Subcontractors and material suppliers often have to deal with payment disputes and delays. When dealing with these issues, they are encouraged to file a mechanics lien to recover the payment that they duly deserve.
Mechanics liens are very effective in getting subcontractors and material suppliers paid. Mechanics liens get recorded against a property’s public files, so potential buyers and financiers are made aware of the payment disputes associated with the property. Most property owners go out of their way to settle outstanding debts just to get rid of a mechanics lien.
In Wisconsin, subcontractors and material suppliers can file a Subcontractor Claim for Lien. Filing this mechanics lien is quite simple, but you have to follow strict rules and regulations to make sure that your mechanics lien is valid and enforceable. This guide explains everything you need to know about filing a Wisconsin Subcontractor Claim for Lien, from preparing the mechanics lien form to releasing it once you finally get paid.
Who can file a Subcontractor Claim for Lien in Wisconsin?
All subcontractors and material suppliers with no direct contractual relationship with a property owner may file a Subcontractor Claim for Lien in Wisconsin. Note that this rule applies regardless of your tier in the contracting chain, so you do have lien rights even if you are on the lower end of the chain.
Preliminary Notice Requirements for Subcontractors in Wisconsin
Before you can file a Subcontractor Claim for Lien in Wisconsin, you must first protect your lien rights by serving a preliminary notice known as the Subcontractor Identification Notice.
The Subcontractor Identification Notice informs a property owner of your participation in a project. Because all subcontractors regardless of tier can file a mechanics lien in Wisconsin, property owners must be duly notified by all construction parties who could potentially record a claim for lien on their property.
Information required for the Subcontractor Identification Notice
The following details must be included in your Subcontractor Identification Notice:
- Your name and address
- The name and address of the property owner
- The date you first performed labor or furnished materials for a property
- The street address or legal description of a property
Note that the Subcontractor Identification Notice in Wisconsin must substantially be in the following form:
“As a part of your construction contract, your prime contractor or claimant has already advised you that those who perform, furnish, or procure labor, services, materials, plans, or specifications for the work will be notifying you. The undersigned first performed, furnished, or procured labor, services, materials, plans, or specifications on… (give date) for the improvement now under construction on your real estate at … (give legal description, street address or other clear description). Please give your mortgage lender the extra copy of this notice within 10 days after you receive this, so your lender, too, will know that the undersigned is included in the job.”
Make sure to include all the relevant statements included in the prescribed form above, and it must be printed in at least 8-point bold font.
As stated in the form, the property owner is required to serve a copy of your Subcontractor Identification Notice on the mortgage lender of the property. This means that you are expected to serve TWO COPIES of the Subcontractor Identification Notice on the Property Owner.
When to serve a Subcontractor Identification Notice in Wisconsin
You must serve a Subcontractor Identification Notice within 60 days of your first day of work. Your first day of work corresponds to the day you first furnish materials or labor to the property.
What happens if you fail to serve a Subcontractor Identification Notice in Wisconsin?
Failing to serve a Subcontractor Identification Notice within the 60-day window will invalidate your lien rights. This means that even if you file a properly prepared mechanics lien, your claim will be declared null and void if you do not serve a valid Subcontractor Identification Notice.
How to file a Wisconsin Subcontractor Claim for Lien
1. Serve a Notice of Intent to Claim a Lien
Before you file a mechanics lien in Wisconsin, you must first serve a pre-lien notice called the Notice of Intent to Claim a Lien. This is different from the Subcontractor Identification Notice.
The Notice of Intent to Claim a Lien is served when a payment dispute has already arisen, while the Subcontractor Identification Notice is served within the first few months of the project simply to inform the owner about your involvement in the project.
The Notice of Intent to Claim a Lien must be served at least 30 days before you file a Subcontractor Claim for Lien. This serves as a warning to the property owner that you are about to record a mechanics lien against their property. In some cases, serving a Notice of Intent to Claim a Lien could be enough to prompt a property owner to settle the outstanding debt.
You may serve the Notice of Intent to Claim a Lien via personal delivery or certified mail with return receipt requested.
2. Prepare the Subcontractor Claim for Lien form
Your Subcontractor Claim for Lien must include the following bits of information:
- a statement of the contract or demand
- the name and address of the property owner
- the name and address of the party against whom you are making the claim
- your name and the name of any or your assignee
- the last date of performing, furnishing, or procuring any labor, services, or materials to the project
- a legal description of the property where the project is located
- a statement of the amount being claimed
Note that you must also attach copies of the Subcontractor Identification Notice and Notice of Intent to Lien to your Subcontractor Claim for Lien form. The Wisconsin subcontractor mechanics lien does not need to be notarized before recording.
3. Record the Subcontractor Claim for Lien
When your Subcontractor Claim for Lien form is ready, the next step is to file it in the clerk’s office in the county where the project is located. Remember that you must attach copies of the preliminary notice as well as the Notice of Intent to Lien when you record your mechanics lien.
You may record your Wisconsin mechanics lien by visiting the local county clerk’s office and filing the documents in person. You may also mail your Subcontractor Claim for Lien but make sure you include the exact amount needed for filing a lien. You may call the clerk’s office to know the exact filing costs associated with your claim for lien.
Note that you have 6 months after your last day of work to file a Subcontractor Claim for Lien. Another thing to keep in mind is that before you file a mechanics lien, you must have served a Notice of Intent to Claim a Lien at least 30 days prior to recording. Serving a Notice of Intent to Lien does not extend the 6-month deadline, so make sure that you serve the pre-lien notice early.
4. Serve a copy of the Wisconsin subcontractor mechanics lien on the property owner
Once your Subcontractor Claim for Lien has been recorded, you must serve a copy of it on the property owner within 30 days of the recordation date. This is to notify the property owner that a mechanics lien has been recorded against their property so they might want to settle the outstanding payments to get rid of the lien.
You may serve the copy of the Wisconsin Subcontractor Claim for Lien via certified mail with return receipt requested or via personal delivery. When delivering in person, make sure that you get the recipient to sign an acknowledgment of receipt form.
5. Release/enforce the mechanics lien
After filing a Subcontractor Claim for Lien in Wisconsin, either you will receive your payment or you won’t. Most of the time, a mechanics lien is effective in getting you paid. Property owners are generally wary of mechanics liens and they would want to get rid of one as soon as possible.
When a Wisconsin mechanics lien is satisfied and you have duly received the payment that you worked hard for, you will likely have to release the mechanics lien. This step is not required, but most property owners would ask you to cancel the lien by filing a lien release in the same county clerk’s office where the Subcontractor Claim for Lien was recorded.
Releasing a mechanics lien upon being paid is considered good business practice. It makes for a good business relationship between you and the property owner, and it recognizes their effort in settling the outstanding debt.
However, it is also possible for your mechanics lien to not prompt the property owner to pay up. In this case, the next course of action is to enforce the mechanics lien. Enforcing the Subcontractor Claim for Lien means initiating a lawsuit. If you win the lawsuit, you will recover your payment through the foreclosure sale of the property.
Remember that enforcing a mechanics lien must be done within 2 years after filing the Subcontractor Claim for Lien. After this 2-year period, the mechanics lien will be considered null and void and may no longer be enforceable.
You may also want to serve a Notice of Intent to Foreclose prior to initiating a foreclosure lawsuit. A Notice of Intent to Foreclose is not a strict requirement in Wisconsin, but it can serve as a final warning to the property owner. They might decide to settle the debt if they want to avoid dealing with a lawsuit.
Important dates to remember regarding your Wisconsin subcontractor mechanics lien
Best practices when serving a Wisconsin Subcontractor mechanics lien
1. Serve the required pre-lien notices on time
Wisconsin is very strict when it comes to pre-lien notice requirements – failing to serve them will automatically revoke your lien rights. It is therefore very important that you serve the Subcontractor Identification Notice as well as the Notice of Intent to Claim a Lien on time. These deadlines are enforced in Wisconsin, and missing them by a day will be fatal to your claim.
2. Keep copies of all mailing and service documents
It is just as important to ensure that you keep copies of all lien-related documents, including mailing and service records. These documents may include mailing receipts and signed acknowledgment of receipt forms. You must always be able to prove that you have complied with the pre-lien notice requirements, and that includes having the proper paperwork to back up your claim.
3. Ensure the accuracy of all the information in all your lien-related forms
One of the challenges in filing a mechanics lien on your own is making sure that you have all the required information in your forms, and that all the details are written accurately. You must always verify that the names are spelled correctly and completely (e.g., business suffixes like Ltd. and Inc. are included). Also make sure that you include the legal property description of the project location in your Subcontractor Claim for Lien. Remember that failing to include the correct legal description could kill the validity of your mechanics lien.
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