BP BHEAD INT S [atlas:bill]

AN ACT Relating to liens on owner's proceeds in favor of commercial real estate brokers; and adding a new chapter to Title 60 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise:

(1) "Commercial real estate" means a fee title interest or possessory estate in real estate located in this state except an interest in real estate which is (a) improved with one single-family home or one multifamily structure with four or less residential units, or (b) unimproved and the maximum permitted development is one to four residential units or structures under the county or city zoning ordinances applicable to that real property, or (c) real property classified as farm and agricultural land or timber land for assessment purposes pursuant to chapter 84.34 RCW, or (d) improved with single‑family residential units such as condominiums, townhouses, timeshares, or homes in a subdivision when sold, leased, or otherwise may be legally conveyed on a unit-by-unit basis. Real property will be considered commercial real estate if it meets the definition contained in this section on either the date of the commission agreement or the date of the disposition.

(2) "Commission agreement" means a written instrument which meets the requirements of RCW 19.36.010 signed by or on behalf of the owner of commercial real estate, pursuant to which the owner agrees to pay a broker a real estate commission upon the disposition or lease of commercial real estate.

(3) "Disposition" means a voluntary transfer or conveyance of commercial real estate.

(4) "Lease" means a written agreement which gives rise to a relationship of landlord and tenant such that the holder of a fee simple interest or possessory estate permits another to possess the commercial real estate for a period, and which meets the requirements of RCW 19.36.010, if applicable.

(5) "Net rental proceeds" means rental proceeds less any amounts currently due under the terms of liens which have priority over the lien created under this chapter as provided in section 4 of this act.

(6) "Owner" means a person or entity which is vested in record fee title or a possessory estate in commercial real estate.

(7)(a) "Owner's net proceeds" means the gross sales proceeds from the disposition of the commercial real estate described in a notice of claim of lien, less the following: (i) Amounts necessary to pay all encumbrances and liens recorded against such commercial real estate recorded prior to the date of recording of the notice of claim of lien; (ii) owner's closing costs, such as real estate excise tax, title insurance premiums, real estate tax and assessment prorations, and escrow fees; and (iii) amounts retained in escrow and actually used by the owner to complete an exchange of real property which is deferred from federal income tax under section 1031 of the internal revenue code of 1986, as amended.

(b) "Owner's net proceeds" shall include any sales proceeds which were retained in escrow for purposes of completing an exchange of real property which is deferred from federal income tax under section 1031 of the internal revenue code of 1986, as amended, but are subsequently not used for that purpose.

(8) "Real estate broker" or "broker" means the same as defined in RCW 18.85.010.

(9) "Real estate" means one or more identified parcels or tracts of land, including any improvements.

(10) "Rental proceeds" means the rent paid to an owner by the tenant under a lease.

NEW SECTION. Sec. 2. (1) A broker has a lien upon the owner's net proceeds from the disposition of commercial real estate and a lien on rental proceeds from the lease of commercial real estate in the amount which the owner has agreed to pay the broker under a commission agreement as a result of an agreement which the owner enters into for the disposition or lease of the commercial real estate. The lien under this chapter is available only to the broker named in the commission agreement.

(2) Subject to the requirements of subsection (3) of this section, the lien created by this chapter becomes effective on the date of the recording of a notice of claim of lien pursuant to subsection (5) of this section, and is perfected by such recording. Recording must be made with the county auditor in the county or counties in which the commercial real estate is located.

(3) In the case of a disposition of commercial real estate, the lien under this chapter is not effective unless it is recorded at least thirty days prior to the date the owner records a deed for conveyance of the commercial real estate. In the case of a lease of commercial real estate, the lien under this chapter is not effective unless it is recorded within ninety days after the tenant takes possession of the leased premises.

(4) The broker shall, within ten days of recording its notice of claim of lien, deliver a copy of the notice of claim of lien to the owner of the commercial real estate in the manner as provided in section 8 of this act or the lien is unenforceable. In the case of the disposition of commercial real estate, the broker shall, on or before the date the deed for conveyance has been recorded, deliver a copy of the notice of claim of lien to the escrow closing agent closing the transaction in the manner as provided in section 8 of this act, if the identity of the escrow closing agent is actually known by the broker.

(5) The notice of claim of lien must state the following:

(a) The name, address, and telephone number of the broker;

(b) The date of the commission agreement;

(d) The legal description of the commercial real estate as described in the commission agreement;

(e) The amount for which the lien is claimed, which may be stated in a dollar amount or may be stated in the form of a formula for how the amount is to be determined such as a percentage of the sales price; and

(f) The real estate license number of the broker.

A copy of the commission agreement must be attached to the recorded notice of claim of lien. The notice of claim of lien must recite that the information contained in the notice of claim of lien is true and accurate to the knowledge of the signatory. The notice of claim of lien must be signed by the broker or by a person authorized to sign on behalf of the broker who shall affirmatively state that he or she has read or heard the claim and believes the notice of claim of lien to be true and correct under penalty of perjury. The notice of claim of lien must be acknowledged pursuant to chapter 64.08 RCW. A notice of claim of lien substantially in the following form is sufficient:

NOTICE OF CLAIM OF LIEN

PURSUANT TO CHAPTER 60.-- RCW

(sections 1 through 10 of this act)

Date:

Notice is hereby given that the person named below claims a lien as to owner's net proceeds or rental proceeds pursuant to chapter 60.‑- RCW (sections 1 through 10 of this act). In support of this lien, the following information is submitted:

1. Name, telephone number, and address of broker:............

2. License number of broker:.................................

3. Date of the written commission agreement on which this claim is based: . . . . . . . . . , a copy of which is attached to this notice of claim of lien.

4. Name of the owner:........................................

5. Legal description of the commercial real property described in the commission agreement:............................................

6. The amount for which the lien is claimed, which may be stated in a dollar amount or may be stated in the form of a formula for how the amount is to be determined such as a percentage of the sales price:

.................................

Signature

.................................

Name, Street Address, City, State

.................................

Telephone Number

State of Washington .... )

.... ) ss

County of . . . . . . )

. . . . . . . . . . ., being sworn, says: I am the broker, or attorney of the broker, above named. I have read or heard the foregoing claim, know the contents thereof, and believe the same to be true and correct and that the claim of lien is made pursuant to a valid commission agreement and is not frivolous, under penalty of perjury.

.................................

Subscribed and sworn to before me this . . . day of . . . . . ..

.................................

(6) Whenever a notice of claim of lien is recorded and a condition or event occurs, or fails to occur, that would preclude the broker from receiving compensation under the terms of the commission agreement, including the filing of a notice of claim of lien in a manner which does not comply with this chapter, the broker shall record, within seven days following demand by the owner, a written release of the notice of claim of lien.

(7) Whenever the amount claimed in a notice of claim of lien is paid, the broker shall record a satisfaction or release of the notice of claim of lien on written demand of the owner within five days after payment. In the case of a disposition of commercial real estate, the escrow closing agent is required to pay to the broker the owner's net proceeds up to the amount claimed in the notice of claim of lien. If the amount claimed in the notice of claim of lien is fully or partially satisfied upon such disposition by the escrow closing agent, the broker shall submit a release of the notice of claim of lien to the escrow closing agent to be held in escrow pending such disposition. In a suit brought by the owner to compel deliverance of the release in which the court determines that the delay was unjustified, the court shall, in addition to ordering the release, award the costs of the action including reasonable attorneys' fees.

NEW SECTION. Sec. 3. (1) An owner of commercial real estate subject to a recorded notice of claim of lien under this chapter, who disputes the broker's claim in the notice of claim, may apply by motion to the superior court for the county where the commercial real estate, or some part thereof, is located for an order directing the broker to appear before the court at a time no earlier than seven nor later than fifteen days following the date of service of the application and order on the broker, and show cause as to why the relief requested should not be granted. The motion must state the grounds upon which relief is asked and must be supported by the affidavit of the owner, or the owner's attorney, setting forth a concise statement of the facts upon which the motion is based.

(2) The order must clearly state that if the broker fails to appear at the time and place noted, the notice of claim of lien must be released, with prejudice, and that the broker must be ordered to pay the costs requested by the owner including reasonable attorneys' fees.

(3) If, following a hearing on the matter, the court determines that the owner is not then a party to a pending agreement for the disposition or lease of commercial real estate, which will result in the owner being obligated to pay to the broker a commission under the terms of a commission agreement, the court shall issue an order releasing the notice of claim of lien and awarding costs and reasonable attorneys' fees to the owner to be paid by the broker. If the court determines that the owner is then a party to a pending agreement for the disposition or lease of commercial real estate, which will result in the owner being obligated to pay to the broker a commission under the terms of a commission agreement, the court shall issue an order so stating and awarding costs and reasonable attorneys' fees to the broker to be paid by the owner.

(4) Proceedings under this section shall not affect other rights and remedies available to the parties under this chapter or otherwise.

NEW SECTION. Sec. 4. (1) If a broker has a lien on rental proceeds pursuant to section 2(1) of this act, and the broker has recorded a notice of claim of lien and otherwise complied with the requirements of this chapter, the broker may apply by motion to the superior court for the county where the commercial real estate, or some part thereof, is located, for an order directing the owner to appear before the court at a time no earlier than seven nor later than fifteen days following the date of service of the application and order on the owner, and show cause as to why the relief requested should not be granted. The motion must state the grounds upon which relief is asked, and must be supported by the affidavit of the broker, or the broker's attorney, setting forth a concise statement of the facts upon which the motion is based.

(2) The order must clearly state that if the owner fails to appear at the time and place noted, the broker shall be entitled to the relief requested and that the owner shall be ordered to pay the costs requested by the broker including reasonable attorneys' fees.

(3) If, following a hearing on the matter, the court determines that the owner is, or was, a party to an agreement for the lease of commercial real estate, which resulted in the owner being obligated to pay to the broker a commission under the terms of a commission agreement, the court shall issue an order enjoining the owner from paying the net rental proceeds from such lease to any party other than the broker. The court shall also order the owner to pay such net rental proceeds to the broker and award costs and reasonable attorneys' fees to the broker to be paid by the owner. If the court determines that the owner is not, or was not, a party to an agreement for the lease of commercial real estate, which resulted in the owner being obligated to pay to the broker a commission under the terms of a commission agreement, the court shall issue an order so stating and awarding costs and reasonable attorneys' fees to the broker to be paid by the owner.

(4) Proceedings under this section shall not affect other rights and remedies available to the parties under this chapter or otherwise.

NEW SECTION. Sec. 5. All statutory liens, liens, mortgages, deeds of trust, assignments of rents, and other encumbrances, including all advances or charges made or accruing thereunder, whether voluntary or obligatory, and all modifications, extensions, renewals, and replacements thereof recorded prior to a notice of claim of lien have priority over a lien created under this chapter. A prior recorded lien includes, without limitation, a valid materialmen's or mechanic's lien claim that is recorded after the recording of the broker's notice of claim of lien but which relates back to a date prior to the recording date of the broker's notice of claim of lien.

NEW SECTION. Sec. 6. A notice of claim of lien recorded under this chapter must be released if the owner deposits with the superior court of the county in which the commercial real estate, or some part thereof, is located, an amount equal to one and one-quarter times the amount of the lien claimed, with the amount to be held pending a resolution of amounts due to the broker.

NEW SECTION. Sec. 7. The county auditor shall record the notice of claim of lien in the same manner as deeds and other instruments of title are recorded under chapter 65.08 RCW. Notices of claim of lien for registered land need not be recorded in the Torrens register. The county auditor may not charge a higher fee for recording a notice of claim of lien than what the county auditor charges for other documents.

NEW SECTION. Sec. 8. Notices to be delivered to a party under this chapter, other than service of process as required in civil actions, shall be by registered or certified mail, return receipt requested, or by personal delivery and obtaining evidence of delivery in the form of a receipt or other acknowledgment signed by the party to whom the notice is delivered or an affidavit of service. Delivery is effective at the time of personal delivery, or when deposited in the mail as required by this section. Notice to a broker may be given to the address of the broker that is contained in the commission agreement with the broker, or such other address as is contained in a written notice from the broker to the party giving the notice. If no address is provided in the commission agreement, the notice may be given to the broker's address of record with the department of licensing pursuant to chapter 18.85 RCW.

NEW SECTION. Sec. 9. This chapter applies to lien claims based on a commission agreement entered into on, or after, the effective date of this act.

NEW SECTION. Sec. 10. This chapter may be known and cited as the commercial real estate broker lien act.

NEW SECTION. Sec. 11. Sections 1 through 10 of this act constitute a new chapter in Title 60 RCW.