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When Is Real Estate Litigation Necessary to Address a Mechanic's Lien?
By Homeowners often hire a general contractor to perform work on their property. The general contractor, in turn, may hire subcontractors to fulfill specific tasks. When the homeowner pays the general contractor their fee, they may assume that the general contractor will be found at fault if a subcontractor is not paid by the general contractor. However, in some cases, a mechanic's lien may be placed against the homeowner if a subcontractor does not receive payment, and real estate litigation may be necessary to settle issues related to these types of liens.
What Is a Mechanic's Lien?
Mechanic's liens laws, also sometimes called “construction liens, ” provide security for laborers and suppliers. The term "mechanic" refers to a physical laborer, such as a construction worker. A lien is the right given to another party by a homeowner to secure a debt. Mechanic's liens give homeowners the incentive to provide laborers with timely and reasonable payment for their work by putting the homeowner’s land up as collateral if payment is not received.
Why Is the Homeowner Held to Account and Not the General Contractor?
The most immediate reason why a homeowner may be held accountable for debts to a subcontractor is that it is their property which is being renovated. As such, they are the party who benefits the most from any work done by a subcontractor, laborer, or supplier. This type of lien also protects the relationship between the general contractor and subcontractors, and it prevents a homeowner from withholding payment by simply claiming they disliked the work done.
How Is a Mechanic's Lien Claimed?
Wisconsin statute § 779.06 has codified the procedure for claiming a lien:
- A lien can be claimed up to six months after the work was performed, and the owner of the property must receive a copy of the claim 30 days after it was filed. The claim must be filed in the district court of the county where the work was done.
- At least 30 days before a claim is filed, the claimant must notify the homeowner of their intent to file a claim.
- The claim document must state the name of the defendant, the contract for the work performed, a description of the work done, the amount being claimed, and any other relevant facts.
After filing a claim, the plaintiff and the defendant will go to trial and present their evidence and arguments to the court. If the defendant is found to have wronged the plaintiff, they may be subject to a fine in addition to the payment that is owed. If payment cannot be made in a reasonable amount of time, then part or all of the homeowner's property could potentially be confiscated as payment.
Recourse if a Lien is Claimed Against a Homeowner
If a lien is successfully brought against a homeowner, then the homeowner may be able to bring a civil suit against the general contractor. If they prove that the general contractor failed in their duties, then the general contractor will be required to compensate the homeowner.
Contact a Milwaukee, WI Real Estate Litigation Attorney
Having a mechanic’s lien placed on your property can be very serious, and it could potentially put your home and savings in jeopardy. If you need help addressing issues related to mechanic’s liens or any other real estate disputes, the Milwaukee real estate lawyers at Gimbel, Reilly, Guerin & Brown, LLP can provide the legal help you need. Contact our offices today at 414-271-1440.
Sources:
https://docs.legis.wisconsin.gov/statutes/statutes/779/
https://www.investopedia.com/terms/m/mechanics-lien.asp
