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Payment

Seattle Housing Authority recognizes that prompt payment is critical for businesses and individuals. We are concerned that subcontractors and suppliers are paid quickly by the contractors the agency hires to complete our construction projects. Likewise, we want to help ensure that workers employed on our construction projects receive the appropriate wages.

Unfortunately, payment is sometimes delayed or withheld, causing financial hardships for those not paid. State law provides a number of avenues to help protect the rights of those working on public construction projects. The information below is a summary of some of those rights and describes the process to follow in securing payment from a contractor or subcontractor on a public construction project.

Preventing payment disputes

The following steps may help you ensure you are paid for your work on a public construction project.

1. Know the contractor you're working for.

It is important that you carefully investigate the contractor you are considering becoming a subcontractor or supplier to prior to entering into a contract with them. Contracting with a contractor with a track record of non-payment or slow payment to subcontractors and suppliers may have a negative impact on your firm's finances. In addition:

  • Ask the contractor for references of other subcontractors and suppliers they have worked with. Call the references to find out about the contractor’s payment practices.

  • Contact the Washington State Department of Labor and Industries to find out if any claims have been filed against the Contractor’s Bond, required by State law for all licensed contractors.

  • Contact the Better Business Bureau to find out if there have been any complaints filed against the contractor.

2. Have a clear written agreement of what you will provide and what the contractor will pay.

Many misunderstandings about payment can be avoided if you make sure you have a clear written agreement about what services or supplies you will provide and how much (and when) the contractor will pay you.

3. Provide the contractor with a clear, written invoice.

A contractor may not pay you until they are satisfied you have billed them properly for the work you performed or for the supplies and materials you provided. Make sure your invoice is clear and describes when you expect payment. This should be consistent with your written agreement with the contractor.

4. Attempt to discuss payment dispute issues with the contractor.

If a payment dispute occurs and you are not paid promptly or not paid the correct amount, contact the contractor and identify why they have not paid you. A misunderstanding about further work they are expecting you to perform or a concern about the quality of your work may be the reason you are not receiving your payment. Try to resolve the outstanding issues to facilitate your payment.

5. Request a joint check from Seattle Housing Authority to the contractor and subcontractor or supplier.

Seattle Housing Authority never makes direct payment to a subcontractor or supplier, except by court order. However, if the agency receives a written request for issuance of a check made payable to both the contractor and a subcontractor or supplier, we will honor such a request. The request must be signed and notarized by an authorized representative of both the contractor and the subcontractor or supplier.

Your rights under the law

Despite taking preventative measures, payment disputes sometimes occur and it becomes necessary to take additional legal steps to protect your rights to payment. There are two important resources that are available to subcontractors, suppliers, materialmen, and workers to help ensure they are paid for work on a public construction project.

Contract bond

On every public construction project of $35,000 or more, Seattle Housing Authority obtains from the contractor a Contract Bond (also known as a Performance and Payment Bond), normally in the amount of 100 percent of the amount of the contract. The Bond is a guarantee by the contractor’s bonding company (or surety) that they will ensure that the public construction project is successfully completed, and that all subcontractors, suppliers, materialmen, and workers will be paid for their work on the project.

State law provides that you may file a claim of lien against this Bond in order to protect your rights to payment for work performed or supplies provided on a public construction project. On public construction projects less than $35,000, Seattle Housing Authority assumes the liability for claims filed against the protections normally afforded by a Contract Bond, and filed consistent with the requirements of State law for claims against a Contract Bond.

Retainage

Seattle Housing Authority withholds from the contractor 5 percent of each payment we make to the prime contractor on public construction projects of $35,000 or more. This 5 percent amount is known as Retainage and is held as a trust fund to help ensure that subcontractors, suppliers, materialmen, and workers are paid for their work on the project.

State law provides that you may also file a claim of lien against the Retainage in order to protect your rights to payment for work performed or supplies provided on a public construction project. On public construction projects less than $35,000, Seattle Housing Authority assumes the liability for claims filed against the protections normally afforded by Retainage, and filed consistent with the requirements of State law for claims against Retainage.

Filing and renewal of claim

Filing a claim against the Contract Bond or Retainage does not guarantee that you will be paid, but it is an important first step. There are a variety of requirements that relate to when a claim must be filed and what you must do to "perfect" the claim.

You may file a claim against the Contract Bond and Retainage after you have performed the work and not been paid, subject to the following restrictions. Forms are available in Word or PDF format (download Adobe Reader).

1. End of claim filing period

The period for filing a claim against the Contract Bond ends 30 days after Seattle Housing Authority has declared the contract complete and formally accepted the project (RCW 39.08.030). The period for filing a claim against the Retainage ends 45 days after the agency has declared the contract complete and formally accepted the project (RCW 60.28.011). To find out the date on which Seattle Housing Authority has declared a public construction project as complete, call 206-615-3375.

2. Renewal

Once you have filed a claim against the Retainage, in order to preserve your legal rights, you must renew the claim every four months, or commence a lawsuit to foreclose on the claim. If you miss the four month renewal deadline, your claim against the Retainage will lapse and cease to be considered a properly filed claim. You may not re-file the claim.

A claim against the Retainage may not be filed or renewed after the 45th day following the contract being declared complete by Seattle Housing Authority. A claim against the Contract Bond may not be filed after the 30th day following the contract being declared complete by the agency. Claims against the Contract Bond do not have renewal deadlines and requirements.

3. Pre-Claim Notice for Delivery of Materials, Supplies, or Equipment

State law requires that anyone furnishing materials, supplies, or equipment on a public construction project must provide a notice to the contractor within specified time limits that they have commenced delivery of the materials. The notice must state the name of the subcontractor who requested the delivery and must further state that a claim against the bond and/or retainage may be filed by the provider of the materials.

Without such a notice being filed, no foreclosure action against a claim will be considered valid by the courts. The specified time limits for filing such a notice are different for protection from the Contract Bond (within 10 days after the first delivery of such materials) and Retainage (within 60 days of beginning to furnish such materials). (RCW 39.08.065 and RCW 60.28.015).

4. Where to file your claim

A claim (and any subsequent renewal) against the Contract Bond and Retainage on a Seattle Housing Authority public construction project should be sent to:

Jena Richmond, Contracts & Procurement Manager
Seattle Housing Authority
P.O. Box 19028
190 Queen Anne Ave N
Seattle, WA 98109

A copy of the claim should also be sent to the contractor and the contractor's bonding company. If you need information on the contractor's Contract Bond, you may call Seattle Housing Authority at 206-615-3375. We can provide you with the name and address of the bonding company and the Contract Bond number.

5. Release of Claim

If the contractor subsequently pays you, you should then send a Release of Claim of Lien form to the same parties to whom the claim form was sent.

Foreclosure and payment

1. Foreclosure

In order to "perfect" your claim against the Retainage and preserve your legal rights, you must commence a lawsuit for foreclosure on the claim. A foreclosure action must be filed in court prior to the claim lapsing. A claim may lapse if you file your claim or renewal of your claim after the deadlines noted above or if you fail to renew your claim within four months of filing the claim.

If all attempts to obtain payment from the contractor have failed and it becomes necessary to "perfect" your claim and commence a lawsuit to foreclose on the claim, you may want to consider hiring an attorney to assist you in the legal proceedings.

2. Payment based on a claim

Seattle Housing Authority does not make payments to subcontractors or suppliers who have filed a claim against the Retainage without a court order directing the agency to make such a payment. Seattle Housing Authority does not review or pass judgment on a claim to determine if the amount claimed should actually be paid. That role is reserved for the courts.

Payment of claims against the Retainage is based on the following priority order established by State law:

  • Claims by workers for payment of prevailing wages (the process described in this document also applies to these prevailing wage claims).

  • Claims by the State Department of Revenue for unpaid taxes (no court order required).

  • Claims by subcontractors, suppliers, and materialmen (court order required).

  • Claims for other taxes due (no court order required).

  • Claims by Seattle Housing Authority (no court order required).

If an inadequate amount of money remains in the Retainage to cover all claims due to be paid, the protections provided by the Contract Bond become applicable and the amounts due to subcontractors, suppliers, materialmen, and workers should be paid by the contractor’s bonding company.

Further information

For the name and telephone number of the Contract Administrator who can provide information about the completion of a Seattle Housing Authority construction contract, information on claims and releases filed, and the name of a bonding company and contract bond number, contact Jena Richmond, Contracts and Procurement Manager at 206-615-3473.