On March 29, 2012, Washington's Governor signed into law SHB 1559, which amended the scope of the "anti-indemnity statute" (RCW 4.24.115).  The bill takes effect on June 7, 2012.  The changes to the law now affirmitively add contracts for design professional services to the list of contracts to which the law applies.  It also changes the duty to defend and cost for defense in negligence actions.

Division I of the Washington Court of Appeals today held that Pacific Continental Bank violated RCW 60.04.221’s stop notice provision, and accordingly "the Bank “los[es] its priority”—the entire deed of trust is subordinated to the [contractor's] lien."  http://www.courts.wa.gov/opinions/pdf/65929-4.pub.doc.pdf

Under RCW 60.04.221 a bank who receives a Stop Notice from a lien claimint mustl withhold from the next and subsequent draws the amount claimed to be due as stated in the notice.  Pacific created a reserve in the amount of the lien instead of witholding the amount from the next construction draw.  The Court of Appeals reversed the trial court and remanded for proceedings consistent with its opinion. 

In Blue Diamond Group v. KB Seattle 1, Inc., Blue Diamond provided construction management services to a company called Kudo Beans (KB Seattle) relating to construction of a coffee kiosk in the Southcenter Mall. Though work on the kiosk had been completed, KB Seattle failed to pay Blue Diamond for its construction management services. Blue Diamond subsequently recorded a lien against the property for $77,615.62. When Blue Diamond attempted to foreclose on its lien, the owner moved for summary judgment. Both the trial court and the Court of Appeals determined that the construction management services were not lienable as they did not constitute "labor" or "professional services" under the lien statute.

In Zervas Group Architects, P.S. v. Bay View Tower LLC, Division One of the Washington Court of Appeals determined that pre-lien notice was not necessary to apprise a subsequent mortgageee of services rendered. Zervas involved an architectural company which provided a geotechnical study for Bay View Tower on a Bellingham condominium project in 2005. Bayview later applied for two loans from Whidbey Island Bank to finance some of its costs, including preconstruction costs like architectural services. The bank was not advised of the work done by Zervas, and Zervas had not filed pre-lien notice. The Bank loand money to Bay View based on its own investigation and determination that construction activity had not commenced, and no liens had been filed. It then recorded its deeds of trust in 2006. Thereafter, Bay View acknowledged an outstanding debt owed to Zervas. Zervas subsequently filed a lien for professional services amounting to $269,309.20 on July 31, 2007 after Bay View failed to pay the debt. The trial court ruled Zervas's lien was prior to the Bank's two deeds of trust, and granted partial summary judgment. Typically, an unrecorded interest in real property is subordinate to a recorded interest. There is an exception, however, for professional service liens, which cannot be recorded until a bill goes unpaid. Professional service liens, therefore, "relate back" to the commencement of the services. But because professional services are often not discernable by physical inspection, a provider may record a pre-lein notice of furnishing professional services. The failure to do so, however, renders the professional services lien subordinate to a subsequent mortgageee so long as the mortgageee acquires its interests without notice of professional services previously provided. The appellate court rejected the Bank's argument that a subsequent mortgagee can have notice of professional services only if a formal pre-lein notice is recorded. Instead, the appellate court held that a subsequent mortgagee has notice if it has reason to know of the professional services. In this case, the Bank admitted it had actual knowledge of Zervas's architectural services. That Bay View failed to disclose the debt owed to Zervas was irrelevant. Accordingly, the Bank's 2006 deeds of trust were deemed subordinate to Zervas's 2007 lien because the Bank had notice of Zervas's services, which related back to their commencement in 2005.