Getting Paid on Construction Projects

There are two resources available to ensure you are paid:

• Payment and Performance Bond
  On most construction projects, the City obtains a Bond (Payment and Performance) from the general contractor for the entire contract amount. The Bond guarantees the project will be successfully completed, and all subcontractors, suppliers, materialmen, and workers will be paid. You may file a claim of lien against this Bond to protect your rights to payment.
  
  
• Retainage
  On most construction projects, the City is required to withhold 5 percent of each payment made to the general contractor. This is held to ensure subcontractors, suppliers, materialmen, and workers are paid. You may file a lien against the retainage to protect your rights to payment.

It is a critical first step to file a lien against the Bond or retainage. This won't guarantee payment, but is the first step. There are different timelines and requirements about when a claim must be filed and steps required to "perfect" the claim. You can file a lien after you performed the work and not received payment, subject to the following:

1. Filing period
   
   • Per RCW 39.08.030, the period for filing a lien against the Bond ends 30 days after the City declared the contract complete and accepted the project.
   • Per RCW 60.28.011, the period for filing a lien on retainage ends 45 days after the City declared the contract complete and accepted the project.
   • You can call 206-684-0444 to find out when the City accepted the project.
2. Claim renewal
   
   • Once you have filed the retainage lien, you must renew the claim every four months or commence a lawsuit to foreclose on the claim.
   • If you miss the four-month renewal deadline, your claim will lapse and cannot be renewed.
   • The 30-day deadline for a claim against the bond is critical. You can't file or renew a claim after the 30th day following the contract being declared complete by the City.
   • A retainage claim also has a 45-day deadline that you can't miss. The claim can't be filed or renewed after the 45th day following the contract being declared complete by the City.
3. Pre-claim notice for delivery of materials, supplies or equipment
   State law requires that anyone furnishing materials, supplies, or equipment on a public works contract provide notice to the contractor within specified deadlines that they commenced delivery of the materials. The notice must state the subcontractor name who requested the delivery and state that a claim against the bond and/or retainage may be filed. Without such a notice being filed, no foreclosure action against a claim will be valid by the courts. The specified time limits for filing such a notice are different for protection from the Payment and Performance Bond (within 10 days after the first delivery of such materials) and retainage (within 60 days of furnishing such materials). (RCW 39.08.065 and RCW 60.28.015).
4. Where to file your claim
   A claim and any renewal against the Payment and Performance Bond and retainage on a City of Seattle construction project should be sent to the address below. A copy of the claim should also be sent to the contractor and the contractor's bonding company. We can provide the name and address of the bonding company and the Bond number.
   
   City of Seattle
   Purchasing and Contracting
   P.O. Box 94687
   Seattle, WA 98124-4687
   FAX: 206-684-4511
5. Release of claim
   If the contractor pays you, send a Release of Claim of Lien form to the same parties to whom the claim was sent.

Foreclosure
In order to "perfect" your claim and preserve your legal rights, you must commence a lawsuit for foreclosure on the claim. A foreclosure action must be filed in court prior to the claim lapsing. A claim may lapse if you file your claim or renewal of your claim after the deadlines noted above or if you fail to renew your claim within four months of suing. If all attempts to obtain payment from the contractor have failed and it becomes necessary to "perfect" your claim and commence a lawsuit to foreclose on the claim, you might hire an attorney to assist you in the legal proceedings. All lawsuits filed in which the City is a defendant must be served formally upon the Mayor.

Payment based on a claim
The City of Seattle does not make payments to subcontractors or suppliers who have sued on retainage without a court order directing the City to make such payment. The City does not review or pass judgment on a claim to determine if the amount claimed should be paid. That role is reserved for the courts. Payment of claims against the retainage is based on the following priority order established by RCW 60.28.040:

a. Claims by workers for payment of prevailing wages
b. Claims by the State Department of Revenue for unpaid taxes
c. Claims by subcontractors, suppliers, and materialmen
d. Claims for other taxes due (no court order required)
e. Claims by the City (no court order required)

If an inadequate amount of money remains in the retainage to cover all claims due, the protections provided by the Payment and Performance Bond become applicable and the amounts due to subcontractors, suppliers, materialmen and workers should be paid by the contractor's bonding company.

For the retainage to be released, the City of Seattle must declare the project complete and issue a Certificate of Completion. The following documents must be submitted by the contractor before the Certificate of Completion can be issued:

• All Intents and Affidavits of Wages Paid for the prime contractor and all subcontractors
• Final Subcontractor Payment Report

Once the Certificate of Completion is issued, the City must obtain releases from the following agencies: Washington State Department of Revenue, Department of Labor & Industries, Employment Security and the City's Revenue and Consumer Affairs Division. The state Department of Revenue requires a 45-60 day waiting period before retainage can be released. If all appropriate releases are received and there are no claims against the retainage at the end of the waiting period, the City releases the retainage.

For questions or more information about public works contracting, contact the appropriate person on the Purchasing and Contracting staff list.