Washington Construction Contracts Guide & FAQs

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Washington Construction Contracts

Washington Construction Contracts Guide

Washington Construction Contracts


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A construction contract outlines each party’s obligations, rights, and remedies on a project. But although the language in specific contract clauses is typically negotiable, Washington has certain rules that govern what the agreement must include — and what is prohibited.

Keep in mind that, while Washington’s rules for construction contract terms are written into state law, the courts determine how strictly those laws should be interpreted — and those interpretations can change.

On this page, you’ll find resources, legal information, and answers to frequently asked questions about Washington’s construction contract and payment terms requirements.

Washington construction contract provisions

While Washington generally allows construction parties to set the terms of their agreement, there are some laws that regulate specific types of contract provisions. Any contract clause that contradicts the law is invalid and unenforceable.

“No lien” clauses

Waiving the right to file a mechanics lien in Washington, also referred to as “no-lien clauses” is an enforceable provision on construction contracts. Furthermore, there is no prohibition against waiving lien rights prior to payment. Contractors should be wary of such provisions before entering into any new construction contract.

Contingent payment clauses

There are two types of contingent payment clauses: pay-if-paid and pay-when-paid.

Pay-if-paid clauses shift the burden of nonpayment to the subcontractor. In other words, cush clauses create a condition precedent (payment from the owner) before the obligation to pay a subcontractor arises. Washington has no statutory provisions, nor any case law that suggests that pay-if-paid clauses are not enforceable. One court discussed pay-if-paid clauses, but ultimately declined to address the validity, as other factors made the analysis unnecessary.

On the other hand, pay-when-paid clauses have been upheld by Washington courts. These types of clauses do not eliminate the obligation to pay, but rather act as a timing mechanism requiring payment within a reasonable amount of time for the contractor to procure payment from the property owner.

Payment timing clauses

Private projects in Washington are not subject to any prompt payment laws. Thus, the timing of payments and interest penalties will be governed by the terms of the contract between the parties.

In contrast, public projects are regulated by prompt payment laws in Washington. Generally, payment to prime contractors must be made by the payment schedule provided in the contract. However, payment must be made no later than 30 days after receipt of an invoice, or receipt of goods/services; whichever is later. All other payments must be made to a party’s subcontractors and suppliers within 10 days of receipt of payment from the higher-tiered party.

Retainage limits

The amount of retainage that can be withheld on private projects in Washington is not regulated by statute. The amount that may be withheld on such projects will be dictated by the terms of the contract between the parties.

On public works projects, the general amount that may be withheld is no more than 5% of each progress payment. However, if the original contract price is less than $510K, the public entity may opt to withhold 10% of each progress payment in lieu of requiring the prime contractor to post a payment bond.

Washington construction contract requirements

Generally, Washington does not require certain provisions to be included in a construction contract, favoring the freedom of contract between the parties. One requirement, however, is contractors licensed by the Washington Dept. of Labor & Industries. Under the licensing laws, a contractor must include their name, address, and registration number in each contract, or face potential administrative fines.

In addition to a contractor’s license registration number, there is another provision that should be included in certain contracts to secure the ability to file a mechanics lien. Any original contractor on either a residential project of 4 or fewer units valued at $1K or more and commercial projects valued between $1K and $60K, must include a Model Disclosure Statement in 12pt, bold font.

Construction Contracts FAQs in Washington

Construction contracts and payment terms are highly regulated in Washington. It can be confusing to figure out when payments must be made, how to make them, and how to best protect your company from expensive problems. Here are some frequently asked questions that come up with construction contracts and payment terms on Washington jobs.

Washington Construction Contracts FAQs

Can you waive lien rights by contract in Washington?

Yes, in Washington there is no specific prohibition on advance lien waivers (i.e. “no-lien clauses“) in a construction contract. Therefore, contractors in Washington should review the terms of their contracts carefully before signing.

• See: Can a construction contract legally use verbiage instructing you that you will not be allowed to file an intent to lien in Washington?

Do I need a written contract to file a Washington mechanics lien?

No, under Washington’s lien laws, there is no specific requirement that a construction contract needs to be in writing to be able to file a mechanics lien claim. However, it’s always a good idea to get your contract in writing.

• Dive deeper: Can a Contractor File a Lien Without a Written Contract? A 50 State Guide

How does Washington treat pay-if-paid and pay-when-paid clauses?

Pay-if-paid clauses and pay-when-paid clauses are both presumably enforceable in Washington construction contracts.

Pay-if-paid

Pay-if-paid clauses, which shift the risk of nonpayment to the subcontractor, are not prohibited by statute, nor has a Washington court specifically addressed the issue. They came close in Western States Paving v. Pease Sons,  but after determining that the breach of contract claim was untimely, the court declined to address the validity of pay-if-paid clauses.

Pay-when-paid

On the other hand, pay-when-paid clauses have been upheld in Washington. The court in Amelco Elec. v. Drake Co. held that the clause in question did not reflect the intent of the parties to create a condition precedent. But rather, “postponed payment for a reasonable period of time after the work was completed, during which [GC] was afforded an opportunity to obtain from [Owner] the funds necessary to pay [Sub].”

Are no-damages-for-delays clauses enforceable in Washington?

A no-damages-for-delay clause is unenforceable in Washington construction contracts, on both public and private projects, under RCW §4.24.360; which states:

Any clause in a construction contract… which purports to waive, release, or extinguish the rights of a contractor, subcontractor, or supplier to damages or an equitable adjustment arising out of an unreasonable delay in performance which delay is caused by the acts or omissions of the contractee or persons acting for the contractee is against public policy and is void and unenforceable.

Can you contract around Washington's prompt payment terms?

Washington’s prompt payment laws only apply to public works projects. Therefore on private projects, the timing of payments will be dictated by the terms of the contract between the parties.

On public works projects, payments by the public entity to the prime contractor must be made according to the payment schedule provided under the contract, but no later than 30 days after receipt of a proper invoice, or receipt of goods/services; whichever is later. All other payments to subs and suppliers must be made within 10 days after the paying party has received payment. These payments may not be modified by contract.

• See: Washington Prompt Pay Act | Payment Help for Public Contractors

Can you contract around Washington’s retainage requirements?

The Washington retainage statutes, similar to the prompt payment provisions, only apply to public works projects. Therefore, on private projects, the amount of retainage that may be withheld will be dictated by the terms of the contract between the parties.

However, retainage on WA public projects is generally limited to 5% of each progress payment, until the project reaches substantial completion. But, if the project is valued under $150K, the public entity may decide to retain 10% in lieu of the general contractor posting a bond.

Does Washington have any specific requirements for construction contracts?

The only real requirement for construction contracts in Washington is that a licensed contractor must include their name, address, and current registration number in their contract documents under RCW §18.27.100. Failure to include a registration number could lead to administrative fines.

• Learn more: Washington State Contractor Licensing Guide

Furthermore, although not required for a valid contract, any original contract for either (a) a residential project of 4 or fewer units valued at $1K+, or (b) a commercial project where the bid price is between $1K and $60K; must include a Model Disclosure Statement (also referred to as a Notice to Customer) in 12pt, bold font as a prerequisite for lien rights. Failure to provide this notice statement is not only fatal to a contractor’s lien rights but can also result in a $500 fine for the first offense.

Deliver the Model Disclosure Statement in Washington… Or Else

How long do I have to bring a breach of contract claim for nonpayment in Washington?

The statute of limitations for a breach of contract claim in Washington varies depending on whether the contract is written or oral.

Written contracts

Claims for breach of written contracts must be made within 6 years of the date of breach under RCW §4.16.040(1).

Oral contracts

Claims for breach of oral contracts must be made within 3 years of the date of breach under RCW §4.16.080(3).

→ Note: Washington’s Breach of Contract Statute of Limitations May Be Shortened by Contract

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