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Construction law is a dynamic body of law that extends to virtually any business decision that a construction company must make on a day-to-day basis. Knowledge of these legal rights and responsibilities helps the owner to make more informed choices, protect rights, mitigate liability and save resources.
A lien is an interest or a legal right that the creditor has in the property of another person, usually lasting until the loan or the debt that the creditor has obtained is fulfilled. A mechanic’s lien is a contractual bond that assures payment of labor or equipment and materials supplied to enhance, restore, or maintain a personal or real property.
This is vital because, as a contractor, you want to be sure you receive the necessary payment. Also, you want to consider how to proceed if at the end of the day you’re no paid. Sometimes your subcontractors might impede your ability to proceed with a deal whether you’re the one doing the work or have employees working with you. Click on the link to learn more about liens and notices in Wisconsin: https://medium.com/seed-law-column/understanding-mechanics-liens-in-construction-94d6a0a2f087.
What is the purpose of a mechanic’s lien?
Mechanic’s liens are civil documents that reserve the filer’s right to demand unpaid reimbursement in principle. Contractors, subcontractors, or vendors who have never obtained payment for work they have done or materials they have given on the property usually file them.
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Suppose you hired a contractor to create a new swimming pool in your garden because you don’t have the knowledge or the experience to build one yourself. They do all the work that is needed, and in the end, they build a fantastic pool that even exceeds your expectations. Yet you refuse to pay the professional the ultimate $5,000 on his contract balance after the project.
This way, the contractor will sue you for a contract violation. But the lien laws offer an extra solution for the contractor. They may file a mechanic’s lien on your property.
Mechanic’s liens exist in public property documents. Liens are often considered to be “traveling by land,” which ensures that if someone decides to purchase your house, they can demand that you pay the contractor first.
This can get quickly complicated because you won’t be able to sell your house before you comply with unpaid liens. In addition, banks and insurers are usually hesitant to refinance homes that are burdened with liens. Liens can be huge inconveniences for a lot of homeowners. But they give contractors, subcontractors, and suppliers substantial leverage. Read more on this page.
When to file one?
If a payment is late, a lien can be filed at some time throughout the building process. Building professionals can easily file a lien for outstanding progress payments, retainage, or final payment. Every state, however, sets a particular period in which a lien must be filed.
Liens are usually used as a final resort to be paid for work performed on or supplied to a private building project with materials. In the construction industry, slow payment and non-payment are usually the most common payment concerns. Mechanical liens are among the most effective ways to ensure that the contractors receive what they deserve for their hard work.
Contractors can use the mechanic’s lien in their favor when all other options for payments have been declined. These include invoice notices and demand letters. Many companies want to avoid mechanic’s liens filed by their contractors because it says poorly about the company that refuses to pay in full its workers. Suppose you are a contractor that is waiting to receive payment for all your hard work. In that case, you should definitely consider filing one as well.
Do I have the right to file one?
In general, anybody who provides labor or material for improving a property permanently would have lien rights. Claimants do, however, submit the required notices within the appropriate amount of time.
Can I file one at the beginning of a project?
This is not a standard procedure, nor is it a good practice, and it is certainly not even a legal practice.
Why is that so? Well, filling a lien right at the beginning of a project can send the wrong message and can be considered adversarial. If you end up not getting paid for an extended duration, this solution can be seen as a last resort. In other words, filling it right away at the start is not something you should do.
Another thing you should be aware of is that this is not legitimate. If you are not owed money for completing your work, it is unfair to file a lien. It would be legal right after completing work. Plenty of contractors, as mentioned above, are left without being paid for their services.
That is the right moment when you should start considering filing a mechanic’s lien in order to get what you deserve. If you want to learn more about liens in Wisconsin, you should do extensive research on the topic.
A few final words on liens and notices in Wisconsin
As you can see, the importance of a mechanic’s lien is huge, especially for contractors. If you are among them, you should always make sure you receive payment for the job you have successfully done. If you are a homeowner, ensure that all of your contractors get paid in full for their services because there will be legal consequences otherwise.