SB450: Bill Text

LRB-2227/3

MDK:kjf:pg

2005 - 2006 LEGISLATURE

2005 Senate BILL 450

November 23, 2005 - Introduced by Senators Zien, Brown, Grothman, Roessler and A. Lasee, cosponsored by Representatives Moulton, Townsend, Van Roy, Vos and Hines. Referred to Committee on Judiciary, Corrections and Privacy.

SB450,2,3 An Act to amend 59.40 (2) (f), 66.0901 (2), 703.22 (title), 703.22 (2), 703.22 (3), 779.01 (2) (a), 779.01 (2) (d) (intro.), 779.01 (2) (d) 1., 779.01 (2) (d) 2., 779.01 (3), 779.01 (4), 779.01 (5), 779.02 (1) (b), 779.02 (1) (c), 779.02 (1) (e), 779.02 (2) (title), 779.02 (2) (a), 779.02 (2) (b), 779.02 (2) (c), 779.02 (2) (d), 779.02 (2) (e), 779.02 (3), 779.02 (5), 779.03 (1), 779.035 (1), 779.035 (2) (b) 1., 779.035 (2) (b) 2. a., 779.035 (2) (b) 2. c., 779.035 (3), 779.036 (1), 779.036 (2), 779.036 (3), 779.036 (4) (a), 779.05 (1), 779.06 (1), 779.06 (2), 779.06 (3), 779.07 (1) (d), 779.08 (1), 779.08 (2), 779.10, 779.13 (2), 779.135 (1), 779.135 (3), 779.14 (1) (intro.), 779.14 (1) (a), 779.14 (1) (b), 779.14 (1e) (a), 779.14 (1e) (b), 779.14 (1m) (c) (intro.), 779.14 (1m) (d) (intro.), 779.14 (1m) (e) 2. b., 779.14 (2) (a) (intro.), 779.14 (2) (a) 2., 779.14 (2) (a) 3., 779.14 (2) (am) 1., 779.14 (2) (am) 2. a., 779.14 (2) (am) 2. b., 779.14 (2) (am) 2. c., 779.14 (3), 779.15 (title), 779.15 (1), 779.15 (2), 779.15 (3), 779.15 (4) (a), 779.155 (2), 779.155 (3), 779.155 (4), 779.155 (5) (a), 779.155 (5) (b), 779.155 (6), 779.155 (7), 779.16 and 779.17; and to create 779.01 (2) (e) of the statutes; relating to: construction liens, requirements for securing payment for work on publicly financed projects, and providing a penalty.

Analysis by the Legislative Reference Bureau

Current law allows persons (such as prime contractors, subcontractors, and suppliers) who do work or furnish materials for improvements to real estate to file liens on the real estate to secure their right to payment. These liens are generally referred to as "construction liens." Under current law, construction liens are available on projects that do not involve public financing. Current law imposes different requirements for securing payment for work performed or materials furnished for projects that are publicly financed.

This bill makes the following changes to construction liens and the requirements that apply to publicly financed projects:

Activities for which lien may be claimed. Current law allows a person to claim a construction lien for labor that the person performs, or materials, plans, or specifications, that the person provides, for an improvement to real estate. However, in referring to labor and materials, current law does not consistently also refer to plans and specifications. This bill allows a person to file a construction lien for any of the following activities: performing, furnishing, or procuring any labor, services, materials, plans, or specifications for an improvement to real estate. The bill changes current law to consistently refer to such activities.

Repairs and remodeling. Under current law, a person may claim a construction lien for an "improvement" to real estate, which is defined as any building, structure, erection, demolition, alteration, excavation, filling, grading, tiling, planting, or landscaping that is done on or to land for its permanent benefit. This bill expands the definition to also include repairing or remodeling that is done on or to land for its benefit. The bill also eliminates the requirement that an improvement must be for the permanent benefit of the land.

Publicly financed projects. The requirements under current law for publicly financed projects apply to persons who furnish material used or consumed in making a publicly financed improvement, including any in the following list: fuel, lumber, building materials, machinery, vehicles, tractors, equipment, fixtures, apparatus, tools, appliances, supplies, electric energy, gasoline, motor oil, lubricating oil, greases, state imposed taxes, premiums for worker's compensation insurance, and contributions for unemployment insurance. The bill eliminates the foregoing list and refers instead to a person who furnishes any material used or consumed in making a publicly financed improvement.

Sixty-day and ten-day notices. Under current law, a subcontractor or supplier who works or furnishes material for certain improvements to real estate is not allowed to make a claim for a construction lien unless, within 60 days after first performing work or furnishing material for the project, the subcontractor or supplier has provided the owner of the real estate a notice specified under current law. The improvements that this notice requirement applies to are the following: 1) a wholly residential improvement in which four or less family living units are provided or added; and 2) a partly or wholly nonresidential improvement in which 10,000 or less total usable square feet are provided or added. A prime contractor must also give a notice to the owner in order to claim a construction lien for the foregoing types of improvements. If the contractor does not include the notice in the contract with the owner, the prime contractor must provide the notice within ten days after labor or materials are furnished. If the prime contractor does not provide the notice, the prime contractor may claim a construction lien only if certain other requirements are satisfied.

Under the bill, for a wholly residential improvement described above, a subcontractor or supplier must provide the 60-day notice and the prime contractor must provide the ten-day notice. However, notice by a subcontractor, supplier, or prime contractor is not required for any wholly or partly nonresidential improvement, regardless of the square footage of usable floor space that is added or provided.

In addition, under the bill, if a ten-day notice is required and the prime contractor does not provide the notice, the prime contractor may claim a construction lien, but only if the prime contractor's subcontractors and suppliers have been paid and none of the prime contractor's subcontractors or suppliers have provided the 60-day notice to the owner. Current law also allows a prime contractor to claim a construction lien under these circumstances, except that current law refers to subcontractors and suppliers, rather than specifically referring to the prime contractor's subcontractors and suppliers.

Service of notice. Current law contains various notice requirements for construction liens and publicly financed projects. Under this bill, any duty to provide notice regarding a construction lien or a publicly financed project may be accomplished by serving the notice on a party in any of the following ways: 1) by personal delivery; 2) by registered or certified mail; 3) in the same manner that is required under current law for service of a summons in circuit court; or 4) by any other means of delivery in which the party receiving the notice makes written confirmation of the delivery. In addition, the bill requires prime contractors and subcontractors who dispute lien claims to serve notice of the dispute in the foregoing manner. Current law does not specify how to provide notice of such a dispute.

Other changes. The bill makes other changes, including the following:

1. Under current law, a person may not bring an action to enforce a construction lien on real estate unless, within six months from the date the person last performed work or furnished materials, the person files a claim for the lien with the circuit court. This bill requires a person to serve a copy of the claim on the owner of the real estate within 30 days after filing the claim with the circuit court.

2. Under current law, under certain circumstances, an owner of real estate or other interested party may release a construction lien from the real estate by substituting two sureties for the lien. This bill requires only one surety.

3. Under current law, prime contractors and subcontractors on both privately and publicly financed projects must hold certain moneys in trust for the payment of claims for labor and materials. Failure to comply with this requirement is theft. Under this bill, if the prime contractor or subcontractor is a business entity, specified individuals who represent the entity may also be guilty of theft.

4. Current law allows a prime contractor on a publicly financed project to dispute a claim for payment by a subcontractor or supplier. If the prime contractor disputes the claim, the prime contractor must provide written notice of the dispute to the governmental body contracting for the work. This bill requires the prime contractor also to provide written notice of the dispute to the subcontractor or supplier.

5. The bill changes certain references to "contractor" or "general contractor" under current law to refer instead to "prime contractor." In addition, the bill changes the definition of "prime contractor" to include construction managers and certain other service providers.

6. Under current law, persons who supply material for an improvement are referred to as suppliers, materialmen, or material suppliers. Under this bill, such persons are consistently referred to as "suppliers."

Because this bill creates a new crime or revises a penalty for an existing crime, the Joint Review Committee on Criminal Penalties may be requested to prepare a report concerning the proposed penalty and the costs or savings that are likely to result if the bill is enacted.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB450, s. 1 Section 1. 59.40 (2) (f) of the statutes is amended to read:

SB450,4,4 59.40 (2) (f) Keep a judgment and lien docket of all claims for liens filed by prime contractors, subcontractors, materialmen suppliers, service providers, and laborers and all claims filed for log, mining, and maintenance liens.

SB450, s. 2 Section 2. 66.0901 (2) of the statutes is amended to read:

SB450,5,17 66.0901 (2) Bidder's proof of responsibility. A municipality intending to enter into a public contract may, before delivering any form for bid proposals, plans, and specifications to any person, except materialmen, suppliers, and others not intending to submit a direct bid, require the person to submit a full and complete statement sworn to before an officer authorized by law to administer oaths. The statement shall consist of information relating to financial ability, equipment, experience in the work prescribed in the public contract, and other matters that the municipality requires for the protection and welfare of the public in the performance of a public contract. The statement shall be in writing on a standard form of a questionnaire that is adopted and furnished by the municipality. The statement shall be filed in the manner and place designated by the municipality. The statement shall not be received less than 5 days prior to the time set for the opening of bids. The contents of the statement shall be confidential and may not be disclosed except upon the written order of the person furnishing the statement, for necessary use by the public body in qualifying the person, or in cases of actions against, or by, the person or municipality. The governing body of the municipality or the committee, board, or employee charged with, or delegated by the governing body with, the duty of receiving bids and awarding contracts shall properly evaluate the statement and shall find the maker of the statement either qualified or unqualified. This subsection does not apply to a 1st class city.

SB450, s. 3 Section 3. 703.22 (title) of the statutes is amended to read:

SB450,5,19 703.22 (title) Mechanics' and materialmen's suppliers' liens.

SB450, s. 4 Section 4. 703.22 (2) of the statutes is amended to read:

SB450,5,23 703.22 (2) Any mechanics' lien or materialmen's suppliers' lien under subch. I of ch. 779 arising as a result of repairs to or improvements of a unit by a unit owner shall be a lien only against the unit.

SB450, s. 5 Section 5. 703.22 (3) of the statutes is amended to read:

SB450,6,9 703.22 (3) Any mechanics' or materialmen's suppliers' lien under subch. I of ch. 779 arising as a result of repairs to or improvements of the common elements, if authorized in writing by the association, shall be paid by the association as a common expense and until paid shall be a lien against each unit in proportion to its percentage interest in the common elements. On payment of the proportionate amount by any unit owner to the lienor or on the filing of a written undertaking in the manner specified by s. 779.08, the unit owner shall be entitled to a release of his or her unit from the lien and the association shall not be entitled to assess his or her unit for payment of the remaining amount due for the repairs or improvements.

SB450, s. 6 Section 6. 779.01 (2) (a) of the statutes is amended to read:

SB450,6,16 779.01 (2) (a) "Improve" or "improvement" includes any building, structure, erection, fixture, demolition, alteration, excavation, filling, grading, tiling, planting, clearing or, landscaping, repairing, or remodeling which is built, erected, made or done on or to land for its permanent benefit. This enumeration is intended as an extension rather than a limitation of the normal meaning and scope of "improve" and "improvement".

SB450, s. 7 Section 7. 779.01 (2) (d) (intro.) of the statutes is amended to read:

SB450,6,18 779.01 (2) (d) (intro.) "Prime contractor" means any of the following:

SB450, s. 8 Section 8. 779.01 (2) (d) 1. of the statutes is amended to read:

SB450,6,24 779.01 (2) (d) 1. A person, other than a laborer, but including an architect, professional engineer, or construction manager, surveyor, or other service provider, employed by the owner, who enters into a contract with an owner of land who is not personally the prime contractor as defined in subd. 2. to improve the land, or who takes over from a prime contractor the uncompleted contract; or.

SB450, s. 9 Section 9. 779.01 (2) (d) 2. of the statutes is amended to read:

SB450,7,2 779.01 (2) (d) 2. An owner of land who acts personally as general prime contractor in improving such land.

SB450, s. 10 Section 10. 779.01 (2) (e) of the statutes is created to read:

SB450,7,7 779.01 (2) (e) "Serve" or "served" means personal delivery, delivery by registered or certified mail, service in a manner described for service of a summons under s. 801.14, or any other means of delivery in which the recipient makes written confirmation of the delivery.

SB450, s. 11 Section 11. 779.01 (3) of the statutes is amended to read:

SB450,7,16 779.01 (3) Extent and character of lien. Every Any person who performs, furnishes, or procures any work or procures its performance or furnishes any, labor or, service, materials or , plans, or specifications, used or consumed for the improvement of land, and who complies with s. 779.02, shall have a lien therefor on all interests in the land belonging to its owners. The lien extends to all contiguous land of the owner, but if the improvement is located wholly on one or more platted lots belonging to the owner, the lien applies only to the lots on which the improvement is located.