House debates changes to Lien Recovery Fund; members split on caps for attorney fees and interest

The House debated first substitute House Bill 78, a set of changes to the Residence Lien Recovery Act intended to reduce outgoing payments from the Lien Recovery Fund. Sponsors said the fund is paying out more than it takes in and that limiting interest and attorney fees is necessary to avoid insolvency and another assessment on contractors who pay into the fund. One sponsor described the fund's condition as "deterioration of the fund balance," and said committee amendments removed an interest-rate provision but preserved an effort to limit payouts.

Opponents, including Representative Daniels, argued that limiting attorneys' fees and eliminating interest payments would make it impractical for small suppliers and subcontractors to pursue claims. Daniels said the fund is "paying out more than it's taking in," and warned that capping attorney fees at a low level would leave many small-claimants without effective legal representation. Representative Christiansen sought an amendment to ensure that partial recovery from the fund would not bar independent pursuit of the balance of a claimant's judgment; he said language should be added so claimants who receive a partial payout "do not lose their judgment by making a small recovery."

Supporters who identified as builders and contractors said the fund's current structure — full repayment plus interest and unlimited attorney fees — created perverse incentives that encouraged looser credit practices and drew down the fund. They urged passage to prevent insolvency and to avoid raising fees on participating builders. On the floor the previous-question motion was called to end debate and voting was opened on the substitute; the transcript does not record a final roll-call tally for the bill.