What can I do if I am not being paid for my work? Here are 5 steps to significantly increase your chances of getting paid in Washington.

How can you get paid for the labor, materials, or equipment you have supplied to a customer who refuses or is unable to pay? If you are involved in almost any sort of home improvement or construction, you most certainly have encountered the ever-unsatisfied customer that is underpaying you or refusing to pay anything. If you have not been paid for such work, you can file a mechanic’s or materialman’s lien. This lien is basically an encumbrance on the title of the property where the work was performed—think bank mortgage that must be paid upon a sale of the property or foreclosure.

The Washington mechanic’s lien is a powerful remedy specifically designed to recover payment for labor, professional services, materials, and equipment that have improved the value of real property. Because it also attempts to protect property owners from frivolous liens, it places certain requirements on the claimant, making the process somewhat technical and complicated.

Filing the lien itself is simple enough and sometimes just that encumbrance alone worries the customer and causes them to pay up. If you file the lien on your own, you will have to go to the county auditor and provide the following information:
 
  • Your name, phone number, and address;
  • The first and last date on which the labor, professional services, materials, or equipment was furnished;
  • Name of the person who owes the debt;
  • Street address and legal description of property to be charged with the lien;
  • The dollar amount for which the lien is claimed.

However, actually enforcing the lien and recovering your money requires some steps to be taken by you even before you filed the lien. To help you be more prepared for the next time that a customer folds their arms or throws up their hands in response to your bill, I provide a checklist of 5 things you should do before this happens to you to help you enforce your lien. Hopefully you will avoid the common scenario where the attorney informs you that you will not be able to collect because you failed to follow some basic steps prior to even starting the work. If you follow these basic steps, chances of you successfully collecting your money substantially increase.

1. Have the Original Scope of Work in Writing. Yes, this sounds basic. But even the best relationship can blow up when unexpected financial difficulties arise, and when that happens it is important to have your labor or services described in writing. Even a simple written estimate form that you supply during your bid can go a long way. However, having a signed written agreement (does not need to be complex) describing in as much detail as possible the work that you will be performing will significantly increase your chances. This avoids many issues of proof when you will be foreclosing on your lien. Some companies have their attorney prepare a standard form agreement with fill-in boxes for each new customer. Although a tailored agreement is best, even something like a basic fill-in agreement would help you and your attorney collect your money.

2. Have Change Orders in Writing. If the customer requests additional work or a change in the original work, it is crucial to have a written change order form signed. Again, a simple, written and signed change order will significantly increase chances of recovery. This is important because courts have ruled that a failure to prove entitlement to a change order amount means that the lien was excessive and have denied the entire lien amount as a result. See more in number 3 below. At the very least, get one of those Carbonless Paper notebooks—handwrite what the change order is and have the customer sign. It sounds simple, but I have seen this exact issue prevent a full recovery for a client in a basic construction project.

3. Always Give Notice to the Owner or General Contractor that You May File a Lien. This is probably the most important point of this article. In order to successfully enforce the lien, you must give proper and timely notice to the customer. You should give this notice prior to starting any work. If you provide the notice after you started work, you will only be allowed to recover for the work done 10 or 60 days before you gave the notice. That’s right—if you wait for them to pay before you give the notice and more than 10 or 60 days passes (depending on the type of project) from the date you last worked, you may be barred from enforcing your lien. This is so even if you spent thousands of dollars on labor and materials. There are some limited exceptions to this notice requirement, but the best practice is to provide the notice for all jobs—it is easy and can save you thousands of dollars. Your attorney can supply the proper form and should be consulted for the types of projects that require a special notice. As you can probably guess, when a client comes in to recover payment for their work after attempting to do it on their own, their attorney may not be able to help if the proper notice was not provided. If in doubt, provide the written notice—there is no penalty for that.

4. Do Not File a Lien without Verifying what Costs are Allowed to be Included. This may sound like common sense, but the actual filing of the lien is not difficult, and so many people file it without consultation. That may be fine in a simple, clear-cut situation. However, filing a lien for certain costs related to the work performed (e.g., lost profit, overhead, delay costs, late charges) or for an amount that cannot be easily proven may result in the lien being labeled an “excessive lien.” This label carries significant penalties. Such penalties range from losing lien rights entirely to having to pay monetary penalties, including the customer’s attorney fees and defense costs. Thus, reviewing what costs will be okay to include in the lien and, as discussed above, having the original contract and change orders in writing is extremely important. As an example, in a home renovation case, a contractor filed a lien for the original work and for additional work that the customer requested. Because the contractor included charges for delay (customer delayed the project for two years) and was not able to prove the customer’s requests for additional work (see 2 above!), the court ruled that the lien was excessive and denied the entire lien amount, including for the original work performed. Bottom line? Do not simply file the lien on your own for an amount that includes interest or other charges without consulting that it is okay in that case. Verify that all your claim amounts are allowed so that your entire lien is not later dismissed and you do not end up paying the customer on your own collection effort against them.

5. Make Sure to Enforce the Lien within 8 Months of Filing. Lastly, if you have already filed a lien and the customer has not paid, you must file a lawsuit to enforce the lien. You must file the legal action within 8 months of filing the lien or else the lien will expire. You will want to contact an attorney in advance of this 8 month deadline. Do not wait till the last minute as that will increase your costs and can impact the result.

Following the above basic steps will significantly increase your chances the next time you attempt to collect from a customer who has not paid you.

I hope you find this article helpful. Please remember that this is general advice that may or may not apply to your situation. As a general rule, it is always the better practice to consult a qualified attorney practicing in this area of law to review the specific facts prior to you taking any sort of legal steps on your own that may entail unintended consequences.

– Ruvim V. Kuznetsov

If you would like to discuss these matters with Mr. Kuznetsov or another attorney at CMDG, please contact our office to set up an appointment.

CMDG is pleased to provide articles on its website as a service to its clients and visitors. These articles are not intended as legal advice. Please be aware that the law differs depending on the circumstances of an individual case and changes over time.