In a case of first impression, the Washington Court of Appeals overturned a trial court decision and held that a lender that posts a release of lien bond under RCW 60.04.161 does not waive its rights to challenge the priority of the underlying mechanics’ lien at a later time by doing so. Such bonds are usually posted by a party so as to be able to foreclose free and clear of the underlying lien (the lien then attaches to the bond, which in theory should make the contractor whole if indeed it has a valid and prior lien). This holding strengthens the hands of lenders in challenging such liens. Along with deciding that issue, the court also held that (1) work done before the purchaser actually owns the property is not work done at the behest of the “owner” (and so not lienable), (2) issues of fact remained as to when the mechanics’ lien attached as compared to the lender’s deed of trust, and (3) contractors can validly lien multiple parcels via one single lien filing if the contractor’s work benefited all the parcels (even though the work could be segregated among the parcels). The appellate court remanded for further proceedings (and awarded the lender its attorney fees under the mechanics lien statute).
Unlike Oregon, Washington does not give mechanics’ liens “super priority” over lenders, so it is rare in Washington State that a mechanics’ lien will trump a deed of trust (since the lien does not attach until work is performed, and usually the contractor’s work will not begin until after the lender has loaned its money and filed its deed of trust). But engineers and other design professionals sometimes do perform work before any development loan closing, and therefore may claim priority over the later-attaching deed of trust. The engineers here began performing work for the purchaser before it purchased the property, and continued to work on the project once the purchaser became a valid “owner.” Hence, it will be interesting to see what the trial court says about when the engineer’s lien attached, since, assuming that the lien attached immediately when that ownership arose, the mechanics’ lien might still claim priority over the deed of trust, if only by a few minutes or even seconds. The case can be found on theFindLaw website, and the published case citation is 171 Wn. App. 57, 286 P.3d 390 (2012).