Contractors will not be Punished for Using a Sample Form in the Washington Mechanics’ Lien Statute: Common Sense Prevails
On September 15, 2011, the Washington Supreme Court decided the case of Williams v. Athletic Field, Inc., determining the fate of thousands of liens recorded in Washington State. In a victory for common sense, the Court decided that liens following the sample form provided in the mechanics’ lien statute are valid even though they do not technically comply with the statute.
In Williams, a contractor recorded a mechanics’ lien against real property after the owners of the property terminated the contract. The property owners argued that the lien was invalid under the “frivolous lien” provision in the mechanics’ lien statute, which requires the lien claimant to show cause as to why the lien should not be released. As usual, the contractor had hired a lien filing service, Lien Data, to record the lien on its behalf. As is common in the industry, an employee for the lien filing service “attested to” the lien by signing it without noting that she was signing as an agent for the contractor. The lien was then notarized and recorded but the “acknowledgment” signed by the notary public did not comply with the acknowledgment requirements in the mechanics’ lien statute. However, the acknowledgment on the lien exactly matched the sample form provided in the statute.
Notwithstanding that the lien matched the sample form provided in the lien statute, the owners of the property argued that the lien was invalid and frivolous, because 1) it was not signed by the lien claimant or its attorney, and 2) the notary public had not included the proper language for a corporate acknowledgment. The owner’s argument was technically sound. First, the lien recited: “I am the claimant or attorney of the claimant . . . above named.” Since an employee for Lien Data had signed the lien without noting that she was signing as an agent for the contractor, the owners were technically correct that the lien did not appear to satisfy the requirements of the mechanics’ lien statute. Second, the mechanics’ lien statute required that a notary public “acknowledge” the lien claimant’s signature in a specific way. For example, the statute required the acknowledgement to state “ the signor, who is known to the person taking the acknowledgment by satisfactory evidence, executed the document freely and voluntarily.” The sample form provided in the statute, however, did not satisfy these specific requirements. Since the lien filing service followed the sample form in the statute, the owners were technically correct that the lien appeared to be invalid.
The surprising aspect of the Williams case is not that the property owners made this technical legal argument, but that the trial court and Washington Court of Appeals agreed with them. Finally, six years after the trial court invalidated the contractor’s lien, the Washington Supreme Court set things right by reversing the decision and reinstating the lien. The Washington Supreme Court rejected the property owner’s technical legal argument and held that a claim of lien that matches the sample form provided in the statute is valid despite the fact that it does not contain the acknowledgment required by the statute and is not signed by the claimant or its attorney. In a victory for common sense as well as the contractor, the Court recognized that lien claimants should not be punished for relying on a sample form that the statute says is sufficient. Because the statute was confusing and because the contractor relied on the sample form, the Court held the lien was neither frivolous nor invalid.
Since 2005, the Williams case has called into question thousands of mechanics’ liens in Washington state. Given that most contractors and lien services follow the sample form when recording a lien, the effect on the construction industry could have been devastating had the Washington Supreme Court agreed with the property owners. Luckily, and rightly, they did not.
To read the Court’s opinion in Williams v. Athletic Field, Inc., 172 Wn.2d 683, 261 P.3d 109 (September 15, 2011), click here.
To see the sample form provided in the mechanics’ lien statute, RCW 60.04.091, click here.