Washington’s construction lien statute, RCW 60.04, balances the interests of persons performing work to improve real property with the interests of property owners in avoiding the necessity of paying for the same work twice. An unpaid contractor can assert a lien against property it has improved, but the owner has a right to notice that the work is taking place. On commercial projects, a contractor that is not under contract with the owner or prime contractor (a “lower-tier” subcontractor) usually must give a pre-claim notice to the owner to preserve its lien right. A contractor supplying only labor is expressly exempt from this requirement, though there has been some question regarding whether a lower-tier subcontractor providing both labor and materials is subject to the notice requirement.
Washington’s Capital Gains Tax Implications on the Transfer of Ownership Interests in Entities That Own Real Property
In addition to Washington’s real estate excise tax (REET), transferors of ownership interests in entities that own real property in Washington must also factor in Washington’s capital gains tax when making such transfers. The Washington Supreme Court upheld the capital gains tax as a constitutional excise tax earlier this year. See Quinn v. State, 1 Wn.3d 453, 526 P.3d 1 (2023). The tax is a flat tax of 7% of all adjusted long-term capital gains over $250,000 allocated to the state. RCW 82.87.010.
Gains from the sale of real estate are generally exempt from Washington’s capital gains tax. RCW 82.87.050(1). The tax also does not apply to the sale or exchange of an interest in a privately held entity, if the gain or loss from such sale or exchange is attributable to real estate directly owned by such entity. RCW 82.87.050(2). But what does this mean in the context of multi-tiered ownership structures, where a party desires to sell membership interests in a subsidiary that owns real estate?
Understanding the Nuances of Post-Closing Obligations in Oregon Real Estate Contracts: Lessons from Freeborn v. Dow
In the busy world of commercial real estate, buyers and sellers may be unable to complete all contractual obligations before closing. In those instances, parties often identify certain “post-closing” matters in the contract. Typically, if those provisions are not carefully drafted to “survive” the closing, then the terms may merge with the deed and be deemed satisfied at closing. However, in a 2022 Oregon case, Freeborn v. Dow, the Oregon Court of Appeals identified a nuance to that rule and explained that certain contractual matters may survive closing and not merge with the deed, regardless of the presence or lack of a survival clause.
Trying Large Construction Disputes CLE—Seattle
On October 6, 2023, I will be on the panel “Trying Large Construction Disputes,” to be presented during The Seminar Group’s 30th Annual Washington Construction Law conference on October 5 and 6, 2023, in Seattle or online. Intended for anyone who practices construction law, desires to practice construction law, or is confronted with matters involving
New Washington Law Applies Limitations to Retainage on Private Construction Projects
In the construction industry, “retainage”—the practice of withholding by an owner or contractor a portion of the funds that are due to a contractor or subcontractor for a construction project until its completion—is a term frequently negotiated in contracts for private construction projects as a means to mitigate the risk of default since the monies
A Reminder for Contractors of Perils of Not Registering
Originally published by the Daily Journal of Commerce on March 16, 2023.
Chapter 18.27 of the Revised Code of Washington (“chapter”) contains the requirements for contractors performing services in Washington state. This chapter governs who is considered a contractor, the registration requirements of those contractors, and what could happen if those contractors do not register.
Deal Sweeteners for Clean Energy Development on Brownfield Sites
Originally published by the Daily Journal of Commerce on February 28, 2023.
Owning or developing a parcel of contaminated real property, or a “brownfield,” has historically been a risky endeavor. But brownfields are abundant in the United States, and there are several incentives available to those who develop clean energy facilities on a dirty project
Oregon’s Employer Liability Law: It Is Time for a Change
Originally published as an Op-Ed by the Oregon Daily Journal of Commerce on February 16, 2023.
Introduced as a ballot measure, Oregon’s Employer Liability Law (ELL) was described in a voter’s pamphlet from 1910 as “a law requiring protection for persons engaged in hazardous employments, defining and extending the liability of employers, and providing that
Some Commercial Property Owners Can Go Green With ‘Propertyfit’
Originally published by the Daily Journal of Commerce on December 6, 2022.
With more and more corporate tenants and institutional owners looking to reduce their carbon footprints, clean energy improvements in initial project development as well as upgrades to existing projects have become more appealing. However, with interest rates and material costs on the rise
Washington Supreme Court Ruling Could Bring Changes to the Construction Industry
Originally published by the Seattle Daily Journal of Commerce on November 3, 2022.
In a 5-4 decision, the Washington Supreme Court recently ruled in Tadych v. Noble Ridge Construction, Inc. that a contract provision providing a one-year limitation period for filing a construction defect lawsuit was “unconscionable” and therefore unenforceable.
The court’s ruling revives a