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Construction and Mechanics liens are remedies created by statute to ensure payment to contractors, subcontractors, tradesmen, laborers or material suppliers who have improved the property of others. Two of the most common types of liens are home improvement liens and motor vehicle repair liens. These liens provide home improvement contractors with a security interest in the homeowner’s property, and auto repair shops with a security interest in the vehicle owner’s vehicle.
How liens work
Usually, having a lien recorded against your home means you can not sell it until the debt is paid. A lien on a vehicle in the possession of a repair shop means you will not be able to have your vehicle back until the debt is paid.
Get lien waivers
Lien waivers are important for consumers because they prevent contractors, subcontractors, and material suppliers from trying to collect money from homeowners who have already paid.
Anytime prior to making a final payment on a home improvement contract, consumers can get a lien waiver from the prime contractor and lien waivers from each subcontractor and material supplier. If payment is made in installments, consumers can request lien waivers for the proportionate amount of the contract covered by each partial payment.
Getting lien waivers will prevent a subcontractor or material supplier from putting a lien on your home if the contractor does not pay the bills.
Wisconsin law (Wis. Adm. Code s. ATCP 110.025) requires that contractors inform consumers of their right to receive lien waivers on a home improvement contract. Consumers can request a lien waiver even if one is not offered. Consumers can specify that the lien waiver request only applies to the final payment.
Lien waivers do not waive any contractual rights for the property owner or contractor.
Notice of lien rights (Wis. Stat. § 779.02(2))
Prime contractors for home improvement must provide written notice of lien rights to the consumer with the written contract. If there is no written contract, the prime contractor must prepare and serve the notice within 10 days after the first labor, services, materials, plans, or specifications are performed, furnished, or procured by the prime contractor for the improvement.
Subcontractors for home improvements who do not directly contract with the homeowners must provide written notice of lien rights to the homeowner within 60 days of when the first work is done. For subcontractors, a late notice waives lien rights for work already performed, but not subsequent work.
Notice of home lien claim (Wis. Stat. § 779.06(1))
Lien claims must be filed within 6 months of the last work performed on a home or they are waived. All lien claimants must provide written notice to the homeowners at least 30 days prior to filing a claim. The notice must describe the nature of the lien claim, amount owed, and a description of the property and the improvements it relates to. Failure to provide timely notice to the consumer will waive all lien claims.
Lien claimants have 2 years from the time the lien is filed to seek a court judgment to perfect the lien. If no judgment is entered within 2 years, homeowners may have the lien removed.
Unauthorized work
Liens for unauthorized improvements are never enforceable, nor are liens enforceable if the contractor defaults or fails to perform under the terms of the contract. Auto repair shops may not refuse to return a vehicle because the owner has refused to pay for unauthorized repairs or repair charges that exceed the shop’s repair estimate.
Slander of title (Wis. Stat. § 706.13)
It is against the law for any person to record or file a lien against real or personal property knowing some or all of its contents to be false or frivolous, and is liable to any owner of the impaired property for punitive damages of $1000 plus any actual damages caused.