title: "RCW 18.27 Explained: Washington's Contractor Registration Law" description: "Complete guide to RCW 18.27 — Washington State's contractor registration requirements, penalties, exemptions, and enforcement. Essential reading for contractors and homeowners." category: "regulations" lastVerified: "2026-03-11" schema: type: "Article" specialty: "Legal"

RCW 18.27 Explained: Washington's Contractor Registration Law

RCW 18.27 is the foundation of contractor regulation in Washington State. This statute governs who must register as a contractor, what bonds and insurance are required, and what penalties apply for violations. Understanding this law is essential for both contractors operating legally and homeowners protecting their investments.

What is RCW 18.27?

RCW 18.27 — officially titled "Registration of Contractors" — is the Washington State law requiring anyone performing construction work for compensation to register with the Department of Labor & Industries (L&I). Enacted to protect consumers from unqualified and unscrupulous contractors, this law establishes:

  • Registration requirements for all contractors
  • Bond and insurance minimums to protect homeowners
  • Penalties for operating without registration
  • Consumer remedies when contractors cause harm
  • Exemptions for certain work types

The law is enforced by L&I's Contractor Section, which maintains the public contractor database and investigates complaints.

Who Must Register Under RCW 18.27?

Definition of "Contractor"

Under RCW 18.27.010, a contractor is any person, firm, or corporation that:

"...offers to construct, alter, repair, add to, subtract from, improve, develop, move, wreck, or demolish any building, highway, road, railroad, excavation, or other structure, project, development, or improvement attached to real estate..."

Key point: The law covers virtually all construction activity on real property when performed for compensation.

Who Must Register

You must register if you:

  • Perform construction work for compensation (even as a subcontractor)
  • Bid on construction projects of any size
  • Advertise construction services to the public
  • Hold yourself out as a contractor in any way

Registration Types

Type Description Bond Requirement
General Contractor All types of construction work $12,000 minimum
Specialty Contractor Specific trade only (electrical, plumbing, etc.) $6,000 minimum
Manufactured Housing Mobile/manufactured home installation $12,000

Bond and Insurance Requirements

Surety Bond

Under RCW 18.27.040, contractors must maintain a surety bond with L&I:

Contractor Type Minimum Bond
General Contractor $12,000
Specialty Contractor $6,000
Public Works Contractor $30,000+ (varies by project size)

What the bond covers:

  • Unpaid wages to employees
  • Unpaid bills to suppliers
  • Homeowner claims for faulty work
  • Consumer protection violations

Important: Bond amounts increased effective July 2024 under HB 1534. Contractors registered before this date were grandfathered until renewal.

Liability Insurance

RCW 18.27.050 requires minimum liability insurance:

  • $50,000 per occurrence for injury/property damage
  • $200,000 aggregate coverage

Contractors must file proof of insurance with L&I and maintain continuous coverage.

Workers' Compensation

All contractors with employees must:

  • Register with L&I's Industrial Insurance program
  • Pay quarterly premiums for workers' comp coverage
  • Report all hours worked by employees

Exception: Sole proprietors with no employees may opt out of personal coverage but must still register.

Exemptions Under RCW 18.27.090

The following are exempt from contractor registration:

1. Owner-Builders

Homeowners building or improving their own residence are exempt if:

  • Work is on property they own and occupy (or intend to occupy)
  • They don't sell the property within one year of completion
  • They don't build more than one residence per year

Warning: Owner-builder exemption does NOT apply to:

  • Rental properties
  • Property flips (sale within one year triggers registration requirement)
  • More than one property per year

2. Employees of Registered Contractors

Workers employed by a registered contractor don't need their own registration. However:

  • The employing contractor must be properly registered
  • Work must be within the scope of employment

3. Retail Sales with Incidental Installation

Businesses primarily engaged in retail sales (appliances, flooring, etc.) where installation is incidental to the sale may be exempt.

4. Licensed Professionals

Work performed by licensed:

  • Architects
  • Engineers
  • Electricians (licensed under RCW 19.28)
  • Plumbers (licensed under RCW 18.106)

...when acting within their license scope.

5. Other Exemptions

  • Work under $500 on a single-family residence (labor only)
  • Agricultural structures in certain cases
  • Emergency repairs in some circumstances

Penalties for Operating Without Registration

Criminal Penalties

Operating as an unregistered contractor is a gross misdemeanor under RCW 18.27.020:

Offense Penalty
First offense Up to 364 days jail, $5,000 fine
Subsequent offense Up to 364 days jail, $5,000 fine
Advertising without registration $1,000 per occurrence

Civil Penalties

L&I can impose civil penalties of:

  • $1,000 to $5,000 per violation
  • Double damages awarded to injured consumers
  • Profit disgorgement on illegally obtained contracts

Loss of Legal Rights

Unregistered contractors cannot:

  • File liens for unpaid work (RCW 60.04 bars unregistered contractors)
  • Sue to collect payment for work performed
  • Use courts to enforce contracts

This is critical: If you work without registration and the homeowner doesn't pay, you have no legal recourse. Courts will dismiss your lawsuit.

Consumer Protections

Homeowner Recovery Fund

Washington's Construction Consumer Recovery Fund provides up to $25,000 to homeowners harmed by registered contractors when:

  • The contractor's bond is exhausted
  • Court judgment or arbitration award exists
  • Contractor cannot pay damages

Note: This fund only covers claims against registered contractors — another reason to always verify registration.

Right to Stop Payment

Under RCW 18.27.114, homeowners can withhold payment to general contractors for:

  • Work performed by unregistered subcontractors
  • Code violations not corrected
  • Lien claims from unpaid suppliers/subs

Mandatory Contract Disclosures

Contractors must include in written contracts:

  • Their registration number
  • Bond information
  • Notice of consumer rights under RCW 18.27

How to Verify Contractor Registration

L&I Contractor Search

Always verify registration before hiring:

Online: secure.lni.wa.gov/verify

By phone: 1-800-647-0982

What to Check

  1. Registration status — Must be "Active"
  2. Bond status — Must be "Current"
  3. Insurance status — Must be "Current"
  4. UBI number — Cross-reference with Secretary of State
  5. Complaint history — Check for past violations

Red Flags

  • Registration expired or suspended
  • Bond or insurance gaps
  • Multiple complaints or violations
  • Recently registered (minimal track record)
  • Name doesn't match business operating name

Recent Changes to RCW 18.27

2024 Updates (HB 1534)

  • Bond increases: General contractor bonds increased from $12,000 to $15,000 (effective July 2024, with phase-in)
  • Insurance updates: Minimum liability increased
  • Enhanced penalties: Repeat offender penalties doubled

2023 Updates

  • Electronic registration: Full online registration now available
  • Immediate verification: Real-time registration status for consumers

Filing a Complaint Against a Contractor

If a registered contractor violates RCW 18.27 or performs faulty work:

Step 1: Document Everything

  • Photos of defective work
  • Copies of contracts and payments
  • Written communication
  • Estimates for repair

Step 2: File with L&I

Online: lni.wa.gov/licensing-permits/contractors/

By mail: Department of Labor & Industries, Contractor Section, PO Box 44450, Olympia WA 98504

Step 3: Bond Claim

If L&I finds in your favor, you may file a claim against the contractor's bond.

Step 4: Legal Action

For damages exceeding bond coverage, consider:

  • Small claims court (up to $10,000)
  • Civil lawsuit
  • Arbitration if specified in contract

Contractor Compliance Checklist

For contractors ensuring RCW 18.27 compliance:

  • Active L&I registration with correct business name
  • Current surety bond meeting minimum requirements
  • Current liability insurance (minimum $50,000/$200,000)
  • Workers' comp coverage if employing workers
  • Registration number displayed on vehicles, advertisements, contracts
  • Proper registration type (general vs. specialty)
  • All subcontractors verified as registered
  • Written contracts with required disclosures

Related Laws

Statute What It Covers
RCW 18.106 Plumber licensing
RCW 19.28 Electrician licensing
RCW 60.04 Construction liens
RCW 64.50 Home improvement contracts
WAC 296-200A Contractor registration rules

Key Takeaways

  1. Anyone performing construction for compensation in Washington must register — no exceptions for "small jobs" or "handyman work"

  2. Unregistered contractors lose all legal rights — they cannot file liens or sue for payment

  3. Homeowners should always verify registration — it's free and takes 30 seconds online

  4. Bonds protect homeowners — registered contractors must maintain bonds as financial protection

  5. RCW 18.27 is actively enforced — L&I investigates complaints and imposes penalties

This guide is for informational purposes. For specific legal questions about RCW 18.27, consult a Washington-licensed attorney or contact L&I directly at 1-800-647-0982.