My question is regarding Pre-lien notices for Sub-Tiers on a project in WA. We have a sub contractor that has around 34 sub-tiers and 8 of them have filed Pre-Lien notices do we need to collect all 34 or just the 8?

2 weeks ago

My question is regarding Pre-lien notices for Sub-Tiers on a project in WA. We have a sub contractor that has around 34 sub-tiers and 8 of them have filed Pre-Lien notices do we need to collect all 34 or just the 8?

Senior Legal Associate Levelset

There’s generally no requirement for a contractor or other top of chain party to collect preliminary notice from every subcontractor, sub-subcontractor, or supplier performing work on their project. However, it’s probably a good idea to gain as much knowledge as possible on who’s all performing work – and preliminary notices are an excellent vehicle for communicating and creating visibility.

Preliminary notices go a long way to promote visibility and communication on a construction project. And, for general contractors or other top-of-chain parties, it can be really helpful to have a full view of who all is working on the project. With that information in hand, it’s much easier to keep tabs on the project from top to bottom, and it will be exponentially easier to contact those parties if problems start popping up – be those payment disputes or problems with the work itself. The line of communication these notices enables can be invaluable.

Perhaps most importantly, though, when a contractor has the name and contact info of every party who’s performing work on their job, it will be far easier to collect lien waivers from everyone involved on the project. With the increased visibility, contractors can more confidently release payments down the chain knowing they won’t end up having to pay twice or having to fend off a flurry of payment claims.

I hope that information was helpful! Levelset has previously discussed the above ideas in several posts – so, if you’re interested in the benefits of collecting preliminary notices, here are some great resources:
(1) The Top 5 Reasons You Should Love to Receive Preliminary Notices;
(2) How to Decrease Payment Risk for Construction Projects
(3) Construction Industry Communication Is Weak | Notices Will Make it Stronger

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Anonymous

No it did not answer my question. If a sub or sub-tier does not file a pre-lien notice is the prime-contractor obligated to collect a monthly lien waiver from them as they are not threat to the job because they did not file their pre-Lien? Please advise

Senior Legal Associate Levelset

I apologize! I didn’t realize you were asking about waivers since the original question had only mentioned pre-liens. And, before going further, I should note that I’m not able to provide you with legal advice – though I can provide some information that should be helpful here.

Generally, there’s no legal requirement that waivers be collected from anyone – regardless of whether any preliminary or pre-lien notices are sent. Washington law is pretty silent on lien waivers, so businesses are more or less free to submit and collect them as they see fit. Though, it’s possible that an owner or lender would create their own waiver requirements, and they may be able to force those requirements on their contractor in the contract or by withholding payment until waivers are in hand.

Practically speaking, it makes sense for a contractor to collect lien waivers from all parties who are entitled to lien rights. So, it’s a good idea to collect lien waivers all the way down the payment chain.

With that principle in mind – recall that Washington subcontractors must send Notice to Owner in order to preserve the right to lien. However, subcontractors can send late notice and still have partial mechanics lien protection. Plus, even if a subcontractor fails to send preliminary notice, having a lien waiver collected from that sub will be helpful in the event that they ultimately decide to file a mechanics lien anyway. While failure to send notice may be fatal to a claim, possession of an actual document which explicitly waives the right to lien is nice to have.

So, merely collecting lien waivers from parties who have sent a Notice to Owner is typically not a good idea in Washington. The best way to provide the most protection is to request lien waivers from any party that might ultimately end up filing a mechanics lien claim. But again – Washington owners and contractors are generally able to collect waivers however they see fit since lien waivers aren’t really regulated in the state.

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