If you are a subcontractor or supplier on a public works project and you have not been paid, one avenue to secure payment is to file a claim against the contract retainage. This process is governed by the Public Works Retainage Statute codified in RCW 60.28.
Under RCW 60.28, all owners of public improvement contracts must reserve no more than 5% of the monies earned by the contractor in a trust fund for the benefit of subcontractors or suppliers. Note: If the project is funded in whole or in part by federal transportation funds then the owner does not have to set aside retainage. However, subcontractors or suppliers can file a claim against the contract bond under RCW 39.08.
A claimant must deliver a pre-claim notice to the general contractor to preserve claim rights. This pre-claim notice will cover all materials, supplies, and equipment furnished after the notice is given and the 60 days preceding when the notice was given. The pre-claim notice must be in the form provided for in RCW 60.28.015 and include 1) the name of the person, firm or corporation that is and/or has furnished materials and supplies, or equipment for use, 2) the name of the subcontractor ordering the same and 3) that a lien against the retained percentage may be claimed for all materials and supplies, or equipment furnished by such person, firm, or corporation for use thereon. The pre-claim notice must be delivered to the contractor in person or by registered or certified mail.
The claimant must file a lien and deliver proper notice of the lien to the owner within 45 days of the completion of the contract work. The owner is then required to hold back from the retainage trust fund sufficient sums to pay the claim. Typically, the parties will resolve their dispute sometime after a claim has been filed. In the event that a claim is not resolved, the claimant has four months after filing the notice of claim to commence a foreclosure action against the lien. If the claimant does not file suit within four months, the reserve fund held by the owner will be paid to the contractor. Note: the four month limitation is solely a limitation on the claimant’s right to foreclose the lien. The claimant may still sue the contractor or its surety where no right of foreclosure is sought.
The claimant must bring a foreclosure action in the appropriate superior court. The foreclosure action is then treated like any other civil proceeding and is subject to the same guidelines.
Note: in some circumstances the general contractor can submit a bond for all or any portion of the contract retainage. In this case, the subcontractor or supplier can bring their claims against the bond, instead of the retainage trust fund. In this instance, filing a claim against a bond follows the same procedure as outlined in the Public Works Retainage Statute.
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