Wisconsin Construction Projects – What You Should Know to Secure Payment
Furnishing to a private construction project in Wisconsin? Today’s post is all Wisconsin. Let’s review what you should know about mechanic’s lien, bond claim, and lien on funds rights for private construction projects!
Wisconsin mechanic’s liens are governed by Wis. Stat. Sec. 779.01 through 779.17. For both commercial and residential projects, the mechanic’s lien is enforceable for the full amount owed, regardless of payments made by the owner – this is known as a full balance lien state.
Generally, there is no statutory requirement for serving a preliminary notice to secure your mechanic’s lien rights on commercial projects. However, residential projects do have a preliminary notice. On residential projects, the notice deadline is different if you are the prime contractor versus any other party in the ladder of supply.
- Prime contractors(those contracting directly with the owner) and who have contracted or will contract with any subcontractor or materialmen):
- Include the notice in the written contract. If there is no written contract, serve notice upon the owner within 10 days after first furnishing materials or services
- If the notice is required but not given, it may still be possible to file a lien provided certain circumstances exist.
- All claimants other than a prime contractor:
- Serve notice upon the owner within 60 days after first furnishing materials or services.
- Serving a late, but otherwise proper, notice upon the owner preserves lien rights for any materials or services furnished after the late notice is received by the owner.
For both commercial & residential projects, the mechanic’s lien is a two-step process: notice of intent + mechanic’s lien. You should serve the notice of intent at least 30 days prior to filing the lien and you should file the lien within 6 months from your last furnishing. In the event you need to pursue suit to enforce your lien, you should file suit within 2 years from filing the lien.
Bond Claim & Lien on Funds (Private Projects)
In Wisconsin, if the contract between the owner and prime contractor contains a provision for payment by the prime contractor of all claims, and the prime contractor provides a payment bond, then lien rights are eliminated for all lien claimants except the prime contractor. What do all other parties do? Pursue a bond claim and/or lien on funds.
To secure your right to make a claim against the prime contractor’s payment bond, serve a notice upon the prime contractor within 60 days after first furnishing materials or services. It is then recommended you serve a bond claim upon all parties within 90 days after last furnishing. If filing suit is needed, it should be filed within 1 year after completion of contract work. (You can find additional information in Wisconsin statute: Wis. Stat. Sec. 779.03 through 779.036)
Generally, for a lien on funds, no preliminary notice is required. You should serve the lien upon the owner and any mortgage lender before payment is made to the prime contractor or subcontractor. The lien attaches to the unpaid funds.
If neither the prime contractor nor subcontractor disputes the lien by written notice to the owner and the lien claimant, within 30 days after service of the lien, the amount liened shall be paid to the claimant on demand.
The deadline to proceed with suit to enforce the Lien on Funds is a bit trickier than it is for the mechanic’s lien or bond claim.
- If the prime contractor or subcontractor disputes the lien, suit must be filed to enforce the lien by the claimant, the prime contractor, or subcontractor, within 3 months from serving the lien.
- When the total undisputed lien claims exceed the amount due to the prime contractor or subcontractor, the owner and lender shall determine who is entitled to the money and shall serve written notice on all claimants and the prime contractor or subcontractor of the determination. Unless suit is filed by a lien claimant, the prime contractor, or subcontractor, within 20 days after the mailing of the notice of determination, the money shall be paid out in accordance with the determination.
- File suit to enforce the lien within 6 months after project completion or within 20 days after the mailing of the notice of determination (see above), whichever is earlier.
Questions about securing your payment rights on private Wisconsin projects?