Washington notice to real property lender, free and word for word from RCW 60.04.221

The window opens on day six and is gone after day thirty-five

Both halves of RCW 60.04.221(1) hang off the same date: the date required for payment by your contract, invoice, employee benefit plan agreement, or purchase order. Five days past that date you become a claimant who may use this section. Thirty-five days past that same date the authority runs out.

So the useful life of this notice is thirty days long, and it starts running before you are likely to be worried. On a net thirty invoice dated the first of the month, payment is required on the last day of that month, the notice becomes available five days into the next one, and the last day to send it is thirty-five days after the due date rather than thirty-five days after you started chasing.

The statute gives no extension and no tolling. There is no version of this that gets longer because the prime contractor kept promising, because the office was closed, or because you were waiting on a change order to be priced. A notice sent on day forty is not a late notice, it is a notice sent without the authority of the section, and subsection (8) has something to say about notices sent under purported authority of this section.

The practical consequence is that this is a form you get ready before you need it. The answers do not change from job to job except for the amount and the dates, so the fastest way to use the thirty day window is to have the sheet already filled in and only the figures left open.

It only works where there is no payment bond covering half the financing

The section does not apply to every construction loan. Its opening sentence limits it: any lender providing interim or construction financing where there is not a payment bond of at least fifty percent of the amount of construction financing shall observe the following procedures and the rights and liabilities of the lender and potential lien claimant shall be affected as follows.

That is a threshold worth checking before you spend the window. On a bonded job of any size the bond is usually the better route anyway, and on a job where the payment bond covers at least half the construction financing this section never engages for anyone.

The lender also has an escape after the notice arrives, and it is in subsection (5). Alternatively, the lender may obtain from the prime contractor or borrower a payment bond for the benefit of the potential lien claimant in an amount sufficient to cover the amount stated in the potential lien claimant's notice. If that happens the lender has complied. You are not being ignored, you are being bonded, and the bond is for your benefit by name.

Neither of those is a reason to skip the notice. A bond obtained after your notice exists because of your notice.

The lender holds back, but only what has not already gone out

Subsection (5) is the whole point of the form. After the receipt of the notice, the lender shall withhold from the next and subsequent draws the amount claimed to be due as stated in the notice.

Then it puts a ceiling on that duty, and the ceiling is the reason the delivery date matters. The lender shall be obligated to withhold amounts only to the extent that sufficient interim or construction financing funds remain undisbursed as of the date the lender receives the notice. Money already paid out is gone. Money not yet drawn is catchable. Every day the notice sits unposted is a day the fund it points at can get smaller.

That is also why the amount on the form is the amount claimed to be due as stated in the notice rather than a running balance. The lender is holding against a number you wrote down, not against an account it audits, which is the same reason subsection (8) makes an excessive number expensive for you rather than for the bank.

Once money is withheld it does not come loose easily. Subsection (6): sums so withheld shall not be disbursed by the lender, except by the written agreement of the potential lien claimant, owner, and prime contractor in such form as may be prescribed by the lender, or the order of a court of competent jurisdiction. All three signatures, on the lender's own form, or a judge. In practice that is what brings the prime contractor to the table.

Three addresses at the top, because three people have to get it

The form is addressed three ways before it says anything, and that is not formatting. Subsection (3) requires the notice to be given in writing to the lender at the office administering the interim or construction financing, with a copy given to the owner and appropriate prime contractor.

The lender block on the form asks for the bank in three pieces, the name, then the administrative office street address, then the city, state and ZIP, because the statute prints it that way and because the office is the part people get wrong. A construction loan is administered by a particular department, and a notice delivered to a retail branch has been delivered to the bank in a loose sense and to nobody in the sense the statute means.

The second and third blocks are the owner and, in the statute's own words, the prime contractor if different than owner. On a job where the owner is acting as their own general contractor those two are the same party and one copy answers both. On every other job they are two different people and both copies are part of giving the notice, not a courtesy.

Delivery is certified or registered mail, or personal service with evidence of delivery in the form of a receipt or other acknowledgment signed by the lender, owner, and appropriate prime contractor, or an affidavit of service. The statute sets those side by side as equals, so choose the one that will still have proof attached to it a year later.

What the statute requires the notice to say, line by line

Subsection (4) lists four things, and the printed form carries each one, which is why the form is worth using instead of a letter that says the same thing in your own words.

Paragraph (a): the person, firm, trustee, or corporation filing the notice is entitled to receive contributions to any type of employee benefit plan or has furnished labor, professional services, materials, or equipment for which a lien is given by this chapter. On the form that is the check box line, four boxes covering labor, professional services, materials and equipment, plus the rules underneath where the work is described.

Paragraph (b): the name of the prime contractor, common law agent, or construction agent ordering the same. That is the which was ordered by line, with the address given for that person on the rule below it.

Paragraph (c): a common or street address of the real property being improved or the legal description of the real property. The form asks for the street address, and a street address is enough here. Unlike the claim of lien under RCW 60.04.091, this notice never has to carry a legal description unless the property has no street address.

Paragraph (d): the name, business address, and telephone number of the lien claimant. The name and business address are on the face of the form. The telephone number is not printed as its own rule, so put it with the business address where a reader will find it.

The section closes that list with a sentence worth knowing: the notice to the lender may contain additional information but shall be in substantially the following form. You may add to it. You may not send something that is not recognizably this.

What a lender loses by ignoring it, and why that is unusual

Start with the rule this section is an exception to. RCW 60.04.226 says that except as otherwise provided in RCW 60.04.061 or 60.04.221, any mortgage or deed of trust shall be prior to all liens, mortgages, deeds of trust, and other encumbrances which have not been recorded prior to the recording of the mortgage or deed of trust to the extent of all sums secured by the mortgage or deed of trust regardless of when the same are disbursed or whether the disbursements are obligatory.

Read what that gives a construction lender. It records first, and everything recorded afterward sits behind it, for every dollar it secures, no matter when those dollars are actually handed over. Two sections in the whole chapter cut into that, and this form is how one of them is triggered.

Subsection (7) is the penalty: in the event a lender fails to abide by the provisions of subsections (4) and (5) of this section, then the mortgage, deed of trust, or other encumbrance securing the lender shall be subordinated to the lien of the potential lien claimant to the extent of the interim or construction financing wrongfully disbursed, but in no event more than the amount stated in the notice plus costs as fixed by the court, including reasonable attorneys' fees.

Subordinated, not voided, and capped. The lender does not lose its security, it loses its place in line, and only for as much as it wrongly paid out, and never for more than the number you wrote on the notice. That cap is another reason the amount on the form is worth getting right rather than rounding up.

The form's own IMPORTANT band is the short version of all of this: failure to comply with the requirements of this notice may subject the lender to a whole or partial compromise of any priority lien interest it may have pursuant to RCW 60.04.226. It is printed on the sheet because a loan officer who does not know this section needs to be told what is at stake before deciding whether to act on the letter.

Two rules on this form the statute never explains

The site's rule is that a statutory form is reproduced as the legislature printed it, including the parts that are awkward, so two rules on this sheet are left empty rather than guessed at.

The first is in the title line. The form's second line reads Authorized by RCW and then a blank, inside the parentheses. The answer is RCW 60.04.221, the section printing the form, and there is no other candidate. It is still the statute's blank rather than something the sender knows and the statute does not, so the form draws the rule and this page tells you what goes on it. Writing it in would mean the printed form is no longer the statute's words, which is the one thing this site does not do.

The second is under the date. The statute prints two short rules of roughly equal width, the first ending in a comma, sitting directly beneath the line where the amount became due, and it never says what they are for. In the state's own rendering they are a centered two cell table, which is how a city and state of signing is usually typeset, and that is almost certainly what they are. Almost certainly is not certainly, so both are printed as blanks with the comma between them and no caption is invented. Fill them in as city and state if that reading suits your job, or leave them.

The check boxes are the third thing printed exactly as drawn. Four pairs of parentheses covering labor, professional services, materials and equipment, to be ticked by hand. A builder that turned them into fields would print an underscore rule inside each pair of parentheses, which is not a check box, and this site does not add to a statutory form what the statute did not ask for.

Sending one you should not have sent

This notice reaches into a live construction loan and stops money moving, so the legislature balanced it with a liability running the other way. Subsection (8): any potential lien claimant shall be liable for any loss, cost, or expense, including reasonable attorneys' fees and statutory costs, to a party injured thereby arising out of any unjust, excessive, or premature notice filed under purported authority of this section.

Three words to weigh before sending. Unjust, meaning you were not owed it. Excessive, meaning the number is too big. Premature, meaning you sent it before the five days ran. The last one is the easiest to trip over and the easiest to avoid, because the cure is to count from the date payment was required and wait.

The same subsection carves out the other Washington notice by name: the word Notice as used in that subsection does not include notice given by a potential lien claimant of the right to claim liens under this chapter where no actual claim is made. A notice of furnishing under RCW 60.04.031 is not a claim and does not carry this exposure. This one does.

There is also a fast way for the other side to test it. Subsection (9) lets any owner of the property, or the contractor, subcontractor, lender or lien claimant who believes the claim that underlies the notice is frivolous and made without reasonable cause, or is clearly excessive, apply by motion for an order commanding you to appear at a time no earlier than six nor later than fifteen days from service and show cause why the notice should not be declared void. The clerk assigns a cause number and takes a filing fee of thirty-five dollars.

The outcome runs both ways, which is the part worth remembering. If the court finds the claim frivolous and made without reasonable cause it declares the notice void; if it finds the claim clearly excessive it reduces the amount stated in the notice; and either way it awards costs and reasonable attorneys' fees to the applicant. If it finds the claim is not frivolous, was made with reasonable cause and is not clearly excessive, it issues an order saying so and the costs and fees run against the applicant instead.

This is not a lien and it does not replace one

Sending this notice preserves nothing. It does not create a lien, it does not extend a lien deadline, and it is not a substitute for either of the other two Washington documents on this site.

The notice of furnishing under RCW 60.04.031 is the one that protects lien rights, and RCW 60.04.031(6) is blunt about why it matters: a lien authorized by this chapter shall not be enforced unless the lien claimant has complied with the applicable provisions of this section. That is about the lien, not about this notice, and RCW 60.04.221 sets no precondition of its own beyond being a potential lien claimant who is five days past due.

The claim of lien under RCW 60.04.091 is the instrument itself, recorded with the county, due within ninety days of the last day you furnished. If this notice does not shake the money loose, that is the next step, and its ninety days keep running while you wait for the bank to answer.

So the honest way to think about all three is by what they act on. The notice of furnishing protects a future right. The claim of lien attaches to the property. This one reaches the money while it is still in the bank's hands, which is the only stage at which anybody actually gets paid without a lawsuit.

One more piece of timing worth carrying: recording a claim of lien starts an eight month clock under RCW 60.04.141 to file suit, plus ninety days from filing to serve the owner. This notice starts no such clock, which is another way of saying it buys time rather than spending it.

Questions people ask

Once the job is running and you are getting paid on it, the paperwork that comes next is the waiver: see the Washington statutory lien waiver forms, and conditional vs unconditional lien waiver for which of the two to sign.