James Yand | Miller Nash
The Washington legislature continues its quest to bring private construction in line with the same rules as public work projects. On February 28, the Washington State Senate unanimously approved Substitute Senate Bill 6192, subsequently signed by the governor, which modifies change order prompt payment in contracts. For public works projects under existing law, the state or municipality must issue a change order within 30 days of satisfactory completion of all or a portion of the additional work beyond the scope of the original contract. If a change order is not issued within 30 days, the state or municipality must pay interest at a rate of one percent per month.
This same prompt payment rule now applies to both public and private construction. The legislature made a similar change last year to retention on construction projects, to bring private construction under the same rules as public works. See my blog post from last year.
In short, any owner must now issue a change order to the contract within 30 days after the satisfactory completion of any additional work performed on the project. The buck does not stop with the owner. Within 10 days of receiving a change order from the owner or upper-tier contractor, the contractor or subcontractor must issue change orders to lower-tier subcontractors impacted by the change. This stream of communication means each party in the construction chain should receive a written change order for the work performed. Failure to issue the change order in a timely fashion will cost the violating party interest at 12% on all sums due. If litigation is required to enforce the amounts due, the statute allows for attorney fees to be awarded.
As seen previously, private residential projects under 12 units are exempted from the new legislation. Private residential construction continues to live by its own set of rules for change orders as well as retention.
It’s also worth noting that the legislation adds subcontractors and suppliers to the list of categories protected by the law, which is a change to both public and private construction.
The bill does not grant contractors, subcontractors, or suppliers any rights against a party with whom they don’t have a written contract.
This new law takes effect on June 6, 2024. Contracting parties can start incorporating this requirement into new agreements immediately to ensure their contracts remain consistent with this legislative change.
When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.