By Brent Carpenter, Attorney
This article was originally published in the February 24, 2020 edition of the Daily Journal of Commerce Oregon.
Construction contractors and subcontractors know how important it is to protect their lien and bond claim rights, as they often provide vital payment security. Additionally, if a construction contract does not contain an attorney fee provision, a lien or bond claim may entitle a contractor to recover these fees, which can be a powerful motivator for payment. Further, lien and bond claims can provide a source of payment in cases of general or prime contractor insolvency. But what contractors may not know is how different the steps for preserving those rights are in Oregon and Washington, and for Federal projects. To help contractors avoid any unpleasant surprises, this article outlines the major differences in Oregon, Washington, and Federal lien and bond procedures.
For private projects in both Oregon and Washington, a contractor may be required to provide several pre-claim notices, depending on the type of project and services the contractors are providing. Pre-claim notices are perhaps the most complicated part of the lien procedure, and while a full recitation of what notices are required in every situation is beyond the scope of this article, the basic notice deadlines are as follows.
In Oregon, a residential contractor is required to provide an Information Notice to Owners when the parties execute their contract. In Washington, however, a contractor working on residential and small commercial projects must provide a Notice to Customer before starting construction. In Oregon, depending on with whom the contractor has a contract and what combination of labor, materials, and/or equipment the contractor provides, the contractor may be required to provide a Notice of Right to Lien to the owner and lender within eight days of first providing labor, materials, and/or equipment to the project. Whereas in Washington, material and equipment suppliers who do not contract directly with the owner must provide a pre-claim notice to the owner within 10 days of first supplying material and/or equipment to new construction of a single-family residence or within 60 days in the case of commercial projects or remodels of residences.
As for the lien itself, in Oregon, a contractor must record a lien within 75 days of the last day of provided labor, materials, and/or equipment to the project. In Washington, this deadline is 90 days. After recording the lien, in Oregon, a contractor must provide a notice of recording of lien and enclose a copy of the lien to the owner and lender within 20 days of recording. In Washington, a contractor must provide the notice and copy of lien within 14 days of recording it. In Oregon, a contractor must provide notice of their intent to foreclose the lien to the owner and lender within not less than 10 days before filing an action in court to foreclose the lien. This notice is typically combined with the 20-day notice referenced above and is commonly referred to as a “20/10” notice. Washington does not require a similar notice. In Oregon, a contractor must file an action in court to foreclose its lien within 120 days from the date the lien was recorded. In Washington, the action must be filed within eight months of recording.
For public projects in Oregon, no pre-claim notice is required to preserve a bond claim. However, in Washington, a subcontractor or supplier who does not contract directly with the prime contractor (i.e., a second-tier subcontractor or supplier) must provide a pre-claim notice to the prime contractor within 10 days of first providing labor, materials, and/or equipment. On Federal public projects, a second-tier subcontractor or supplier must provide a pre-claim notice to the prime contractor within 90 days of the date they last provided labor, materials, and/or equipment.
In Oregon, a subcontractor or supplier must send a notice of bond claim to the prime contractor and the contracting agency within 180 days of the date they last provided labor, material, and/or equipment to the project. In Washington, a subcontractor or supplier must send a notice of bond claim to the contracting agency within 30 days of acceptance of the work by the public body. On Federal projects, no notice of claim is required for first-tier subcontractors or suppliers, though those on the second-tier are required to send the notice discussed above. No post-claim notices are required for Oregon, Washington, or Federal bond claims.
In Oregon, a subcontractor or supplier must file an action in court to foreclose its bond claim within two years of the date it last provided labor, materials, and/or equipment to the project. In Washington, a subcontractor or supplier should file an action in court to foreclose their bond claim within the four-month limitations period contained in the retainage lien claim statute, discussion of which is outside the scope of this article. For Federal bond claims, a subcontractor or supplier must file an action to foreclose their bond claim no later than one year after they last provided labor, materials, and/or equipment to the project.
If you perform certain types of work repeatedly, your counsel can create a packet of notices for you to use on each project, ensuring your rights are preserved. While this would require an initial investment in attorney fees, it would be well worth the expense to protect your right to payment.
Thank you for your interest in this article. The information contained in this article is for the general interest of our readers and should not be regarded as legal advice. If you have questions, or to obtain more information on this topic, please contact an attorney in our construction practice group.
Brent Carpenter is a shareholder at Jordan Ramis PC and focuses his practice on construction law. Contact him at 503-598-7070 or firstname.lastname@example.org.