Transcript Slide 1

WISCONSIN HOUSING ALLIANCE
Builder Continuing Education Training:
Lien Law
Presented By:
Saul C. Glazer
Axley Brynelson, LLP
Wisconsin Lien Law
Preparing Lien Claims & Notices
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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
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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/owner’s 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
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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
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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. 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
owner’s 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 don’t?
• 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 don’t?
• 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 doesn’t serve the new
owner, the lien will fail.
Know Your Owner!
• Don’t wait until the last minute to determine
ownership.
• Don’t 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!
• Don’t 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. Don’t 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
temporary—for 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 contractor’s 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
contractor’s
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. Glazer’s 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 protected]