Deliver the Model Disclosure Statement in Washington…Or Else

Deliver the Model Disclosure Statement in Washington...Or ElseThe Model Disclosure What?

That’s what a lot of Washington contractors say when they give my law office a call and ask whether they have lien rights.   Sadly, most contractors (especially the smaller outfits) have no idea that they’re required to provide this on each and every project before work begins.

What happens if it’s not provided?    Unfortunately, quite a lot.

First, if the Model Disclosure Statement is not required, you can lose your lien rights.    Second, you can be fined by the Department of Labor and Industries.    And for a third thought, what about possibly being exposed to a civil consumer protection act claim, or something like that?

This may seem harsh, but I’m here to tell you that it’s quite difficult to wiggle away from this requirement.  If you are a contractor of any shape and size (even a handyman), and you’re working on a residential project worth more than $1k or a commercial project worth less than $60k, the Model Disclosure Statement must be provided, it must be signed by the owner, and you must retain a record of the signed statement for two years!

I just got finished posting on this subject at my law firm’s blog, the Construction Law Monitor.   That post, Model Disclosure Statement Required In Washington When Contracting With Owner, offers a good analysis of when the MDS must be provided.

Getting a copy of a Model Disclosure Statement is not tricky.  You can download it for free from the Department of Labor & Industries, or download it right from this site..  Filling it out is a cinch.

If you’re in Washington state, do it or risk your lien rights.

, , ,

Scott Wolfe Jr

About Scott Wolfe Jr

Scott Wolfe Jr. is the CEO of zlien, a company that provides software and services to help building material supply and construction companies reduce their credit risk and default receivables through the management of mechanics lien and bond claim compliance. He is also the founding author of The Lien and Credit Journal, a leading online publication about liens, security instruments and getting paid on every account. Scott is a licensed attorney in six states with extensive experience in corporate credit management and collections law, with a specific emphasis on utilizing mechanic liens, UCC filings and other security instruments to protect and manage receivables. You can connect with him via Twitter, LinkedIn and Google+.
  • http://www.steubenville-gutter-cleaning.info/ Marinda Vandis

    Can I just say what a relief to find people who actually knows what theyre talking about on the internet. You definitely know how to bring an issue to light and make it important. More people need to read this and understand this side of the story. I cant believe youre not more popular because you definitely have the gift

    • http://www.expresslien.com Scott Wolfe Jr

      Thanks for visiting and for your comment, Marinda.

  • Doug

    As a customer, why is it in my interest to sign the MDS? What are my liabilities if the contractor doesn’t provide the form?

    • http://www.zlien.com Scott Wolfe Jr

      Hi Doug – Thanks for visiting our site and for your comment. This is a very good question, and a somewhat controversial issue. A few months ago I had a client in Washington state run into this very issue. He was a contractor, and although he properly provided the MDS to the homeowner the homeowner did not sign and return it to him. The question became…could he file a lien? (We never got to the bottom of it, because the case resolved itself).

      I think it’s unfortunate that the statute is written the way it is, because it leaves a lot of ambiguity. On the one hand, it requires the MDS be provided to and signed by the homeowner. On the other hand, there’s no enforcement mechanism for the contractor if the homeowner refuses to sign the document.

      So, to answer your first inquiry — why is it in your interest to sign the MDS — the answer is simply: you should because you’re supposed to. Now, what does that mean as to your actual interests, who’s to say. I don’t know of any litigation on this issue (anybody out there?), but I think there are a number of questions presented by the situation:

      1. If you don’t sign the MDS, but the MDS is provided to you, is the contractor prohibited from filing a lien? The contractor will argue that he fulfilled his obligation, and shouldn’t be penalized because you didn’t. He may have a case. While there isn’t any decisions about this in Washington, in Louisiana (another state where I practice), they have a similar statute and notice, and even though a signature is required, the contractor is not penalized because the homeowner refuses to sign.

      2. Since you’re technically required to sign the MDS, the contractor could – in theory – file a lawsuit against you to compel you to sign the document. Or, if you refuse to sign the document, I suppose the contractor could also have a theoretical claim against you in damages if he’s unable to file a lien because of your refusal. However, I don’t know of any cases when this actually happened. I’m just brainstorming scenarios.

      If the contractor simply doesn’t provide the form, you have no liabilities, only the contractor has liabilities as to providing or not providing the form.