The new RCW 39.04.360, effective June 6, 2024, outlines protections and payment assurances for contractors, subcontractors, and suppliers involved in public and private construction projects in Washington. This statute mandates timely issuance of change orders for undisputed additional work, imposes interest on delays, and clarifies the rights of aggrieved parties to seek appropriate relief, including
Washington
WSBA Construction Law Section Midyear CLE Program
On June 14, 2024, the WSBA Construction Law Section is hosting its midyear CLE program, “Back to the Future: Leveraging Technology in Post-Covid Construction Disputes,” which will cover ethics, construction-related case law updates, technology, perspectives from the bench, arbitration, artificial intelligence, and legislative updates and appeals.
As part of the program, my colleague Colm Nelson…
New Limitations on Commercial Leases Within the City of Seattle
On December 12, 2023, Seattle’s former City Council passed Ordinance 126982 in an effort to increase commercial rent affordability for small businesses. The Ordinance, returned unsigned by the Mayor, became law on January 29, 2024. The new law places limits on the amount of personal guarantees, letters of credit, and security deposits to certain new…
Washington Court of Appeals Upholds Assessment of Tax Liability Against Prime Contractor in Lanzce G. Douglass, Inc. v. Department of Revenue
Under Washington law, prime contractors perform construction for consumers, while speculative builders construct on property they own. The differentiation between these classifications is important because prime contractors are subject to Washington’s business and occupation (“B&O”) tax and retail sales tax, while speculative builders are not. In Lanzce G. Douglass, Inc. v. Department of…
A Case in How to Delegate and Avoid Landowner Liability for Contractor Employees
In a case of first impression in Washington, the Washington State Supreme Court held that a landowner may satisfy its duty to guard an invitee “against known or obvious dangers on the premises by delegating the duty of protection to an independent contractor.” Eylander v. Prologis Targeted U.S. Logistics Fund, LP, 539 P.3d…
Washington Supreme Court Weighs in on Notice Requirements for Labor Liens: Velazquez Framing LLC v. Cascadia Homes, Inc.
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?
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.