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Does my subcontractor have lien rights?

I’m a general contractor. I hired a sub to perform work on a residential property. I paid him half down at job start (Aug 2nd) and he walked off the job about halfway through (sept 24) He just sent an intent to file lien to the property owner (dated dec 8) unless the remaining 50% is paid. I don’t think they or I should have to pay for work that wasn’t completed. He sent the 60 day preliminary notice with the intent to file (dated dec 8) Does he even have lien rights since we are well past the 60 days? And if not, do the property owners have to contest the intent to file? He can’t proceed with filing if he has no lien rights, correct? Thank you!

1 reply

Dec 20, 2021

Hello GC, A lien claimant must file a mechanics lien within 6 months after the last day on which labor/materials were furnished, but at least 30 days after filing a Notice of Intent to File a Claim of Lien. A subcontractor also must have provided a preliminary notice within 60 days after first providing labor or materials to the owner. It sounds like you question whether the preliminary notice requirement has been timely met here, or if not, whether the subcontractor is afforded lien rights under any exceptions. 779.02(2)(b) requires a subcontractor to provide timely preliminary notice. Because the preliminary notice was delivered in December and the first labor was provided in August, it does not appear timely. Thus, the subcontractor would not have a valid lien right unless one of the exceptions found in 779.02(1) are met. 779.01 waives preliminary notice requirements for the following: (a) By any laborer or mechanic employed by any prime contractor or subcontractor. (b) By any lien claimant who has contracted directly with the owner for the labor, services, materials, plans, or specifications performed, furnished, or procured, unless the claimant is a prime contractor subject to the notice requirement of sub. (2)(a). (c) By any lien claimant performing, furnishing, or procuring labor, services, materials, plans, or specifications 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 the improvement is partly or wholly nonresidential in character. (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. (e) By any lien claimant, other than a prime contractor, who performs, furnishes, or procures labor, services, materials, plans, or specifications for an improvement on a project on which the prime contractor is not required to give notice under this section. Do any of these exceptions apply to this subcontractor? Next, thorough analysis of exceptions should also include 779(3), the "savings" clause, which provides that a Claimant that 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 performed AFTER the late notice is actually received by the owner. The burden of proving that labor for which a lien is claimed were furnished after that date is on the lien claimant. It does not appear that this subcontractor has a claim under the savings clause, as they walked off the job more than 60 days before the preliminary notice. Further, 779.05 provides strong lien waiver rights, and you should consider whether there is any document signed by the potential lien claimant that may waive construction lien rights. Also, finally, where a lien is filed under 779 by any person other than the prime contractor (the subcontractor in your case), 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. As you can see, there are numerous moving parts to a Wisconsin subcontractor lien rights question... but your explanation and this preliminary analysis suggests the subcontractor's lien claim may fail. However, there may be other information that changes this analysis. It is important to keep in mind that a subcontractor may still have valid underlying breach of contract claims, and that an invalid lien is not the end-of-the-road... They can still sue for simple breach of contract and collect damages, but simply cannot force them to be collected against the property. I'd be happy to discuss further if you are interested. Feel free to contact me through my website, Michaeljohnsonlegal.com

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