Wednesday, February 2, 2011

Professional Services and Construction Liens

Can a construction professional file a construction lien for professional services when the services do not actually result in a physical improvement to real property? A recent opinion from the Washington Court of Appeals suggests the answer is “no.”

In Colorado Structures, Inc. v. Blue Mountain Plaza, a contractor drilled core samples at a construction site to determine the feasibility and cost of developing the property. The development did not go forward because of lack of financing, and the contractor filed a construction lien, including a lien for professional services involved in drilling and evaluating the core samples.

The Court first noted there are four key elements to a valid construction lien:

(1) Furnishing services or equipment;
(2) For the improvement of real property;
(3) At a contracted price; and
(4) At the request of the owner.

The court accepted that the drilling of core samples was professional services, but because the core samples did not result in an actual improvement to real property, the court rejected the claim that a valid lien was created.

This would seem to be at odds with the definition of “professional services”, which includes services rendered “in anticipation of providing improvements to real property.” But the lesson is clear: For a construction lien to be valid in Washington, the improvements must be made. This puts contractors at risk when they perform professional services prior to finalization of funding for a project.

1 comment: