What does it mean for us as a business if a customer doesn't sign the Model Disclosure Statement that was sent out by Levelset?

4 months ago

We are new to Levelset, and wanted to know if the model disclosure was something that could be done through our work authorization, or if it had to be it’s own document. I do know that it is required to present one in Washington state, but we just need some clarification on what’s acceptable as far as delivering the statement itself. Secondly, if it is sent out and not returned signed by the customer, what does that mean for our business? What repercussions are we at risk of?

Chief Legal Officer Levelset

Washington’s disclosure statement requirement can be confusing in many respects. As a quick overview, the disclosure statement is required to be provided by project participants contracting directly with the property owner on residential projects of $1,000 or more, and commercial projects between $1,000 and $60,000 in value. This notice is required to be provided prior to beginning work.<br><br>

There are additional requirements relate to the notice, as well. The notice is required to be signed by the property owner (which provides proof that the notice statement was delivered),. And, “[t]he contractor must retain a signed copy of the disclosure statement in his or her files for a minimum of three years,” and produce a copy if requested by the Department of Labor and Industries.<br><br>

Since this statement is required to be furnished to the property owner prior to the commencement of work, many contractors in Washington include the model disclosure statement in their contract itself, or as an exhibit thereto. This is perfectly acceptable, as there is no requirement that the notice be delivered as a separate stand-alone document.<br><br>

The failure to comply with the model disclosure requirements can result in significant problems for Washington construction participants. Not only does a failure to comply with the requirements preclude the ability to file a valid and enforceable mechanics lien, it also opens up the contract to being fined by the Dept. of Labor and Industries, and potentially to criminal penalties, as well.<br><br>

There would be an interesting argument to be made if the contractor could prove actual receipt of the notice by the property owner, but did not receive a signed copy back. However, since strict compliance with the requirements is mandated and the statue requires “a signed copy” of the notice be retained, it is probably not a good idea to push one’s luck and rely on mere delivery of the notice.

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