Upfront Construction Notices: The Right to Cure and the Right to Enforce a Lien

15 May

Upfront Construction Notices: The Right to Cure and the Right to Enforce a Lien

By Attorney Isaiah M. Richie, Schloemer Law Firm, S.C.

Construction contractors, landscapers, and builders frequently ask us, “What notices do I need to provide to consumers at the beginning of a project to protect my business?” This article will examine “Right to Cure” and “Lien Laws” so that you can take steps to protect your bottom line.

Very few parties enter into an agreement expecting to end up in a conflict or even court. Usually, when a contractor and customer start a project there aren’t any red flags or warnings, and if the two sides can’t agree from the beginning, they will go their separate ways before either of them makes a significant investment.

Unfortunately, it’s not until after projects have been substantially started or even completed that conflict usually starts to arise. Whether it is a customer that is unhappy with the work or a customer that refuses to pay for all or some of the work you have performed, it is always better to plan for disagreement from the beginning when the parties are on the same page. This article discusses two areas that can substantially benefit from providing upfront notice to customers before ordering a plank of wood or hammering the first nail.

The Right to Cure

In an effort to curb the expensive costs of litigation involved in construction defect claims, Wisconsin passed Wisconsin Act 201 in 2005. Act 201 requires a customer provide written notice to a contractor or materials supplier prior to filing a claim for defective work or products.

The contractor or supplier must then be given the opportunity to remedy or “cure” any purported defect before the customer may take legal action. Although the customer is not obligated to accept the contractor or supplier’s proposal, the customer must at least offer the opportunity for the contractor to cure.

This procedure has been explained in a short step-by-step handout which may be found at:

https://www.housingalliance.us/wp-content/uploads/RightToCure_SinglePage.pdf

This handout should be delivered to a potential customer with any bid, estimate, or contract you send out. Doing so will help protect yourself from future claims, and it will provide a cost-effective remedy to a large number of potential complaints.

This right to cure applies only to residential construction, and in particular, it falls on the general contractor to provide this notice. Be sure to clarify your relationship with the general contractor and customer to ensure you are protected under the general contractor’s notice. If you are working directly with the customer, it may be appropriate for you to provide this notice, even if the general contractor has also provided the notice.

If you or your company has already been presented with a legal claim and did not provide this handout to the customer, it may still be possible to halt litigation while you are given an opportunity to propose a solution. Our office can assist in this procedure.

Right to Enforce a Lien

For general and sub-contractors alike, however, a second notice that should be provided to the customer is a lien notice. The lien notice must be provided within 60 days of starting work or providing materials.

Wisconsin Statutes provide specific language which must be included in the lien notice, which must be in at least 8-point bold type (or in capital letters if typewritten). The notice must state essentially the following language:

“As required by the Wisconsin construction lien law, claimant hereby notifies owner that persons or companies performing, furnishing, or procuring labor, services, materials, plans, or specifications 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 claimant, are those who contract directly with the owner or those who give the owner notice within 60 days after they first perform, furnish, or procure labor, services, materials, plans or specifications for the construction. Accordingly, owner probably will receive notices from those who perform, furnish, or procure labor, services, materials, plans, or specifications for the construction, and should give a copy of each notice received to the mortgage lender, if any. Claimant agrees to cooperate with the owner and the owner’s lender, if any, to see that all potential lien claimants are duly paid.”

For ease of drafting, we recommend using this specific language to comply with the statute.

A claimant who fails to provide this notice does not have any right to a lien on the land or improvements. This does not eliminate a customer’s liability, but it limits the potential remedies if the customer is unable or refuses to pay for goods or services.

There are several exceptions to this rule, and there are also provisions allowing late notice to be enforceable on all subsequent work. If you have started a project and have not yet filed a lien notice, our office can assist you in filing a notice and reviewing the specific situation to see if one of the exceptions may apply to prior work.

The Next Step

There are a number of questions that should be answered prior to entering into any contract with a customer. These questions go far beyond what type of design or materials should be used. A carefully drafted contract should specify the obligations of each party and should include a procedure and protections for each party in case of a dispute. The right to cure and the right to enforce a lien are two of those protections which should be provided at the onset of a project.

If you have questions about this article, please contacts its author, Isaiah M. Richie, at 262-334-3471 or [email protected], or one of our Business Law Attorneys. For more information please contact our firm by emailing [email protected].

Originally published: May 15, 2019.