Every person other than a prime contractor who performs, furnishes, or procures labor, materials, plans, or specifications for an improvement shall have the lien and remedy under this subchapter only if within 60 days after performing, furnishing, or procuring the first labor, services, materials, plans, or specifications the person serves a written notice, in 2 signed copies, on 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 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".
If any prime contractor required to give the notice prescribed in par. (a)
fails to give notice as required, the prime contractor does not have the lien and remedy provided by this subchapter unless the prime contractor pays all of the prime contractor's obligations to its subcontractors, suppliers, and service providers 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 either none of its subcontractors, suppliers, or service providers gives notice as a lien claimant under par. (b)
or all of its subcontractors, suppliers, and service providers have waived all lien rights in full under s. 779.05
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 the prime contractor by this subsection.
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 supplier 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 supplier who asserts a lien from the requirement of giving timely notice.
(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 on the owner or authorized agent shall have the lien provided by s. 779.01
for any labor, services, materials, plans, or specifications performed, furnished, or procured after the late notice is actually received by the owner. The burden of proving that labor, services, materials, plans, or specifications for which a lien is claimed were furnished after that date is on the lien claimant.
(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
(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, services, materials, plans, and specifications 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, limited liability company, or other legal entity other than a sole proprietorship, such misappropriation also shall be deemed theft by any officers, directors, members, partners, or agents 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, member, or partner not responsible for the misappropriation shall be a civil liability of that person 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 person other than the prime contractor or subcontractor to whom such moneys are paid. 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.
(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.
(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.
(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.
It is not necessary to show that the defendant received benefits from a misappropriation of trust funds in order for the plaintiff to recover. A showing of wrongful intent is not required to establish civil liability under sub. (5). Burmeister Woodwork Co. v. Friedel, 65 Wis. 2d 293
, 222 N.W.2d 647
When the defendant lessor had not paid the lessee for improvements to the lessor's property by the lessee's contractor, the contractor had a claim for unjust enrichment against the defendant even though the contractor lost its lien rights against the defendant by failing to give the notice required under sub. (2) (a). S & M Rotogravure Service, Inc. v. Baer, 77 Wis. 2d 454
, 252 N.W.2d 913
Intent to defraud must be proved when criminal sanctions are sought under sub. (5). State v. Blaisdell, 85 Wis. 2d 172
, 270 N.W.2d 69
Because an entire project was covered by one contract, 3 buildings on 3 adjoining lots constituted a single improvement under sub. (1) (c). Cline-Hanson, Inc. v. Esselman, 107 Wis. 2d 381
, 319 N.W.2d 829
Sub. (5) does not require that payments be made directly from the owner to subcontractors for a trust to be created. Money deposited into a bank did not lose its trust fund status. Kraemer Bros. v. Pulaski State Bank, 138 Wis. 2d 395
, 406 N.W.2d 379
A trust fund under sub. (5) is created when an owner constructively pays an insolvent contractor by delivering money to the clerk of court seeking a declaratory judgment as to distribution. A subcontractor need not preserve lien rights. Wis. Dairies Coop. v. Citizens Bank, 160 Wis. 2d 758
, 467 N.W.2d 124
A violation of sub. (5) may be found without showing that the prime contractor intended to permanently deprive laborers and suppliers of compensation. The intent required is to use the moneys subject to a trust inconsistent with the purpose of the trust. State v. Sobkowiak, 173 Wis. 2d 327
, 496 N.W.2d 620
(Ct. App. 1992).
Under sub. (5), a corporate officer who had the power and authority to ensure that corporate affairs were properly managed and who did not receive a personal benefit may be personally responsible for a misappropriation. Capen Wholesale, Inc. v. Probst, 180 Wis. 2d 354
, 509 N.W.2d 120
(Ct. App. 1993).
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 Wis. 2d 481
, 531 N.W.2d 419
(Ct. App. 1995).
The exemption under sub. (1) (c) to the notice requirement for improvements when 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 when 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 Wis. 2d 821
, 536 N.W.2d 722
(Ct. App. 1995), 94-2413
The test for a violation of sub. (5) is whether all the money received by the contractor was paid for labor and materials used for contracted improvements. It is not whether an individual subcontractor received its full billed amount. Capital City Sheet Metal, Inc. v. Voytovich, 217 Wis. 2d 683
, 578 N.W.2d 643
(Ct. App. 1998), 97-1588
When a lien claimant's work was essential to allow an improvement to be used for its intended purpose and the improved area exceeded 10,000 square feet, the work “provided" 10,000 square feet of space to the facility under sub. (1) (c), 1995 stats., and the claimant was exempt from the sub. (2) lien notice requirement. U.S. Fire Protection v. St. Michael's Hospital, 221 Wis. 2d 410
, 585 N.W.2d 659
(Ct. App. 1998), 97-3426
Under sub. (5), a misuse of contractor trust funds can form the basis of a prosecution for criminal theft by contractor under s. 943.20. Because s. 943.20 qualifies for treble damages under s. 895.80, treble damages are available for theft by contractor under sub. (5), provided that the elements of both the civil and the criminal statutes, including the specific criminal intent element required by s. 943.20, are proven to the civil preponderance burden of proof. Tri-Tech Corporation of America v. Americomp Services, Inc. 2002 WI 88
, 254 Wis. 2d 418
, 646 N.W.2d 822
While money cannot be used for purposes outside of the project, that does not end contractors' responsibilities under the statute. Using the money to pay themselves in full while other subcontractors have not been paid proportionally constitutes using money for a non-statutory purpose. State v. Keyes, 2008 WI 54
, 309 Wis. 2d 516
, 750 N.W.2d 30
Monies paid to the trustee in bankruptcy of an insolvent contractor are not trust funds. In re Mercury Heating Co. 322 F. Supp. 1161
Wisconsin's Construction Trust Fund Statute: Protecting Against Theft by Contractor. Hinkston. Wis. Law. May 2005.
Lien valid unless waived by claimant personally, or unless payment bond furnished. 779.03(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, services, materials, plans, or specifications to which the lien claim relates.
(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)
do not apply and all claimants who have no lien shall follow the requirements and procedures specified in ss. 779.035
History: 1973 c. 230
; 1979 c. 32
, 92 (9)
; Stats. 1979 s. 779.03; 1993 a. 486
; 2005 a. 204
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, services, materials, plans, or specifications performed, furnished, procured, 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, services, materials, plans, and specifications performed, furnished, or procured 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.
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.
Except as provided in subd. 2.
, a subcontractor, supplier, or service provider may maintain an action under par. (a)
only if the subcontractor, supplier, or service provider has notified the prime contractor in writing that the subcontractor, supplier, or service provider was performing, furnishing, or procuring labor, services, materials, plans, or specifications for the construction of the improvement. The notice must be provided no later than 60 days after the date on which the subcontractor, supplier, or service provider first performed, furnished, or procured the labor, services, materials, plans, or specifications.
A notice under subd. 1.
is not required if any of the following applies:
The contract for performing, furnishing, or procuring the labor, services, materials, plans, or specifications does not exceed $5,000.
The action is brought by an employee of the prime contractor, the subcontractor or the supplier.
The subcontractor, supplier, or service provider is listed in a written contract, or in a document appended to a written contract, between a subcontractor, supplier, or service provider and the prime contractor.
In any case in which the improvement contract and bond have been prepared and executed pursuant to sub. (1)
upon inquiry by any subcontractor, supplier, service provider, laborer, or mechanic performing, furnishing, or procuring labor, services, materials, plans, or specifications 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.
A provision in a 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 sub. (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 Wis. 2d 456
, 230 N.W.2d 621
The liability of a prime contractor for damages to employees of a subcontractor under s. 779.14 (2) did not include wage penalties under s. 66.293 [now 66.0903] (3). Consent to be a named a party under s. 66.293 (3) may occur after one year when the action is for damages under s. 66.293 in the name of the plaintiffs and other similarly situated employees and was filed within the one-year time period. Strong v. C.I.R., Inc. 184 Wis. 2d 619
, 516 N.W.2d 719
Contracts with payment bond; lien; notice; duty of owner and lender. 779.036(1)
In any case in which an improvement is constructed or to be constructed pursuant to a contract and payment bond under s. 779.035
, any person performing, furnishing, or procuring labor, services, materials, plans, or specifications to be used or consumed in making the improvement, to any prime contractor or subcontractor shall have a lien on the money or other payment due or to become due the prime contractor or subcontractor therefor, if the lienor, before payment is made to the prime contractor or subcontractor, serves a written notice of the lienor's claim on the owner or authorized agent and on any mortgage lender furnishing funds for the construction of the improvement. Upon receipt of the notice, the owner and lender shall assure that a sufficient amount is withheld to pay the claim and, when it is admitted or not disputed by the prime contractor or subcontractor involved or established under sub. (3)
, shall pay the claim and charge it to the prime contractor or subcontractor as appropriate. Any owner or lender violating this duty shall be liable to the claimant for the damages resulting from the violation. There shall be no preference among lienors serving such notices.
A copy of the notice provided in sub. (1)
also shall be served by the lienor, within 7 days after service of the notice upon the owner and lender, upon the prime contractor or subcontractor.
If the prime contractor or subcontractor does not dispute the claim by serving written notice on the owner and the lien claimant within 30 days after service of written notice under sub. (2)
, the amount claimed shall be paid over to the claimant on demand and charged to the prime contractor or subcontractor pursuant to sub. (1)
. If the prime contractor or subcontractor disputes the claim, the right to a lien and to the moneys in question shall be determined in an action brought by the claimant or the prime contractor or subcontractor. If the action is not brought within 3 months from the time the notice required by sub. (1)
is served, the lien rights under this section are barred.
When the total lien claims exceed the sum due the prime contractor or subcontractor concerned and where the prime contractor or subcontractor has not disputed the amounts of the claims filed, the owner with the concurrence of the lender shall determine on a proportional basis who is entitled to the amount being withheld and shall serve a written notice of the determination on all claimants and the prime contractor or subcontractor. Unless an action is commenced by a claimant or by the prime contractor or subcontractor within 20 days after the service of said notice, the money shall be paid out in accordance with the determination and the liability of the owner and lender to any claimant shall cease.
If an action is commenced, all claimants, the owner and the lender shall be made parties. Such action shall be brought within 6 months after completion of the work of improvement or within the time limit prescribed by par. (a)
, whichever is earlier.
Within 10 days after the filing of a certified copy of the judgment in any such action with the owner and lender, the money due the prime contractor or subcontractor shall be paid to the clerk of court to be distributed in accordance with the judgment.
History: 1979 c. 32
, 92 (9)
; 1979 c. 110
s. 60 (11)
; 1979 c. 176
; Stats. 1979 s. 779.036; 2005 a. 204
The initial availability to the supplier of a lien under this section on payments made to a subcontractor, did not preclude the bringing of an action on the payment bond since nothing in the statute itself indicates it is to be an exclusive remedy, and the legislative history indicates it was intended as a supplementary remedy to the supplier's rights under the payment bond provided for in s. 779.035. R.C. Mahon Co. v. Hedrich Construction Co. 69 Wis. 2d 456
, 230 N.W.2d 621
A construction lien protects employee benefits in addition to hourly wages. Plumber's Local 458 v. Howard Immel, 151 Wis. 2d 233
, 445 N.W.2d 43
(Ct. App. 1989).
Claims assignable; notice; prior payment.
All claims for liens and right to recover therefor under this subchapter are assignable. Notice in writing of such assignment may be served upon the owner of the property affected and all payments made by the owner before service of such notice shall discharge the debt to the amount paid. The assignee may file petitions for such liens and may bring an action in the assignee's name to enforce the same, subject to the limitations in s. 779.01 (5)
History: 1979 c. 32
, 92 (9)
; 1979 c. 176
; Stats. 1979 s. 779.04.
Waivers of lien. 779.05(1)(1)
Any document signed by a lien claimant or potential claimant and purporting to be a waiver of construction lien rights under this subchapter, is valid and binding as a waiver whether or not consideration was paid therefor and whether the document was signed before or after the labor, services, materials, plans, or specifications were performed, furnished, or procured, or contracted for. Any ambiguity in such document shall be construed against the person signing it. Any waiver document shall be deemed to waive all lien rights of the signer for all labor, services, materials, plans, or specifications performed, furnished, or procured, or to be performed, furnished, or procured, by the claimant at any time for the improvement to which the waiver relates, except to the extent that the document specifically and expressly limits the waiver to apply to a particular portion of such labor, services, materials, plans, or specifications. A lien claimant or potential lien claimant of whom a waiver is requested is entitled to refuse to furnish a waiver unless paid in full for the labor, services, materials, plans, or specifications to which the waiver relates. A waiver furnished is a waiver of lien rights only, and not of any contract rights of the claimant otherwise existing.
A promissory note or other evidence of debt given for any lienable claim shall not be deemed a waiver of lien rights unless the note or other instrument is received as payment and expressly declares that receipt thereof is a waiver of lien rights.
History: 1979 c. 32
; Stats. 1979 s. 779.05; 2005 a. 204
Public improvement liens under this section are subject to the waiver provision of s. 289.05 (1) [now s. 779.05 (1)]. Since waiver of a public improvement lien disposes of the lien itself, the refiling of a claim for lien after a waiver was a nullity and the fact that the claim was not disputed following refiling did not revive the lien. Druml Co., Inc. v. New Berlin, 78 Wis. 2d 305
, 254 N.W.2d 265
Section 779.135 (1) voids a contract provision that requires a subcontractor to waive its right to a construction lien before it can get paid. Section 779.05 (1) specifically allows a subcontractor who has signed a contract containing a lien waiver provision to refuse to furnish the waiver unless paid in full for the work or material to which the waiver relates. Thus a subcontractor facing a void construction lien waiver contract provision has a choice: it can either tender a lien waiver prior to being paid or refuse to do so until it is paid. Tri-State Mechanical, Inc. v. Northland College, 2004 WI App 100
, 273 Wis. 2d 471
, 681 N.W.2d 302
Filing claim and beginning action; notice required before filing; contents of claim document. 779.06(1)(1)
No lien under s. 779.01
shall exist and no action to enforce a lien under s. 779.01
shall be maintained unless within 6 months from the date the lien claimant performed, furnished, or procured the last labor, services, materials, plans, or specifications, a claim for the lien is filed in the office of the clerk of circuit court of the county in which the lands affected by the lien lie, and unless within 2 years from the date of filing a claim for lien an action is brought and summons and complaint filed. A lien claimant shall serve a copy of the claim for lien on the owner of the property on which the lien is placed within 30 days after filing the claim. A claim for a lien may be filed and entered in the judgment and lien docket, and action brought, notwithstanding the death of the owner of the property affected by the action or of the person with whom the original contract was made, with like effect as if he or she were then living.
No lien claim may be filed or action brought thereon unless, at least 30 days before timely filing of the lien claim, the lien claimant serves on the owner a written notice of intent to file a lien claim. The notice is required to be given whether or not the claimant has been required to and has given a previous notice pursuant to s. 779.02
. Such notice shall briefly describe the nature of the claim, its amount and the land and improvement to which it relates.
Such a claim for lien shall have attached thereto a copy of any notice given in compliance with s. 779.02
and a copy of the notice given in compliance with sub. (2)
, and shall contain a statement of the contract or demand upon which it is founded, the name of the person against whom the demand is claimed, the name of the claimant and any assignee, the last date of performing, furnishing, or procuring any labor, services, materials, plans, or specifications, a legal description of the property against which the lien is claimed, a statement of the amount claimed and all other material facts in relation thereto. Such claim document shall be signed by the claimant or attorney, need not be verified, and in case of action brought, may be amended, as pleadings are.
History: 1979 c. 32
, 92 (9)
; 1979 c. 176
; Stats. 1979 s. 779.06; 1995 a. 224
; 2005 a. 204
The limitation period under sub. (1) commenced on the date the claimant furnished the last materials for the project, although the claimant supplied 2 succeeding subcontractors and the 2nd subcontractor paid in full. Fredrick Redi-Mix, Inc. v. Thomson, 96 Wis. 2d 715
, 292 N.W.2d 528
When a contractor gave a lien notice to the initial owner when work commenced and had no notice of a subsequent transfer of title, the contractor's lien rights prevailed against subsequent owners who received no lien notice. Wes Podany Const. Co., Inc. v. Nowicki, 120 Wis. 2d 319
, 354 N.W.2d 755
(Ct. App. 1984).
Sub. (3) does not restrict when amendments to lien claims can be made. It only provides that if an amendment is made after an action is brought, the lien claim may be amended in the same manner as pleadings. Torke/Wirth/Pujara v. Lakeshore Towers, 192 Wis. 2d 481
, 531 N.W.2d 419
(Ct. App. 1995).
A subcontractor's liens are not protected by incorporation into the prime contractor's lien if the subcontractor makes an independent claim. If the subcontractor brings a lien claim independent from the prime contractor, it is required to follow the procedures required for all claimants under the statutes. Torke/Wirth/Pujara v. Lakeshore Towers, 192 Wis. 2d 481
, 531 N.W.2d 419
(Ct. App. 1995).
Judgment and lien docket. 779.07(1)
Every clerk of circuit court shall keep a judgment and lien docket in which shall be entered, immediately upon filing, the proper entries under the appropriate headings specified in this subsection, relative to each claim for lien filed, opposite the names of the persons against whom the lien is claimed. The names shall be entered alphabetically. Each page in the judgment and lien docket shall be divided into 9 columns, with headings in the following sequence to the respective columns, as follows:
Name of person against whom lien is claimed.
Last date of performing, furnishing, or procuring labor, services, materials, plans, or specifications.
Description of copies of notices attached to claim when filed.
The judgment and lien docket shall be presumptive evidence of the correctness of its entries.
History: 1979 c. 32
; Stats. 1979 s. 779.07; 1993 a. 486
; 1995 a. 224
; 2005 a. 204
Release of lien; undertaking. 779.08(1)
The person against whom a lien is claimed or any other interested party may file with the clerk of court in whose office the claim for lien is filed an undertaking executed by a surety to the effect that the person against whom the lien is claimed shall pay the amount of the claim and all costs and damages which may be awarded against that person on account of the lien or in lieu thereof deposit with the clerk of the court a sum of money, certified check or negotiable government bonds in par value equal to 125 percent of the claim for lien. The court in which any action to foreclose the lien may be brought shall determine any question of sufficiency of the surety if exception is taken thereto by the lien claimant within 10 days after notice of the filing of such undertaking or deposit of other security and may upon notice and upon motion of any party, order any sum of money deposited to be invested. The clerk of court shall remove the lien from the judgment and lien docket upon the court's order approving the surety in substitution for the lien. The depositor shall be entitled to any income from the investments, certified check or negotiable U.S. government bonds deposited and the clerk shall pay the income to the depositor without order when received or, in the case of coupons, as the income becomes due.
If an undertaking is furnished, it shall be accompanied by the affidavit of the surety which states that the surety is worth, over and above all debts and liabilities in property within this state not exempt from execution, an amount in the aggregate equal to 125 percent or more of the amount of the claim for lien.