of the owner and any work done will support a lien upon the interest of the lessor or vendor.[79]  However, a lien will attach “only if the lessee or vendee has an obligation under the contract, rather than a privilege, to make improvements.”[80]  In other words, by requiring that improvements be made, the owner grants an implied (common law) agency that is recognized by the lien law.

      One consequence of implied (common law) agency is that if a lease (or sales agreement) requires the lessee (or vendee) to make certain improvements on the property, then not only does the lessee (or vendee) subject the property to a lien for the work done, but he also subjects the owner, as principal, to personal liability.[81]  However, the implied agency is limited by the scope of work required by the lease.[82]

      The limits of the implied (common law) agency doctrine were explored in Hewson Construction, Inc. v. Reintree Corporation.[83]  A developer hired a contractor to build sidewalks for a subdivision.  When the developer failed to pay for the work, the contractor sought to impose a lien on the individual lots in the subdivision, arguing that the developer had an obligation to install the sidewalks because it had promised the lot purchasers that the sidewalks would be built.  The contractor argued that the lot owners were, in effect, the developer’s principals.  The court was not persuaded, pointing out that the lot owners did not create the developer’s obligation to build sidewalks; that obligation was a condition of the original plat approval.  Although the lot owners knew the sidewalks were being built and the sidewalks enhanced the value of their lots, these facts did not make the developer into their implied agent for purposes of the lien statute.

   2. Work Authorized by Owner’s Construction Agent.

      Even if the owner and its common law (express or implied) agents do not order any work, a lien may arise from work at the instance of the owner’s “construction agent.”[84]  A construction agent is defined as “any registered or licensed contractor, registered or licensed subcontractor, architect, engineer, or other person having charge of any improvement to real property, who shall be deemed the agent of the owner for the limited purpose of establishing the lien created by this chapter.”[85]  A person meeting this definition can trigger lien rights, even if the usual criteria for a common law agency are absent.  The lien rights triggered by a construction agent are limited to the owner’s property; the owner is not subjected to personal liability.[86]

      On a typical project, the owner first hires an architect to provide a design.  The architect may hire one or more subconsultants for portions of the design (e.g., a structural engineer), and those subconsultants may in turn hire lower tier subconsultants.  Once the design is completed, the owner hires a general contractor to build the project.  The general contractor may hire one or more subcontractors for particular kinds of work (e.g., earthwork), and those subcontractors may in turn hire lower-tier subcontractors.  In this scenario, all designers at every tier and all contractors at every tier are deemed “construction agents” of the owner for purposes of the lien statute.

      The definition of a construction agent includes contractors, subcontractors, designers, or other persons having charge of a property improvement.  In Guillen v. Pearson, the argument was made that a subcontractor was not a construction agent because it did not “have charge” of the improvement.[87]  The court rejected this argument, holding that the subcontractor was a construction agent whether or not it had charge of the work.  The court said that the “having charge” language applied to persons other than contractors and designers who might as construction agents.  It would appear that a construction manager could fit the definition of a construction agent, but no reported Washington case has decided the question.

      The definition of “construction agent” does not include any material suppliers or equipment suppliers.  These have not traditionally been deemed agents of the owner for lien purposes and nothing in the current statute changes this.  Thus, a material supplier working for a construction agent may have a lien, but someone working for the material supplier, either an individual laborer or a lower-tier material supplier, has no lien rights because her work was not performed at the instance of a construction agent.[88]

      The statute says that contractors and subcontractors can be construction agents only if they are “registered or licensed.”[89]  Thus, a person who works at the instance of a contractor or subcontractor should ensure that the contractor or subcontractor is currently registered.  On projects costing more than $5,000, the lien statute requires the prime contractor to post a notice that includes information about its registration; this can be helpful for persons who contract directly with the prime.[90]  Potential lien claimants can check the status of a contractor’s or subcontractor’s registration online at the Washington State Department of Labor and Industries website.

      Relevant registration/licensing statutes include RCW 18.27.020 (registration of contractors), RCW 19.28.041 (licensure of electrical contractors), RCW 18.104.030 (licensure of water well contractors), RCW 18.106.020 (certification of plumbers), RCW 18.160.040 (licensure of fire sprinkler contractors), and RCW 18.270.020 (certification of fire sprinkler fitters).[91]  Persons working for contractors and subcontractors may rely upon a certificate of registration covering at least part of the period when the work is to be done, and the claimant’s lien rights will not be lost if the registration is suspended or revoked without her knowledge.[92]  In addition, a claimant’s lien rights are not affected by the absence, suspension, or revocation of a registration concerning any contractor or subcontractor with which she is not in immediate contractual privity.[93]  So, a claimant needs to check only the person with whom she has contracted — not everyone else up the chain.

      It has been held that a contractor in “substantial compliance” with the registration act can effectively serve as a construction agent for purposes of the lien statute.[94]  This continues to be the rule in Washington, though the contractor registration statute now defines what counts as substantial compliance.[95]

      The foregoing registration/licensure requirement applies only to contractors and subcontractors.  There is no requirement that architects, engineers, or “other person[s] having charge” of a project be licensed to be able to serve as construction agents, though architects and engineers are generally required to be licensed.

6. Contractor Registration.

   The main contractor registration requirements are found in RCW Chapter 18.27.  The registration requirement applies to persons, firms, corporations, and other entities who or which, in pursuit of an independent business, undertake or offer to undertake any of a variety of activities relating to improvements to real property.[96]  We have seen one effect of the contractor registration law:  an unregistered contractor is not (normally) a construction agent able to subject the project property to liens of third parties.[97]  This section examines another aspect of the registration law:  a contractor may not maintain an action for compensation for its work or breach of contract without alleging and proving that it was properly registered at the time it entered into the contract which forms the basis of its claim.[98]  If an unregistered contractor has no right to pursue a debt arising from her work, it follows that she has no right to enforce that debt through a lien claim.

   There are several exceptions from the contractor registration requirements.  Of interest in the context of construction liens is the exception for persons who furnish materials, supplies, or equipment without fabricating them into the work of a contractor — in other words, a material or an equipment supplier.[99]

   One case has suggested that a material supplier who does limited installation work can both escape the contractor registration requirement (on the ground that her materials were not “fabricated into” the structure) and still pursue a lien claim (on the ground that her materials were somehow annexed to the real property).[100]  This case is hard to reconcile with the rule that, to be lienable, materials must become fixtures or be delivered in good faith to become fixtures.[101]

   Although the contractor registration statute states a very broad prohibition of actions by unregistered contractors, the Washington Supreme Court has construed the statute not to apply when one contractor sues another.[102]  However, even if the registration statute does not prevent an unregistered subcontractor from seeking payment from the prime contractor, it may be doubted whether such a subcontractor could pursue lien rights against the owner.  A lien claim would appear to fall outside the recognized “contractor vs. contractor” exemption, though no reported Washington case has decided this question.

7. Property Interests Subject to Construction Liens.

   A construction lien applies in the first instance to “the improvement” on which the lien claimant is working.[103]  In most cases, the lien extends also to the real estate underlying the improvement, to the extent of the interest of the person at whose instance, either directly or through an agent, the work is done.[104]

   In the simplest case, a property owner orders a structure to be built on his land.  Persons performing this work have a lien on the structure and on the “lot, tract, or parcel of land which is improved.”[105]  The court is given discretion to determine how much land should be subject to the lien, though following the statutory language it is usual to subject the entire lot or tract, as defined in relevant title records, to the lien.[106]

   Complexities can arise if the lien claimant works on more than one lot or tract.  The statute provides that if work is done on more than one property at the instance of the same person(s), then the lien claimant “shall” designate in her lien claim the amount due on each piece of property;  otherwise, the lien is subordinated to other lien claims that do focus on particular properties.[107]  This can pose a problem for a supplier of materials, who may not know which materials were used to build on which lot in a subdivision.  The material supplier can perhaps protect herself by delivering materials to the various lots separately.

   There is a special rule for condominiums:  after the declaration has been filed, any liens that arise are against each unit individually.[108]  The statute is not very clear, but it appears that a lien for work upon multiple units can be allocated according to the work done, if that is recorded separately, or according to the relative shares of the affected units.  If a lien claim is recorded and then a condominium declaration is filed, it has been held that the blanket lien automatically converts to a set of “proportional liens” on the various units.[109]

   Complexities can also arise if the person ordering the work does not hold all rights in the real estate.  Of course, if the person ordering the work (either directly or through an agent) has no interest at all in the property, then no lien can arise.[110]  If the person ordering the work has a limited interest, then the lien attaches to that limited interest.[111]  For example, a tenant-in-common may order work that creates a lien on their undivided interest in a parcel of land.[112]  Work done for a person who has purchased land at a sheriff’s sale creates a lien only on the purchaser’s limited rights.[113]

   The extent to which a lien affects property is fact specific, depending upon who ordered the work and what property interest(s) that person possessed.

-----------------

[1] Colorado Structures, Inc. v. Blue Mountain Plaza LLC, 159 Wash. App. 654, 662, 246 P.3d 835 (2011).

[2] See supra, Chapter One, Section 3, The Construction and Interpretation of Construction Lien Statutes.

[3] RCW 60.04.011(4). The reference to employee benefit plans evidently means that if a person performs lienable labor, then her employee benefit plan also has a lien for any unpaid contributions arising from that labor. See also RCW 60.04.011(7), which defines “labor” to include “amounts due and owed to any employee benefit plan on account of . . . labor performed.”  However, see fns. 17 and 18, below, and the accompanying text.

[4] See RCW 60.04.181; discussed in Chapter 5, Section 6, Lien Priority Issues in a Foreclosure Action.

[5] See RCW 60.04.031, discussed in Chapter 3, Section 2, Pre-Claim Notices Under the Lien Statute.

[6] RCW 60.04.011(7).

[7] See Powell v. Nolan, 27 Wash. 318, 341-42, 67 P. 712 (1902).

[8] See Guillen v. Pearson, 195 Wash. App. 464, 472, 381 P.3d 149 (2016) (confirming that individual laborers have lien rights).

[9] Id.

[10] See Willett v. Davis, 30 Wash. 2d 622, 629-30, 635, 193 P.2d 321 (1948) (the court relied on the fact that the challenged items were within the agreed “contract price” and therefore within the scope of the lien).

[11] See Better Fin. Sols., Inc. v. Transtech Elec., Inc., 112 Wash. App. 697, 51 P.3d 108 (2002) (construing the public project retainage lien statute).

[12] See Blue Diamond Grp., Inc. v. KB Seattle 1, Inc., 163 Wash. App. 449, 454-55, 266 P.3d 881 (2011) (offsite construction management was not labor); Pac. Indus., Inc. v. Singh, 120 Wash. App. 1, 7-8, 86 P.3d 778 (2003) (offsite property development work was not labor).

[13] RCW 60.04.011(5)(a).

[14] See Associated Sand & Gravel Co. v. DiPietro, 8 Wash. App. 938, 509 P.2d 1020 (1973) (work on streets and sewers created lien on individual lots); Hewson Constr., Inc. v. Reintree Corp., 101 Wash. 2d 819, 685 P.2d 1062 (1984) (work on sidewalks created lien on individual lots); Northlake Concrete Prods., Inc. v. Wylie, 34 Wash. App. 810, 663 P.2d 1380 (1983) (construction of side sewer under public street created a lien on the private property benefited).

[15] See Baker v. Yakima Valley Canal Co., 77 Wash. 70, 137 P. 342 (1913). The holding of the case was that the lien was ineffective because the claimants had not acted at the instance of the property owner or the owner’s agent. The dictum was that “in order to have a lien for labor, it is not necessary that the labor be performed on the premises where the improvements are actually made” if the lien claimant works directly for the owner or general contractor.  See Id. at 73-74 (holding), 76 (dictum).

[16] See R.H. Freitag Mfg. Co. v. Boeing Airplane Co., 55 Wash. 2d 334, 339, 347 P.2d 1074 (1959).

[17] RCW 60.04.011(4).

[18] See W.G. Clark Constr. Co. v. Pac. Nw. Reg’l Council of Carpenters, 180 Wash. 2d 54, 322 P.3d 1207 (2014) (overruling prior authority, holding that ERISA does not prevent employee benefit plans from pursuing state lien claims).

[19] RCW 60.04.011(13).

[20] See Shelcon Const. Grp., LLC v. Haymond, 187 Wash. App. 878, 906, 351 P.3d 895 (2015).

[21] See RCW 60.04.031(5); see also Zervas Grp. Architects, P.S. v. Bay View Tower, LLC, 61 Wash. App. 322, 254 P.3d 895 (2011) (enforcing lien for offsite architectural services).

[22] See Blue Diamond Grp., Inc., 163 Wash. App. at 455.

[23] RCW 60.04.011(5)(c).

[24] See RCW 60.04.031(5) (discussing professional services giving lien rights “where no improvement . . . has been commenced”).

[25] See DBM Consulting Eng’rs, Inc. v. U.S. Fid. & Guar. Co., 142 Wash. App. 35, 41, 170 P.3d 592 (2007). The holding of the case was that DBM had lost its lien rights by failing to obtain a judgment on the validity of its lien.  The dictum was: “RCW 60.04.021 requires that professional services must result in an improvement to the property in order to give rise to a lien.”

[26]  See McAndrews Grp., Ltd. v. Ehmke, 121 Wash. App. 759, 90 P.3d 1123 (2004). The Court of Appeals held that the claimant’s surveying work gave rise to lien rights even though no improvements were constructed (and the survey was not itself an improvement). The question on remand was the priority of the claimant’s lien rights relative to a later deed of trust.

[27] RCW 60.04.011(4).

[28] See Standard Lumber Co. v. Fields, 29 Wash. 2d 327, 342, 187 P.2d 283 (1947).

[29] See id. at 343-44; see also Portland Elec. & Plumbing Co. v. Dobler, 36 Wash. App. 114, 117-18, 672 P.2d 103 (1983) (it is “well settled” in Washington that materials are lienable if “delivered upon the site for incorporation into [a] building”).

[30] See Westinghouse Elec. Supply Co. v. Hawthorne, 21 Wash. 2d 74, 78-79, 150 P.2d 55 (1944).

[31] See Stimson Mill Co. v. Feigenson Eng’g. Co., 100 Wash. 172, 175, 170 P. 573 (1918) (citing Brace & Hergert Mill Co. v. Burbank, 87 Wash. 356, 151 P. 803 (1915)).

[32] No case holds this directly. But see Nat’l Concrete Cutting, Inc. v. Nw. GM Contractors, Inc., 107 Wash. App. 657, 661, 27 P.3d 1239 (2001) (“materials” for purposes of pre-claim notice under RCW 60.04.031 include only “materials, supplies, or provisions intended to be used on the job which enter into and form a part of the finished product”). Note that some tools may be lienable as “equipment” as discussed below.

[33] See Stimson Mill Co., 100 Wash. at 175-76 (holding that concrete forms, falsework, and the like, if they lack commercial value at the conclusion of the project, are lienable materials). If similar items are provided that continue to have commercial value at the conclusion of the project, it might be best to analyze them as equipment rather than materials.  Small tools are commonly invoiced through a “field overhead” markup on other costs, which may relieve a lien claimant from having to characterize small tools as labor, materials, or equipment.

[34] See Haskell v. McClintic-Marshall Co., 289 F. 405, 412-13 (9th Cir. 1923).

[35] See R. H. Freitag Mfg. Corp. v. Boeing Airplane Co., 55 Wash. 2d 334, 339, 347 P.2d 1074 (1959) (labor performed upon material before delivery is not lienable as a labor lien); cf. Farwest Steel Corp. v. Mainline Metal Works, Inc., 48 Wash. App. 719, 722-26, 741 P.2d 58 (1987) (discussing the distinction between materialmen and subcontractors).

[36] See LRS Elec. Controls, Inc., 153 Wash. 2d 731 (Tyko’s claim was analyzed as separate labor and material liens).

[37] See Farwest Steel Corp., 48 Wash. App. at 729-31 (discussing the private lien statute to elucidate the public retainage statute).

[38] RCW 60.04.011(4).

[39] See Emerald City Elec. & Lighting, Inc. v. Jensen Elec., Inc., 68 Wash. App. 734, 740, 846 P.2d 559 (1993).

[40] See supra, fn. 12.

[41] RCW 60.04.011(5)(a).

[42] See the three bulleted cases in Section 2.a, Labor, above.

[43] See LRS Elec. Controls, Inc., 153 Wash. 2d 731 (Tyko’s claim was analyzed as separate labor and material liens).

[44] RCW 60.04.021.

[45] See, e.g., Dean v. McFarland, 81 Wash. 2d 215, 500 P.2d 1244 (1972) (statute required that work be done to construct a “building” or another structure, so claimant had no lien for carrying away debris from a demolished building).

[46] RCW 60.04.011(5).

[47] 91 Wash. App. 297, 957 P.2d 265 (1998).

[48] TPST apparently performed no work at the project site other than picking up the soil for disposal.

[49] 136 Wash. App. 268, 275, 145 P.3d 402 (2006).

[50] 120 Wash. App. 1, 9, 86 P.3d 778 (2003).

[51] 121 Wash. App. 759, 90 P.3d 1123 (2004).

[52] 159 Wash. App. 654, 246 P.3d 835 (2011).

[53] The lien was also defective because the claimant had not performed the test pit work under contract with anyone, and because the person the claimant was dealing with was not the owner of the property. The claimant might have characterized her efforts as professional services, but she had failed to give timely notice under RCW 60.04.031(5).

[54] See Christensen Grp., Inc. v. Puget Sound Power & Light Co., 44 Wash. App. 778, 781, 723 P.2d 504 (1986) (citing Westinghouse Elec. Supply Co., 21 Wash. 2d 74). Westinghouse Electric Supply held it was enough for a material supplier to show that materials were delivered in good faith for the purpose of becoming fixtures. See Westinghouse Elec. Supply Co., 21 Wash. 2d at 80. The holding of Harbor Millwork, Inc. v. Achttien, 6 Wash. App. 808, 496 P.2d 978 (1972), that items can be lienable even if not permanently annexed to real property, is hard to reconcile with Westinghouse Electric Supply.

[55] See Est. of Haselwood v. Bremerton Ice Arena, Inc., 166 Wash. 2d 489, 210 P.3d 308 (2009) (ice arena improvements were lienable fixtures for purposes of the lien statute, even though designated as personal property in the underlying lease).

[56] 94 Wash. 563, 162 P. 1000 (1917).

[57] 114 Wash. 205, 194 P. 985 (1921).

[58] The planting of trees and vines is now expressly included in the definition of “improvement” in RCW 60.04.011(5)(b).

[59] Howe, 94 Wash. at 565.

[60] Id. at 566.

[61] 91 Wash. App. 297.

[62] 259 Kan. 166, 910 P.2d 839 (Kan. 1996).

[63] Id. at 176. See also Inter-Rail Systems, Inc. v. Ravi Corp., 387 Ill. App. 3d 510, 900 N.E.2d 407 (Ill. App. Ct. 2008) (removal and disposal of waste-filled drums was not a lienable improvement because it was “[not] shown to be part of an overall plan to improve rather than simply maintain the property”).

[64] See Chapter Four, fn. 12, and accompanying text.

[65] RCW 60.04.021.

[66] RCW 60.04.011(2).

[67] But see infra, Chapter Three, Section 2, Pre-Claim Notices Under the Lien Statute.

[68] See Keane v. Thomas B. Watson Co., 149 Wash. 424, 431, 271 P. 73 (1928).

[69] 136 Wash. App. 268, 145 P.3d 402 (2006).

[70] See id. at 274, 275-76.

[71] Id. at 276.

[72] See Colorado Structures, Inc. v. Blue Mountain Plaza, LLC, 159 Wash. App. 654, 664, 246 P.3d 835 (2011).

[73] Construction contracts commonly include provisions for recognizing and pricing changes to the work, including increased payment for added work and decreased payment for deleted or defective work. In determining the “contract price,” a court in a lien case should take these provisions into account, just as it would in a non-lien case.  In addition, the court in a lien case has equitable power to fashion an appropriate remedy.

[74] RCW 60.04.011(2); see Top Line Builders, Inc. v. Bovenkamp, 179 Wash. App. 794, 320 P.3d 130 (2014) (lien permitted for work in excess of original scope, payable in quantum meruit).

[75] RCW 60.04.021.

[76] See RCW 60.04.051 (the parcel of land that is improved is subject to the lien to the extent of the owner’s interest).

[77] RCW 60.04.021.

[78] CKP, Inc. v. GRS Constr. Co., 63 Wash. App. 601, 608, 821 P.2d 63 (1991) (based on unusual facts, the court found that the general contractor was the common law agent of the property owner).

[79] See Hewson Constr., Inc. v. Reintree Corp., 101 Wash. 2d 819, 823, 685 P.2d 1062 (1984) (citing cases).

[80] Id.

[81] See Markley v. Gen. Fire Equip. Co., 17 Wash. App. 480, 485-86, 563 P.2d 1316 (1977) (a lease case).

[82] See Christensen Grp., Inc., 44 Wash. App. at 784 (question of fact whether lease required construction of bank vault; if it did, then vault supplier had a lien).

[83] See supra, fn. 79.

[84] RCW 60.04.021.

[85] RCW 60.04.011(1). A “construction agent” is a legal fiction that extends lien rights to claimants not in contractual privity with the owner or its common law agents.

[86] See Blossom Provine Lumber Co. v. Schumacher, 147 Wash. 369, 371, 266 P. 167 (1928) (construing similar language in former statute).

[87] 195 Wash. App. 464, 477, 381 P.3d 149 (2016).

[88] See Neary v. Puget Sound Eng’g. Co., 114 Wash. 1, 6-8, 194 P. 830 (1921) (individual employees of material supplier had no lien); Farwest Steel Corp., 48 Wash. App. at 729 (lower-tier material supplier had no lien).

[89] See RCW 60.04.011(1) & 60.04.041.

[90] See RCW 60.04.230.

[91] RCW 60.04.041 lists some of these.

[92] Id.

[93] Id.

[94] See Expert Drywall, Inc. v. Brain, 17 Wash. App. 529, 540-42, 564 P.2d 803 (1977).

[95] See RCW 18.27.080.

[96] See RCW 18.27.010.  This section is not a full discussion of the contractor registration statutes. It focuses on the interplay between registration requirements and lien rights.

[97] See supra, Section 5, Work Authorized by the Owner.

[98] RCW 18.27.080.  Failure to register does not make a construction contract void, but it creates a defense. The defense can be waived if not asserted. See Davidson v. Hensen, 135 Wash. 2d 112, 1336-37, 954 P.2d 1327 (1998). Substantial compliance is permitted, but only to the extent defined in the registration statute.

[99] See RCW 18.27.090(8); see also Harbor Millwork, Inc., 6 Wash. App. at 811-14 (claimant manufactured millwork for installation by others, so no contractor registration was required, and claimant was entitled to pursue a lien).

[100] See Harbor Millwork, Inc., 6 Wash. App. at 815-16.

[101] See Westinghouse Elec. Supply Co., 21 Wash. 2d 74.

[102] See Frank v. Fischer, 108 Wash. 2d 468, 472, 739 P.2d 1145 (1987) (purpose of statute is to protect the public, not to protect contractors from each other).

[103] RCW 60.04.021.  Question:  If a carpenter, electrician, and a laborer help to build a house, do their liens attach to the whole house or only to those parts of the house that they built? The statute does not clearly answer this question, though the fact that every lien typically extends to the entire underlying real estate, along with the practical difficulty of determining what part of an improvement has been built by a particular claimant, would seem to favor the first option.

[104] RCW 60.04.051.

[105] Id.

[106] See Standard Lumber Co., 29 Wash. 2d at 349-50 (lien for construction of farm buildings attached to 160-acre parcel); Keane, 149 Wash. at 429 (lien of well digger attached to 17-acre parcel); cf. Caine- Grimshaw Co. v. White, 136 Wash. 98, 101, 238 P. 980 (1925) (lien attached to three contiguous lots that constituted a “single home premises“).

[107] RCW 60.04.131.

[108] RCW 64.32.070.  The statute allows individual owners to release their units from the lien by paying a proportion of the lien claim.

[109] See Rainier Pac. Supply, Inc. v. Gray, 30 Wash. App. 340, 343-44, 633 P.2d 1355 (1981). The court noted that the analysis could be different if the lien claimant worked on a phased project or had separate contracts for different parts of the project.

[110] See Olson Eng’g, Inc. v. KeyBank Nat. Ass’n, 171 Wash. App. 57, 75-76, 286 P.3d 390 (2012) (work for prospective purchaser did not give rise to a lien until the purchase closed); Irwin Concrete, Inc. v. Sun Coast Props., Inc., 33 Wash. App. 190, 196, 653 P.2d 1331 (1982) (work performed for construction manager who had sold the property and was not the owner’s agent did not give rise to a lien).

[111] See Est. of Haselwood, 166 Wash. 2d 489 (lien attached to the improvements but not to the underlying public land); Bremerton Concrete Prods. Co. v. Miller, 49 Wash. App. 806, 745 P.2d 1338 (1987) (lien attached to tidelands leasehold and contiguous upland property).

[112] In re Clallam County, 130 Wash. 2d 142, 148-49, 922 P.2d 73 (1996).

[113] See W. T. Watts, Inc. v. Sherrer, 89 Wash. 2d 245, 248-49, 571 P.2d 203 (1977).