Preparing Lien Claims & Notices Required Information Identification Notice Notice of Intent to File Lien Claim Claim for Lien The Importance of a Title Search Serving Lien Claims and Notices.
A. Required Information to Prepare Identification Type of Project Size of Project Name/Address of Owner Whether a statutory payment bond exists (sec. 779.035) Is prime contractor related to owner? Address of owner/owners agent for service of process
Notice Continued… Address of project Date of first visible commencement of work for project Date first labor or materials were provided by lien claimant Manner in which lien claimant contracted to perform the work or furnish the materials
Required Info for Notice of Intent to File Lien Claim Owner ID at time of Notice of Intent Brief description of the work performed Amount due, plus applicable interest Date of last work performed by claimant Scope of written lien waivers signed by claimant
Required Info for Notice of Intent to File Lien Claim Continued… All copies of accounts, ledgers, delivery tickets, timesheets, written contracts, correspondence re: payment, etc. Documentation that the identification notice was not satisfied or not required
Info Required for Claim for Lien Copy of Identification Notice Copy of Notice of Intent to File Lien Claim Legal description of the property Documentation that the Notice of Intent requirements were satisfied Identify of all assignees, if any
B B. Identification Notice Important Issues Regarding the Identification Notice Timing Form Prime Contractor or Sub-Contractor? Is the project exempt?
Timing Issues Included in the written contract -Or- Within 10 days
Form Must have the requisite type size and statutory language (sec. 779.02)
Prime or Sub? Prime Contractor: Notice given with written contract; or within 10 days Statutory language Subcontractor Within 60 days Statutory language
Identification Notice Exception OLD LAW: Notice not needed for projects more than four units if wholly residential OR more than 10,000 USF provided or added if not wholly residential NEW LAW: Improvement partly or wholly non-residential in character.
Service Requirements Prime Contractor: Serve on owner or owners authorized agent. By hand delivery, registered/certified mail. Sub Contractor: Two copies. Service is the same as a prime contractor.
Form for ID Notice by Prime Contractor If prime contractor contracts with any sub, and has written contract with owner, must include the language quoted in section 779.02(2)(a). If no written contract exists, sample State Bar form is helpful.
Comments Regarding Identification Notice Make sure you know the date of first visible commencement. Is the project exempt? Prime contractor or subcontractor? See sec. 779.02(1)(d). A lot depends on whether the prime contractor has a special relationship or common management with the owner. Identify the owner.
What if I am required to provide identification notice but dont? For prime contractors, there is a savings clause in sec. 779.02(2)(c). All subcontractors, suppliers, and service providers have been paid in full; or All subcontractors, suppliers, and service providers have waived their lien rights
What if I am required to provide identification notice but dont? For non-prime contractors, there is a savings clause in sec. 779.02(3). Can file a late notice for any labor, services, materials, plans, or specifications performed, furnished, or procured after the late notice is actually received by the owner. Burden is on lien claimant to prove that the services were provided after the late notice was served on the owner.
Notice of Intent to File Claim For Lien Regardless of size and nature, must serve upon the owner a written notice of intent to file a claim for lien. Served 30 days before filing lien claim. Must describe nature of claim, amount, and the land improvements it relates to. § 779.06(2) sets out requirements for content and timing.
Service 30 days before filing of a Claim for lien. In writing. Serve copy on lender (not required) and/or prime contractor.
Language No required language. Must describe nature of the claim, the amount of the claim, and the land and improvements to which it relates.
Exceptions No exceptions! Notice of Intent to File Claim for Lien is required even if the initial Identification Notice if not required.
Comments Regarding Notice of Intent Conduct a title search and determine whether there has been a change in ownership. Obtain copies of written lien waivers signed by claimant to see if claims have been preserved. Make sure service is proper and timely.
Claim for Lien Cannot be filed until at least 30 days after the filing of a Notice of Intent. Must be filed within 6 months from the date the claimant furnished its last labor or materials.
Requirements *Must include a copy of the Notice of Intent and the Identification Notice (if required). Good practice to attach evidence to show that the notices were properly given.
Requirements Must also identify the following: Contract or demand upon which claim is formed Name of party against whom demand is claimed Name of claimant and any assignee Last date of furnishing labor or materials Legal description of the property Amount claimed Other material facts
Service Must be served on the owner within 30 days after the filing Good practice to do the same on the lender or prime contractor (if applicable).
Time Limitation for Filing Claim Must be filed no later than 6 months after the last day that the lien claimant performed, furnished or procured labor, service, materials, plans or specifications.
Location of Filing Claim Must be filed in the Clerk of Circuit Court where the project is located.
Enforcement of a Claim Litigation to foreclose on a lien must be commenced in order to enforce the Claim for Lien within 2 years after the filing of the Claim.
Title Search Very important, when preparing an identification notice or notice of intent, to do a title search. Can complete a title search at the Register of Deeds or by calling a title company. Serve notices on ALL possible owners. If lien claimant has constructive knowledge of a conveyance, and doesnt serve the new owner, the lien will fail.
Know Your Owner! Dont wait until the last minute to determine ownership. Dont rely on tax records, or the city assessor to determine ownership. Get a title search for deeds dating from before visible commencement through date when notice of intent is about to be sent. If there are new owners, send notice of intent and claim for lien to original and new owner.
Know Your Owner! Dont wait until the last minute for ownership and property description. It may not be easy to figure out property description from street address (or there may be no street address). Deed will give you proper property description. If there are subsequent owners and you could have known about them, you must provide the owners notice. Send notice of intent and claim for lien to all possible owners (original and subsequent).
Service of Notice of Intent and Claim For Lien Send notice of intent and claim for lien via certified mail, return receipt requested to name on deed, registered agent on DFI website, and name listed under notices in contract. Other service permitted, hand delivery, federal express where signature required, service of process by sheriff or process server.
Lien Waivers Lien waiver must be signed by the lien claimant or the potential lien claimant. A lien waiver is considered to be valid regardless of (1) whether payment or other consideration; and (2) whether or not the labor or materials was furnished prior to the signing of the lien waiver.
Lien Waivers Any ambiguity is construed against the person signing the waiver. A person may refuse to provide a lien waiver unless paid in full. A contract provision forcing a contractor, subcontractor or material supplier to waive his or her right to a construction lien or to a claim against a payment bond before he or she has been paid for the labor or materials is unenforceable under Wisconsin law.
Lien Waivers Make sure contracts do not waive lien rights. While a contractor cannot be required to waive lien rights, a contractor may voluntary waive lien rights in a contract or by a lien wavier. Make lien waivers conditioned upon payment in good funds. Dont use the state bar lien wavier form.
Lien Waivers Make partial lien waivers to the extent of work performed to date, to the extent that work has been invoiced, and not for retainage or work that may subject to change orders, and only to the extent of actual payment for the work. Even if you receive a check for payment and that check bounces, if you have waived your lien rights, you are done.
Lien Waivers Get lien waivers from your subcontractors. Consider after-the-fact lien waivers. Make sure subcontractor waives claims not subject to written approved change orders.
Changes to Wisconsin Lien Law Visible commencement on or after April 11, 2006
Changes to Lien Law 779.01(2)(a), the definition of improvement has been expanded to include repairing or remodelling work. The new bill also deletes the previous requirement that an improvement had to be for the permanent benefit of the land to be eligible for a lien. This section was changed to make clear that to be eligible for a lien, an improvement need not add value to the land.
Changes to Lien Law Contractors may now receive a lien for work, such as remodelling or repairing an existing structure, that merely maintains or preserves the value of land. The deletion of the permanency requirement may also mean that a contractor may receive a lien on a structure that is meant to be temporaryfor example, a structure which is only intended to last for the summer.
Changes to Lien Law The old version of chapter 779 had various requirements as to what constituted notice to the owner of property. The new law makes clear (in newly created 779.01(2(e)) that in most cases, any means of delivery in which the recipient makes written confirmation of delivery will suffice to give notice to the property owner that the contractor intends to file a lien.
Changes to Lien Law Acceptable means of notice include registered mail, certified mail, and the process of serving summons under section 801.14 (the general rule for serving lawsuit pleadings). The one remaining exception to this general notice filing is that notice for liens filed under section 779.15 (lien for public improvements for state matters only) must be given by registered or certified mail.
Changes to Lien Law Lien claimants are now required to give a copy of their filed Claim for Lien to the property owners within 30 days after filing the claim. Sec. 779.06(1). The 10,000 square foot requirement has been eliminated by Act 205. The other exceptions in section 779.02(1) remain essentially the same, subject to the language changes mentioned above.
Changes to Lien Law Contractors need no longer estimate how big the project will be. If a lien claimant builds or adds four residential units, or improves a partially or wholly non-residential building, the 779.02(1)(c) exception applies, and initial notice of lien rights does not have to be given to the owner of a project.
Changes to Lien Law If a prime contractor fails to give notice as required under 779.02(2)(a), the prime contractor will now not have any lien rights or remedies unless the following two things apply: the prime contractors pays all of its obligations to its subcontractors; and all of the prime contractors subcontractors have forfeited their lien rights by missing the 779.02(2)(b) deadline, or by waiving their lien rights.
Changes to Lien Law The main change is in the second conditions; if there are multiple prime contractors in a project, they can cure after their own subcontractors have released their lien rights. Contractors no longer need to worry about other contractors subcontractors. Sec. 779.02(2)(c).
Changes to Lien Law The disbursement of proceeds if the total amount of lien claims exceeds the funds being held now must be on a proportional basis for both private and public projects. Secs. 779.036(4)(a), 779.15(4)(a).
Changes to Lien Law The statutes dealing with theft by contractor now have identical wording, so the misuse of trust funds on projects now have the same standards private and public projects. Secs. 779.02(5), 779.16. These theft provisions have been expanded to make clear that misappropriation by any form of business organization will be deemed theft by any officers, directors, members, partners or agents responsible for the misappropriation.
Changes to Lien Law If misappropriated funds are disbursed to a shareholder, member, or partner that is not responsible for the appropriation, those funds can still be recovered in a civil action. This section makes it easier to prosecute responsible members of (for example) LLPs and LLCs who misappropriate funds, and makes it easier for parties to recover those funds even if they were given to organization members who were innocent of misappropriation.
Saul Glazer is a partner at Axley Brynelson, LLP, and works as a construction and employment lawyer. Mr. Glazer has extensive trial and administrative experience and has been involved in many complex litigation disputes. Mr. Glazers construction practice includes representing owners, contractors, engineers, and architects in preparation of construction contracts (including AIA, EJCDC and AGC documents) and in construction-related disputes. Mr. Glazer has represented clients regarding bid disputes, change orders, construction and design defects, differing site condition claims, delay claims, insurance coverage issues, and lien claims.
Saul C. Glazer Axley Brynelson, LLP 2 E. Mifflin St., Suite 200 (53701) P.O. Box 1767 Madison, WI 53701-1767 Tel: 608.257.5661 Fax: 608.257.5444 Email: email@example.com