779.87 Escrow account or bond requirement.
779.88 Prepaid maintenance lien.
779.89 Attachment and preservation.
779.90 Notice of existence of lien.
779.91 Discharge of lien.
779.92 Enforceability of lien.
779.93 Duties of the department of agriculture, trade and consumer protection.
SUBCHAPTER XI
FEDERAL LIEN REGISTRATION
779.97 Uniform federal lien registration act.
SUBCHAPTER XII
LIENHOLDER; ACQUISITION OF PRIOR LIEN
779.98 Payment of prior real estate liens.
CONSTRUCTION LIENS
779.01
779.01
Construction liens. 779.01(1)(1)
Name of law. This subchapter may be referred to as the construction lien law.
779.01(2)
(2) Definitions. In this subchapter unless the context or subject matter requires otherwise:
779.01(2)(a)
(a) "Improve" or "improvement" includes any building, structure, erection, fixture, demolition, alteration, excavation, filling, grading, tiling, planting, clearing or landscaping 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".
779.01(2)(b)
(b) "Lien claimant" means any person who claims a lien under this section pursuant to a contract for improvement of land entered into by an owner of the land.
779.01(2)(c)
(c) "Owner" means the owner of any interest in land who, personally or through an agent, enters into a contract, express or implied, for the improvement of the land. Agency will be presumed, in the absence of clear and convincing evidence to the contrary, between employer and employe, between spouses, between joint tenants and among tenants in common, but there shall be a similar presumption against agency in all other cases.
779.01(2)(d)1.
1. A person, other than a laborer, but including an architect, professional engineer, or surveyor 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
779.01(2)(d)2.
2. An owner of land who acts personally as general contractor in improving such land.
779.01(3)
(3) Extent and character of lien. Every person who performs any work or procures its performance or furnishes any labor or materials or plans or specifications 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.
779.01(4)
(4) Priority of construction lien. The lien provided in
sub. (3) shall be prior to any lien which originates subsequent to the visible commencement in place of the work of improvement, except as otherwise provided by
ss. 215.21 (4) (a),
292.31 (8) (i), [144.77] 292.41 (6) (d), 292.81 and 706.11 (1). When new construction is the principal improvement involved, commencement is deemed to occur no earlier than the beginning of substantial excavation for the foundations, footings or base of the new construction, except where the new construction is to be added to a substantial existing structure, in which case the commencement is the time of the beginning of substantial excavation or the time of the beginning of substantial preparation of the existing structure to receive the added new construction, whichever is earlier. The lien also shall be prior to any unrecorded mortgage given prior to the commencement of the work of improvement, if the lien claimant has no actual notice of the mortgage before the commencement. Lien claimants who perform work or procure its performance or furnish any labor or materials or plans or specifications for an improvement prior to the visible commencement of the work of improvement shall have lien rights, but shall have only the priority accorded to other lien claimants.
779.01 Note
NOTE: Par. (d) is shown as affected by two acts of the 1995 legislature and as merged by the revisor under s. 13.93 (2) (c). The bracketed language was inserted by
1995 Wis. Act 225, but was rendered superfluous by the treatment of this provision by
1995 Wis. Act 227. Corrective legislation is pending.
779.01(5)
(5) Assignment of lien, garnishment. Assignment of a claim or right to a lien or any part thereof by a prime contractor, or garnishment by the creditor of a prime contractor, subcontractor, materialman, laborer or mechanic, shall not operate to compel the owner, prime contractor, subcontractor or materialman to pay the assignee or creditor until the lien claims of subcontractors, materialmen and laborers under this subchapter have either been paid in full, matured by notice and filing or expired. If such claims become liens, the owner, prime contractor, subcontractor or materialman shall be compelled to pay such assignee or creditor only what remains due in excess of such liens.
779.01 History
History: 1973 c. 231;
1979 c. 32 ss.
57,
92 (9);
1979 c. 176; Stats. 1979 s. 779.01;
1983 a. 189;
1993 a. 453;
1995 a. 225,
227; s. 13.93 (2) (c).
779.01 Annotation
Mechanics' liens did not accrue by virtue of the surveyor's placing stakes indicating the street layout although performed before the mortgage was recorded, for staking is not a visible commencement of improvement work. Mortgage Associates v. Monona Shores, 47 W (2d) 171, 177 NW (2d) 340.
779.01 Annotation
Public policy does not require that financial institutions notify contractors that the owner is or may be in default. Mortgage Associates v. Monona Shores, 47 W (2d) 171, 177 NW (2d) 340.
779.01 Annotation
In complaint to foreclose construction lien on municipal arena, allegation that lessee of arena was acting as city's agent in contracting for improvements thereto was sufficient to withstand demurrer. Jas. W. Thomas Const. Co., Inc. v. Madison, 79 W (2d) 345, 255 NW (2d) 551.
779.01 Annotation
Architects' lien was unenforceable prior to the visible commencement of construction. Goebel v. National Exchangors, Inc. 88 W (2d) 596, 277 NW (2d) 755 (1979).
779.01 Annotation
Prospective buyer under purchase contract was not an "owner" under (2) (d). C. R. Stocks, Inc. v. Blakely's Matterhorn, Inc. 90 W (2d) 118, 279 NW (2d) 499 (Ct. App. 1979).
779.01 Annotation
Lien for work performed after owner's ex-spouse docketed judgment against owner related back to earlier work completed and paid in full under different contract. Estate of Riese v. Weber, 132 W (2d) 215, 389 NW (2d) 640 (Ct. App. 1986).
779.01 Annotation
Construction lien claimants' rights against purchase contract interests: The role of equitable conversion. 1980 WLR 615.
779.02
779.02
Notice required to preserve lien rights; exceptions; saving clause; obligations of contractors. 779.02(1)(1)
Exceptions to notice requirement. The notice required to be given by lien claimants under
sub. (2) shall not be required to be given in the following cases only:
779.02(1)(a)
(a) By any laborer or mechanic employed by any prime contractor or subcontractor.
779.02(1)(b)
(b) By any lien claimant who has contracted directly with the owner for the work or materials furnished, unless the claimant is a prime contractor subject to the notice requirement of
sub. (2) (a).
779.02(1)(c)
(c) By any lien claimant furnishing labor or materials for an improvement in any case where more than 4 family living units are to be provided or added by such work of improvement, if the improvement is wholly residential in character, or in any case where more than 10,000 total usable square feet of floor space is to be provided or added by such work of improvement, if the improvement is partly or wholly nonresidential in character.
779.02(1)(d)
(d) By any prime contractor who is personally an owner of the land to be improved, by any corporate prime contractor of which an owner of the land is an officer or controlling shareholder, by any prime contractor who is an officer or controlling shareholder of a corporation which is an owner of the land or by any corporate prime contractor managed or controlled by substantially the same persons who manage or control a corporation which is an owner of the land.
779.02(1)(e)
(e) By any lien claimant, other than a prime contractor, who furnishes labor or materials for an improvement on a project on which the prime contractor is not required to give notice under this section.
779.02(2)
(2) Notice to owner, lender and materialman. 779.02(2)(a)(a) Every prime contractor who enters into a contract with the owner for a work of improvement on the owner's land and who has contracted or will contract with any subcontractors or materialmen to provide labor or materials for the work of improvement shall include in any written contract with the owner the notice required by this paragraph, and shall provide the owner with a copy of the written contract. If no written contract for the work of improvement is entered into, the notice shall be prepared separately and served personally or by registered mail on the owner or authorized agent within 10 days after the first labor or materials are furnished for the improvement by or pursuant to the authority of the prime contractor. The notice, whether included in a written contract or separately given, shall be in at least 8-point bold type, if printed, or in capital letters, if typewritten. It shall be in substantially the following language: "As required by the Wisconsin construction lien law, builder hereby notifies owner that persons or companies furnishing labor or materials for the construction on owner's land may have lien rights on owner's land and buildings if not paid. Those entitled to lien rights, in addition to the undersigned builder, are those who contract directly with the owner or those who give the owner notice within 60 days after they first furnish labor or materials for the construction. Accordingly, owner probably will receive notices from those who furnish labor or materials for the construction, and should give a copy of each notice received to the mortgage lender, if any. Builder agrees to cooperate with the owner and the owner's lender, if any, to see that all potential lien claimants are duly paid".
779.02(2)(b)
(b) Every person other than a prime contractor who furnishes labor or materials for an improvement shall have the lien and remedy under this subchapter only if within 60 days after furnishing the first labor or materials the person gives notice in writing, in 2 signed copies, to the owner either by personal service on the owner or authorized agent or by registered mail with return receipt requested to the owner or authorized agent at the last-known post-office address. The owner or agent shall provide a copy of the notice received, within 10 days after receipt, to any mortgage lender who is furnishing or is to furnish funds for construction of the improvement to which the notice relates. The notice to the owner shall be in substantially the following language, with blanks accurately filled in: "As a part of your construction contract, your contractor or builder has already advised you that those who furnish labor or materials for the work will be notifying you. The undersigned first furnished labor or materials 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".
779.02(2)(c)
(c) If any prime contractor required to give the notice prescribed in
par. (a) fails to give notice as required, such contractor does not have the lien and remedy provided by this subchapter unless the contractor pays all of the contractor's obligations to subcontractors and materialmen in respect to the work of improvement within the time periods under
s. 779.06 and until the time for notice under
par. (b) has elapsed and no lien claimant under
par. (b) gives notice.
779.02(2)(d)
(d) Every mortgage lender making an improvement or construction loan shall make reasonable inquiry of the owner as to whether any notices required by this subsection have been given. A lender is not required to pay out any loan proceeds unless or until the prime contractor has given any notice required of such contractor by this subsection.
779.02(2)(e)
(e) If the owner or lender complains of any insufficiency of any notice, the burden of proof is upon the owner or lender to show that he or she has been misled or deceived by the insufficiency. If there is more than one owner, giving the notice required to any one owner or authorized agent is sufficient. In addition, every prime contractor and subcontractor, at the time of purchasing or contracting for any materials to be used in any of the cases enumerated in
s. 779.01, shall upon request deliver to the materialman a description of the real estate upon which the materials are to be used and the name and post-office address of the owner and authorized agent, if any. Failure to receive such description and name and address does not relieve a materialman who asserts a lien from the requirement of giving timely notice.
779.02(3)
(3) Failure to give notice; saving clause. Any lien claimant, other than the prime contractor, who fails to give a notice as required by
sub. (2) (b) shall have no lien on the land or improvement to which the failure relates. Any claimant who serves a late but otherwise proper notice personally or by registered mail on the owner or authorized agent shall have the lien provided by
s. 779.01 for any labor or materials furnished after the late notice is actually received by the owner. The burden of proving that labor or materials for which a lien is claimed were furnished after that date is on the lien claimant.
779.02(4)
(4) Notice and filing requirements in s. 779.06 unaffected. Nothing in this section shall be construed to relieve any lien claimant of the notice and filing requirements under
s. 779.06.
779.02(5)
(5) Theft by contractors. The proceeds of any mortgage on land paid to any prime contractor or any subcontractor for improvements upon the mortgaged premises, and all moneys paid to any prime contractor or subcontractor by any owner for improvements, constitute a trust fund only in the hands of the prime contractor or subcontractor to the amount of all claims due or to become due or owing from the prime contractor or subcontractor for labor and materials used for the improvements, until all the claims have been paid, and shall not be a trust fund in the hands of any other person. The use of any such moneys by any prime contractor or subcontractor for any other purpose until all claims, except those which are the subject of a bona fide dispute and then only to the extent of the amount actually in dispute, have been paid in full or proportionally in cases of a deficiency, is theft by the prime contractor or subcontractor of moneys so misappropriated and is punishable under
s. 943.20. If the prime contractor or subcontractor is a corporation, such misappropriation also shall be deemed theft by any officers, directors or agents of the corporation responsible for the misappropriation. Any of such misappropriated moneys which have been received as salary, dividend, loan repayment, capital distribution or otherwise by any shareholder of the corporation not responsible for the misappropriation shall be a civil liability of the shareholder and may be recovered and restored to the trust fund specified in this subsection by action brought by any interested party for that purpose. Except as provided in this subsection, this section does not create a civil cause of action against any other person. Until all claims are paid in full, have matured by notice and filing or have expired, such proceeds and moneys shall not be subject to garnishment, execution, levy or attachment.
779.02(6)
(6) Prime contractors to defend lien actions. Where a lien is filed under this subchapter by any person other than the prime contractor, the prime contractor shall defend any action thereon at personal expense, and during the pendency of the action the owner may withhold from the prime contractor the amount for which the lien was filed and sufficient to defray the costs of the action. In case of judgment against the owner, the owner may deduct from any amount due to the prime contractor the amount of the judgment and if the judgment exceeds the amount due, the owner may recover the difference from the prime contractor. This subsection does not apply if the lien is the result of the failure of the owner to pay the prime contractor.
779.02(7)
(7) Wrongful use of materials. Any prime contractor or any subcontractor furnishing materials who purchases materials on credit and represents at the time of making the purchase that the materials are to be used in a designated building or other improvement and thereafter uses or causes them to be used in the construction of any improvement other than that designated, without the written consent of the seller, may be fined not more than $300 or imprisoned not more than 3 months.
779.02(8)
(8) Wage payments to laborer apply to earlier work. In any situation where a laborer or mechanic employed by any prime contractor or subcontractor has wage payments due and has worked on more than one improvement for the employer during the period for which the wages are due, and a payment of less than all wages due is made, the payment is deemed to apply to the unpaid work in chronological sequence starting with the earliest unpaid time, unless the laborer agrees in writing that the payment shall be applied in a different way.
779.02 Annotation
It is not necessary to show that the defendant received benefits from the misappropriation of the trust funds in order for the plaintiff to recover. Also, a showing of wrongful intent is not required to establish liability under (5). Burmeister Woodwork Co. v. Friedel, 65 W (2d) 293, 222 NW (2d) 647.
779.02 Annotation
Where lessor defendant has not paid lessee for improvements to lessor's property by lessee's contractor, contractor has claim for unjust enrichment against defendant even though contractor lost its lien rights against defendant by failing to give notice required by (2) (a). S & M Rotogravure Service, Inc. v. Baer, 77 W (2d) 454, 252 NW (2d) 913.
779.02 Annotation
Intent to defraud must be proved under (5) when criminal sanctions are sought. State v. Blaisdell, 85 W (2d) 172, 270 NW (2d) 69 (1978).
779.02 Annotation
Because entire project was covered by one contract, 3 buildings on 3 adjoining lots constituted single improvement under (1) (c). Cline-Hanson, Inc. v. Esselman, 107 W (2d) 381, 319 NW (2d) 829 (1982).
779.02 Annotation
Discussion of (1) (c). Sullivan Bros. v. State Bank of Union Grove, 107 W (2d) 641, 321 NW (2d) 545 (Ct. App. 1982).
779.02 Annotation
Sub. (5) doesn't require that payment be made directly from owner to subcontractor for trust to be created. Money deposited into bank didn't lose trust fund status. Kraemer Bros. v. Pulaski State Bank, 138 W (2d) 395, 406 NW (2d) 379 (1987).
779.02 Annotation
Sub. (5) does not require direct payment from owner to contractor or subcontractor for monies to have trust fund status; trust fund is created when owner constructively pays insolvent contractor by delivering money to clerk of court seeking declaratory judgment as to distribution; subcontractor need not preserve lien rights. Wis. Dairies Coop. v. Citizens Bank, 160 W (2d) 758, 467 NW (2d) 124 (1991).
779.02 Annotation
A violation of sub. (5) may be found without showing the prime contractor intended to permanently deprive laborers and suppliers of compensation. The intent required is the intent to use the moneys subject to a trust inconsistent with the purpose of the trust. State v. Sobkowiak, 173 W (2d) 327, 496 NW (2d) 620 (Ct. App. 1992).
779.02 Annotation
Under sub. (5), a corporate officer who had the power and authority to ensure corporate affairs were properly managed and did not receive a personal benefit may be personally responsible for a misappropriation. Capen Wholesale, Inc. v. Probst, 180 W (2d) 354, 509 NW (2d) 120 (Ct. App. 1993).
779.02 Annotation
The prime contractor's duty under sub. (6) to defend the property owners against subcontractors' lien claims is not altered because the prime contractor is also owed money. Torke/Wirth/Pujara v. Lakeshore Towers, 192 W (2d) 481, 531 NW (2d) 419 (Ct. App. 1995).
779.02 Annotation
The exemption under sub. (1) (c) to the notice requirement for improvements where more than 4 residential units are provided is not restricted to the actual provision of the dwellings, but also applies to improvements that facilitate providing the dwellings where the improvements are not provided to each living unit separately but are provided to a project as a whole. Riverwood Park, Inc. v. Central Ready-Mixed Concrete, Inc. 195 W (2d) 821, 536 NW (2d) 722 (Ct. App. 1995).
779.02 Annotation
Monies paid to the trustee in bankruptcy of an insolvent contractor are not trust funds. In re Mercury Heating Co. 322 F Supp. 1161.
779.03
779.03
Lien valid unless waived by claimant personally, or unless payment bond furnished. 779.03(1)
(1)
No agreement by other than claimant may invalidate lien. Subject to
s. 779.05, a lien claimant may waive the lien given by
s. 779.01 by a writing signed by the lien claimant, but no action by nor agreement between any other persons shall invalidate the lien, other than payment in full to the claimant for the labor or materials to which the lien claim relates.
779.03(2)
(2) Payment bond may eliminate lien rights. In any case where the prime contractor, pursuant to agreement with the owner, has furnished a payment bond under
s. 779.035, all liens provided by
s. 779.01 except those of any prime contractor do not exist,
ss. 779.02 (1) to
(4) and
(6) and
779.06 do not apply and all claimants who have no lien shall follow the requirements and procedures specified in
ss. 779.035 and
779.036.
779.03 History
History: 1973 c. 230;
1979 c. 32 ss.
57,
92 (9); Stats. 1979 s. 779.03;
1993 a. 486.
779.035
779.035
Form of contract; payment bond; remedy. 779.035(1)(1) To eliminate lien rights as provided in
s. 779.03 (2), the contract between the owner and the prime contractor for the construction of the improvement shall contain a provision for the payment by the prime contractor of all claims for labor performed and materials or plans or specifications furnished, used or consumed, except plans or specifications furnished by the architect, professional engineer or surveyor employed by the owner, in making such improvement and performing the work of improvement. The contract shall not be effective to eliminate lien rights unless the prime contractor gives a bond issued by a surety company licensed to do business in this state. The bond shall carry a penalty for unpaid claims of not less than the contract price, and shall be conditioned for the payment to every person entitled thereto of all the claims for labor performed, and materials furnished under the contract and subsequent amendments thereto, to be used or consumed in making the improvement or performing the work of improvement as provided in the contract and subsequent amendments thereto. The bond shall be approved by the owner and by any mortgage lender furnishing funds for the construction of the improvement. No assignment, modification or change in the contract, or change in the work covered thereby, or any extension of time for completion of the contract shall release the sureties on the bond.
779.035(2)(a)(a) Except as provided in
par. (b), any party in interest may, not later than one year after the completion of the contract for the construction of the improvement, maintain an action in his or her own name against the prime contractor and the sureties upon the bond for the recovery of any damages sustained by reason of the failure of the prime contractor to comply with the contract or with the contract between the prime contractor and subcontractors. If the amount realized on the bond is insufficient to satisfy all of the claims of the parties in full, it shall be distributed among the parties proportionally.
779.035(2)(b)1.1. Except as provided in
subd. 2., a subcontractor or supplier may maintain an action under
par. (a) only if the subcontractor or supplier has notified the prime contractor in writing that the subcontractor or supplier was providing labor or materials for the construction of the improvement. The notice must be provided no later than 60 days after the date on which the subcontractor or supplier first provided the labor or materials.
779.035(2)(b)2.
2. A notice under
subd. 1. is not required if any of the following applies:
779.035(2)(b)2.a.
a. The contract for the provision of the labor or materials does not exceed $5,000.
779.035(2)(b)2.b.
b. The action is brought by an employe of the prime contractor, the subcontractor or the supplier.
779.035(2)(b)2.c.
c. The subcontractor or supplier is listed in a written contract, or in a document appended to a written contract, between a subcontractor or supplier and the prime contractor.
779.035(3)
(3) In any case in which the improvement contract and bond have been prepared and executed pursuant to
sub. (1) upon inquiry by any subcontractor, materialman, laborer or mechanic furnishing labor or materials for said improvement, the prime contractor and the owner shall so advise the person making the inquiry and shall give the person reasonable opportunity to inspect and examine the contract and bond.
779.035 Annotation
Liability of prime contractor for damages to employes of a subcontractor under s. 779.14 (2) did not include wage penalties under s. 66.293 (3); consent to be a named party under s. 66.293 (3) may occur after one year where the action is for damages under s. 66.293 in the name of the plaintiffs and other similarly situated employes and was filed within the one year time period. Strong v. C.I.R., Inc. 184 W (2d) 619, 516 NW 719 (2d) (1994).
779.035 Annotation
A provision in the contractor's payment bond requiring a supplier of a subcontractor to provide notice to the prime contractor within 90 days after supplying materials in order to secure his rights under the payment bond was not inconsistent with the one-year statute of limitations provided by (2), which was also incorporated into the agreement, and hence was not contrary to public policy. R. C. Mahon Co. v. Hedrich Construction Co. 69 W (2d) 456, 230 NW (2d) 621.
779.036
779.036
Contracts with payment bond; lien; notice; duty of owner and lender.
