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Who Owns the Improved Upon Property?

wpengine November 3, 2017

In Other Commercial Credit News Mechanics Lien

Who Owns the Improved Upon Property?

In Owner Roulette: Avoid Construction Lien Headaches, authors Roy E. Wagner & Christopher T. Koehnke (“authors”) reviewed a recent Wisconsin court decision where the lien claimant “incorrectly” identified the owner within its lien. At least, that was the owner’s attempted defense.

The Case in a Nutshell

Here’s a quick look at the case:

“Bayland Buildings (“Bayland”) filed a construction lien against Siren Saukville, LLC (“Siren”), the party that Bayland believed to be the owner of the project under the terms of its construction contract. However, Siren had in fact been bought out by Spirit Master Funding VIII, LLC (“Spirit”), and Spirit was then the actual owner of the project at the time Bayland filed its construction lien.”

Ultimately, Spirit argued Bayland’s lien was invalid, because the lien identified the incorrect owner. Fortunately, the Court of Appeals determined Bayland’s lien was valid and enforceable, because Bayland did not receive constructive notice that the property ownership had changed.

How to Identify Property Owner

The case is interesting, but what I found to be of greater interest are the authors’ suggestions on how to ensure the property owner is properly identified.

The authors suggest claimants could confirm property ownership via the Register of Deeds or obtain a title report letter from the title company. I will add, ownership information may also be obtained from the County Assessor, and many counties make searchable data available online.

What other suggestions do the authors provide? Check the municipal tax records. “While this may be a less reliable way to get information regarding real estate ownership, checking the most recent municipal tax bill records will at least provide a contractor with ownership information as of the end of the most recent tax year.”

Plus, monitor all communication including change orders.

“Obviously change orders can vastly change the scope or price of any construction project. However, they may also provide a contractor with constructive notice of a change in ownership or even impact lien rights. To the extent that change orders are issued and a contractor is asked to sign a “Partial Waiver of Construction Lien,” a contractor needs to be aware that signing such a waiver may impact the ability to foreclose on a lien and obtain a monetary judgment for the full amount that is owed, or even provide constructive notice regarding a change in ownership.”

Best Practice

Don’t guess! Take the time to confirm property ownership, and if applicable, serve the registered agent for the owner.

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Who Owns the Improved Upon Property?

Who Owns the Improved Upon Property?

The Case in a Nutshell

How to Identify Property Owner

Best Practice

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