Construction professionals must be proactive when it comes to protecting their lien rights. In the construction industry, part of being proactive is taking all the necessary steps to ensure that your lien rights are preserved all throughout a project.
In Washington, certain construction parties have to serve a preliminary notice called Notice to Customer, also known as Model Disclosure Statement Notice to Customers, to ensure that their lien rights are protected. Failing to serve this very important notice will invalidate their potential mechanics lien, which is why every construction participant must familiarize themselves with this Washington preliminary notice.
This guide will answer your questions about the Washington Notice to Customer and will lay out the steps that you need to follow in order to serve this notice properly.
What is a Washington Notice to Customer or Model Disclosure Statement Notice to Customers?
A Washington Notice to Customer – or Model Disclosure Statement Notice to Customers – is a preliminary notice that a construction participant serves on their customer or client. It is a statement that contains information regarding the bond posted on a project, as well as the warnings and rights that the customer – typically the property owner – must know about.
Who must serve a Washington Notice to Customer?
A Washington Notice to Customer must be served by general contractors who meet either of the two criteria:
- working on residential projects
- working on non-residential projects and the contract is worth between $1,000 and $60,000
When to serve a Washington Notice to Customer
According to RCW 18.27.114(1), a Washington Notice to Customer must be served prior to starting work on a project. This means that you must serve a Washington Notice to Customer before you start furnishing any type of service, including labor and materials, to the project.
What happens if you fail to serve a Washington Notice to Customer?
Serving a Washington Notice to Customer is mandatory for certain general contractors, specifically those who are working on residential projects and those who are working on non-residential projects for a contract that’s worth more than $1,000 but less than $60,000. This implies that if you are one of the parties required to serve this preliminary notice, failing to do so will revoke your lien rights over a project.
A number of general contractors in Washington, unfortunately, make the mistake of not fulfilling this requirement. Only when a payment issue comes up and they try to file a mechanics lien do they realize that they have essentially forfeited their lien rights by not serving a Notice to Customer or a Model Disclosure Statement in Washington.
You must, therefore, serve a Washington Notice to Customer before you begin working on a project if you want to preserve your right to file a mechanics lien. Aside from losing your lien rights, you might even have to pay fines and penalties simply for not serving this very important preliminary notice.
How to serve a Washington Notice to Customer
1. Prepare your Washington Notice to Customer form
The Washington Model Disclosure Statement Notice to Customers must include the following details:
- Your registration number
- The amount of bond that you posted
- The expiration date of your registration number
- The total amount of your contract for the project
Washington has a prescribed form for the Notice to Customer. You are advised to stick to the state’s prescribed form, so make sure that your Notice to Customer Disclosure Statement is substantially in the following format:
When preparing the form, make sure that you follow these guidelines:
- Use a 12-point font size
- Ensure that the appropriate statements are properly written in bold and capitalized, as prescribed in the form above
- Leave a space at the bottom for your client to sign
- Prepare at least 2 copies of the Notice to Customer form
2. Serve the Notice to Customer on the property owner
There is no prescribed method for serving the Notice to Customer. However, you must have your client or customer sign the Notice to Customer form, so it is best practice to deliver this preliminary notice in person and have them sign the document in front of you.
Note that the Notice to Customer in Washington must be served before you start working on a project. Also, note that you must have at least two copies of the Notice to Customer and that the property owner signs all copies that you have. You must keep at least one signed copy of the Notice to Customer for your own records.
3. Keep a signed copy of your Notice to Customer for the next three years
Washington state laws require all applicable general contractors to keep a signed copy of their Notice to Customer for at least three years. The Department of Labor and Industries may ask you to produce a signed copy of the Notice to Customer, and you must be able to do so within the three-year period after you serve this preliminary notice.
Note that your copy of the Notice to Customer Disclosure Statement must be signed by your client. Failing to produce a signed copy of the Notice to Customer could subject you to fines, so make sure that you do not forget to fulfill this step.
Best practices in serving a Washington Notice to Customer
1. Stick with the state-prescribed Notice to Customer form
It is best practice to use the state-prescribed Notice to Customer form shown above and simply fill in the necessary information as required. Include all the required statements, and make sure to capitalize all the important lines.
2. Get the property owner to sign at least two copies of your Notice to Customer
Give at least 2 copies of the Notice to Customer form to the property owner and get them to sign both forms. This way, you will be able to keep the second copy for yourself, as required by the law. Note that keeping a signed copy of the Notice to Customer is not done purely for recordkeeping purposes – you are also obligated by law to keep a signed copy of this preliminary notice.
3. Find a secure place to keep your signed copy of the Notice to Customer
You must keep a signed copy of the Notice to Customer for at least three years, so make sure that you find a safe spot to store this document. Remember that the Department of Labor and Industries can at any time ask you to produce the signed Notice to Customer, even when the project has already been completed. Ensure that you store your copy in a safe and accessible location.
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