How do we proceed when we are about to file a Notice of Intent to Lien and the GC issues a check to a sub-sub?

3 weeks ago

We issued a Notice of Right to Lien through ZLien at the beginning of a project in 2016. We are a subcontractor.
The project being completed, we submitted a Pay App for retention on 9/27/2019.
We still had to pay one sub-sub.
On 11/19/2019,the General Contractor issued a 2-pty check to us and the sub-sub.
We are reluctant to sign this check, concerned that doing so will cause us to issue a new Pay App for the balance of the retention with the 45-day wait on the right to lien beginning again. If that happens, will the Washington State law requiring payment application within 90 days of completion kick in and preclude filing a Notice of Intent to Lien? Even if it does not, we want to file a Notice of Intent to Lien now, not 45 days from now. How do we proceed?

Senior Legal Associate Levelset

There’s a lot going on with this question – joint checks, pay apps, Notices of Intent to Lien, and lien deadlines. Let’s look at some topics separately.

Joint checks

A contractor generally can’t force joint checks onto their subcontractor unless the contract allows for the use of joint checks, or unless their subcontractor agrees to the use of joint checks. So, note that a subcontractor may be entitled to push back when joint checks are requested. Granted, there’s always the possibility that the contractor would take issue with that and a larger dispute may take place.

For more joint check discussion:

– What Is A Joint Check Agreement?
– Joint Check Agreements: Most Common Misunderstanding And How It Can Burn Your Company

Is a Notice of Intent to Lien Required?

It might just be a vernacular issue here, but it’s important to note that Washington doesn’t have a Notice of Intent to Lien requirement for public or private projects. So, regardless of the project type, a claimant can file their mechanics lien claim (against the property, for private projects) or Notice of Lien (against project funds, for public projects) without first sending a Notice of Intent to Lien. Though, it is a good idea to send that notice anyway.

For further discussion on notices of intent:

– What Is a Notice of Intent to Lien and Should You Send One?
– Do I Need to Send a Notice of Intent Before Making a Construction Bond Claim?

Mechanics lien, bond claim, and Notice of Lien deadlines

Based on the timeframes described above, it sounds like you might be referring to either the mechanics lien deadline or the Notice of Lien deadline. As mentioned above, a mechanics lien will generally be applicable for privately owned projects. But, on public works jobs, a mechanics lien typically won’t be available – and a bond claim or Notice of Lien (on funds) may be available instead.

Let’s look at the deadlines for each claim separately. These resources may be helpful, too:

– The Difference Between Public and Private Projects
– What’s the Difference Between a Lien Claim and a Bond Claim?
– Lien on Property or Lien on Funds? It’s Two Different Collection Tools

Washington’s mechanics lien deadline

Washington mechanics lien claims will only be available on privately-owned construction jobs (like commercial or residential work). The deadline to file that claim will be 90 days from the last date when labor or materials were furnished to the projectSo, the timeframe isn’t based on a pay application or any other timing mechanism. Rather, it’s based on when work was actually provided.

For more on Washington mechanics liens, including the lien deadline: Washington Mechanics Lien Guide and FAQs.

Washington’s payment bond claim deadline

If there’s a payment bond on the project, which is the case for most Washington public works projects, then a payment bond claim could help to recover payment. The deadline to make such a claim is generally 30 days from the completion of the project and acceptance of the project by the public agency. So, the timeframe for making a claim is unaffected by when pay applications are sent – rather, it’s based on overall project completion.

Washington’s Notice of Lien (on funds) deadline

A Notice of Lien can also help to recover payment on public jobs by placing a lien on the project funds rather than the project property, itself. The deadline for making a Notice of Lien claim with the public agency will be 45 days from the completion of the project – though, it’s generally a good idea to make the claim sooner than later. Otherwise, if all contract funds have been released to the contractor, then there may not be much in the way of funds to place a lien on.

For more information on Notice of Lien or payment bond claims: Washington Bond Claim Guide and FAQs.

Deadlines, generally

Finally, keep in mind that deadlines are just that – deadlines. The 30, 45, or 90-day marks act as due dates, and they identify the last date during which a valid claim can be filed. But, a claim can (and typically should) be filed well before the deadline comes.

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