Seattle’s Top Contract Lawyers Weigh in on What They Wished We Knew about Our Landscape Design Contracts
Their top advice, the mistakes they see, and recent changes in the law
By Alerian Lockwood
Patrick McKenna, Bret Satcher and Hana Kern are top local lawyers with experience creating contracts for APLDWA members. Here is what they say we should know about recent changes to the law, issues they’ve seen, and the most common errors we make.
Error #1: You Don’t Have a Clear, Written Contract
We’ve all experienced or heard horror stories about working without a contract. We know we need one. Contracts, according to Bret Satcher, act as a neutral third party to avoid this conflict and resulting problems. To be most effective, your contract must be clearly written and clarify the scope (including what is not being done) and the payment schedule. Hana Kern reiterates that “scope should be carefully considered and reviewed each time you sign a new contract.”
In addition to being clear, Hana adds that the contract must be written, not verbal. Verbal contracts are difficult to prove and will not be enforceable if the work takes more than a year to perform. Verbal contracts have a three-year statute of limitations (the time period within which you can sue or can be sued after a breach of contract) versus six years for a written one. However, Hana notes that “this period can be modified in writing in the contract”, so there is no benefit to use verbal contracts.
Finally, Hana mentions that many people don’t read contracts; she reminds us to read ours and any we sign.
Error #2: Terms are Missing from Your Contract
Bret finds that clients sometimes come in with contracts that do a good job describing the scope of work, but boilerplate terms are missing, such as severability, choice of law, errors and omissions, and waiver of jury trial. Hana adds that there are optional clauses that should also be added, such as venue. Arbitration clauses can also be added, but there are pros and cons to those that you should discuss with an attorney. Patrick McKenna specifically warns that Washington law does not provide for attorney fees, so make sure to add it into your contract so that the losing party pays the attorney fees. “I’ve never seen anyone come with a contract that didn’t need some work,” Bret shares. The bottom line is that you should have an attorney review or draft your contract.
Recent Law Changes: Bond and Retainage
Patrick notes that although Washington law usually moves at a snail’s pace, there are a few new changes that could affect us. The first change is that contractor registration bond amounts increased on July 1, 2024. General contractors now require a $30,000 bond (up from $12,000 previously), and probably more relevant for most of us, specialty contractors need a $15,000 bond, an increase from $6,000. Patrick says that this change may incentivize litigation because there will now be a larger sum of money at stake in a lawsuit.
Patrick explains you should also know what assets are at risk in a lawsuit. As a contractor, the funds available to satisfy a judgment include the bond, your general liability insurance funds, and the business assets of the contractor. Personal assets can even sometimes be available if you do not have your business set up properly, you aren’t treating it like a separate legal entity or are acting in bad faith, Patrick says.
Patrick also shares that a second change in the law is restrictions on retainage amounts (an amount withheld until the completion of the project to ensure quality and performance). In Washington, retainage on private construction projects is now capped at 5% of the contract price. This applies to owners, contractors, and subcontractors. If retainage applies to your business, Patrick notes that you should double-check your contract to make sure your contract doesn’t have an outdated retainage provision, as higher amounts are often standard in older contracts.
Advice: Understand How Liens Work and Affect You
One issue that Bret has seen affect landscape designers are liens, which in this context, are a legal claim that can be placed against a property to secure the payment of an unpaid bill. Some designers, contractors, and sub-contractors use them. If you use them to secure payment, a notice of intent to lien must be sent within 10 days of furnishing labor or materials.
As a designer, knowing the basics of construction liens can help you explain them to a client who may be concerned when they read about them in their (sub)contractor’s contract or receive a notice of intent to lien from a contractor. If they have additional questions, consider suggesting that they speak to an attorney. If they do not want to sign any contract with a lien provision, Brett suggest a conditional lien waiver be used.
With a conditional lien waiver, a contractor or subcontractor agrees as a condition of doing business that upon payment (or partial payment) they will leave the homeowner’s assets alone. Make sure you and your client are aware if liens could be an issue by reading the contracts of your subcontractors and contracts.
Final Advice:
Although clients often want us to provide guarantees on plant material, many designers have been burned by offering such guarantees. Bret points out that if we do not want to provide a guarantee on our plant material as part of our services, we could alternatively provide the option to purchase a limited warranty as a compromise and a way of making extra income. He has seen this done in corporate plant services.
Patrick provides us with a few final bits of wisdom:
Make sure you have your insurance and license
Make sure you have your bond, if you have a contractor’s license
Have your business properly set up to shield personal assets
Don’t procrastinate on complaints
Keep good written communication through the entire process
Open your mail promptly
A huge thanks to Hana, Bret and Patrick (contact information below) for their time and expertise. These attorneys are highly recommended by APLDWA members, so reach out to one of them if you need any further help.
Patrick McKenna, PMK Legal, PLLC (206) 395-5185
Bret Satcher, The Sachter Law Office, PLLC (206) 690-6318
Hana Kern, Ryan, Swanson & Cleveland, PLLC (206) 654-2210