Speaker 1 00:00:11 This is Carolyn from and welcome to the quick getting screwed podcast, where we talk about everything related to contractors, construction, and information to help you run better businesses. Hey guys, and welcome back to the quick getting screwed podcast, where we talk all about all the ways not to get screwed in the construction industry. And today we have another one in our series of our 50 state lean laws. Uh, and today we're doing handling the state of Wisconsin and I have the lean guru here from Wisconsin, Brian Ziman. How are you, Brian?
Speaker 2 00:00:44 Hi, good morning. Uh, good to be here, Carolyn.
Speaker 1 00:00:47 Good. How are things in Wisconsin?
Speaker 2 00:00:50 Uh, they're they're doing, doing well. Uh, sun shining. It's a pretty nice day here. So
Speaker 1 00:00:55 Is the construction business busy? There?
Speaker 2 00:00:58 It is extremely busy as it, uh, I understand most of the country is it's very busy, lots of, lots of work, lots of changes. Um, lots of disputes as well, uh, as a result, uh, the delay and, uh, other supply chain issues have really, uh, increase disputes in those areas, time, uh, schedule issues and all the things that come with that.
Speaker 1 00:01:22 Yeah. And like I tell, I could tell clients or, uh, people wanna do talks. I never see a good project. Right. I never see one that goes smoothly. So <laugh>, you don't have that perspective. So before we jump into, uh, lean rides in Wisconsin, tell us a little bit about yourself, how long you've been practicing, how you got involved in construction, uh, you know, all the good things.
Speaker 2 00:01:41 Sure. So I, I found construction law, uh, somewhat based on where I started an undergrad. I'd always, always had some interest in construction. Uh, worked some jobs as a, uh, H V a C installer. Um, and then, uh, in undergrad, uh, focused on civil engineering and that sort of led me into the project management side of civil engineering, construction management. Um, it was involved a little bit in that, uh, involved in some, uh, internships during, uh, undergrad doing work, uh, had a job doing survey verification, work on market interchange when that was going hot. And, uh, then, uh, always had an interest in law school decided to, to move forward with that. Um, wasn't really sure exactly what area I was gonna focus in kind of found the construction niche and, uh, was lucky enough to find a local boutique law firm here in Milwaukee that specialized in it, um, on a LA was able to get a job as a clerk and have been here ever since. Um, my, my partner now, uh, Kim Hertado of, uh, it's Hertado Zimerman SC, and, uh, she's been doing this type of work for, I think 30 plus years, uh, was a great mentor, got me into doing it. And I graduated 2009 and have been doing primarily construction legal work ever since. Awesome.
Speaker 1 00:03:16 Awesome. That's amazing. Well, good. Um, all right, so let's dive right in. So my first question usually is do you have to be licensed to be a contractor in Wisconsin?
Speaker 2 00:03:27 Uh, Wisconsin requires licensing only for residential work. Um, there's no requirement for commercial, uh, contractor licensing other than, you know, specific trades, electrical plumbing, those, uh, but there's no, uh, general contractor, uh, licensing required for commercial work. Uh, but when it comes to one or two family dwellings, uh, that does require, uh, a license in order to be able to pull permits. Um, so as, as some level of subcontract, you may not need a, a license. Um, but if you're in any stage pulling permits for a project, you do need to be licensed and there's sort of a two level requirement. The, the overall company needs to have a dwelling contractor certification. Okay. Um, and in order to get that it's an application filing fee. Um, but then you need to PR you need to certify that you have workers comp and unemployment insurance. Um, and then the other component is you need to provide proof of either a $25,000, essentially performance bond gotcha.
Speaker 2 00:04:43 Uh, or 250,000 of general liability insurance. Um, and having been through, you know, the other side of it, you know, looking at contractors, um, trying to find insurance generally, it's a one time certification. You, you show proof of it possibly at reapplication. You need to show proof of it, but there there's really no ongoing checking, uh, checking of it. And then, uh, there's also a requirement that you have a dwelling contractor qualifier, essentially one person in the organization needs to have the dwelling contractor qualifier, which is more of an individual license okay. Than a company wide license. And that, you know, requires application filing fee. But the one component is a 12 hour course, uh, completed within one year of the application.
Speaker 1 00:05:36 Gotcha. And so is there a dollar amount limit on the residential guys that need that? Or is it all residential
Speaker 2 00:05:42 Dwells? It's all residential, anyone pulling a permit. Gotcha,
Speaker 1 00:05:46 Gotcha. That we need that.
Speaker 2 00:05:47 And some local municipalities have their own licensing requirements. Like the city of Milwaukee has their own, it's, uh, not all that widely known, but the, uh, there is a separate licensing requirement and I believe some other municipalities do have them, although, um, it's, it's not a majority by any means.
Speaker 1 00:06:06 So if it's required and you don't have it as the penalty, you don't get paid or you, you don't, or you could potentially not get paid or is it, is it more severe than that as you know,
Speaker 2 00:06:16 So for the, the state level requirements, this dwelling contractor, essentially you're, you're prevented from pulling a permit. Okay. Um, the local one, I think the municipality can find you. I don't think there's anything I've never seen anything codified that says, if you don't have it, you can't get paid. Gotcha. Um, but it, it certainly subjects you to claims under some of the other consumer protection laws related to home improvement practices in Wisconsin, um, you know, misrepresent that you're licensed, uh, or MIS essentially misrepresenting that you're qualified to be able to, to obtain permits or properly licensed, could subject you to some additional damages, um, if you didn't perform properly.
Speaker 1 00:07:02 Gotcha. Okay. So then who Wisconsin has lean rights? Is there any limitation or what does that define? Like in Wisconsin
Speaker 2 00:07:11 There there's really not a limitation. The, the standard is whether you've done work for improvement of a project. Okay. So anywhere from architects, engineers, uh, contractors, suppliers, any subcontractor of any tier. Okay. Um, even unions and individual laborers can file liens against projects. Gotcha. Um, so there's really no limitation again, it's whether you've done work for improvement of the project, it's really expansive any, any real type of work for improvement. Um, excavation filling, grading,
Speaker 1 00:07:49 Demolition,
Speaker 2 00:07:50 Tilling, planting
Speaker 1 00:07:52 Demolition guys.
Speaker 2 00:07:54 Yep. Demolition is specifically included in the statute, um, repairs or remodeling, you know, there, there's sometimes a question when it comes to items like maintenance, um, which is hard to define some states. And I think Wisconsin way back used to have a requirement. It had to, it, it was a permanent improvement. Gotcha. And they, they since removed that requirement quite a while ago. Gotcha. Um, so there is some question in the industry is, you know, what is considered an improvement versus maintenance like
Speaker 1 00:08:28 Yeah. Like
Speaker 2 00:08:29 Mm-hmm <affirmative> and I, I generally fall back to, well, if you're doing something that improves the property by doing that maintenance, it's,
Speaker 1 00:08:37 It should be liable.
Speaker 2 00:08:38 It's covered if you're, I've, I've been in scenarios of arguments about whether snowplowing, uh, landscaping or, uh, lawn mowing type work is covered. And yeah, generally, if you read the statute, it's very expansive. It specifically says it's a non exhaustive list. So I, I generally look at is, is the property in a better condition, more valuable before or after the work was done? And if that's the case, it seems to be improved. Gotcha.
Speaker 1 00:09:07 So before we dive into the technicals of how to have a, how to have a lean, that once you can establish, once you qualified as a contractor that can have a lie, is there any difference in the, in the steps to the procedures, if it's residential or commercial or a home set or anything like that?
Speaker 2 00:09:21 Yeah. Wisconsin does have a, a differentiation between residential and commercial projects. Um, residential is not specifically defined, but it's projects that are less than four family units. Gotcha. Um, that are not, um, partially commercial in nature, um, or not public works projects.
Speaker 1 00:09:46 Gotcha. Okay. So let's dive down. What does a residential contractor have to do to perfect its lie rise?
Speaker 2 00:09:53 So there's a three step process for residential construction. Um, and in residential, there is a differentiation of what you have to do depending on whether you are, what Wisconsin calls a prime contractor, the one who contracts directly with the owner versus a subcontractor or supplier that has contracted with the, the prime contractor. So what a prime contractor has to do is, uh, the first step is they have to serve the owner with a note, uh, an initial notice specific statutory notice that's quoted in the statutes. They have to serve that homeowner with it, with their contract or simultaneously with executing the contract, they have to provide notice to the owner, um, would
Speaker 1 00:10:42 Be in the actual contract or does that be attached
Speaker 2 00:10:46 It or does it matter? The requirement is either in the contract or given immediately at the time of contract or before, um, the not the issue usually becomes well, if it's not in the contract, how do you prove that it was given? Yeah. So
Speaker 1 00:11:02 It's just easier to put it in the contract.
Speaker 2 00:11:04 <laugh> easier to have it in the contract since it's required anyways, and, uh, standard. And generally what that says is, Hey, we're doing work on the project and we may be hiring other people providing work or materials. And, uh, those people may be entitled to a lean against the project if they're not paid.
Speaker 1 00:11:22 Okay. So the record, the prime contractor has to have this in his contract so he can have lean rights. That's step number one for the prime contractor.
Speaker 2 00:11:30 Okay. Mm-hmm <affirmative> and then similarly, a subcontractor has to give a what's called identification notice. Okay. Uh, similar same statutory written, uh, requirement, uh, statutory terms. And that has to be given to the homeowner owner of the property within 60 days of the first work provided by that sub supplier for the project.
Speaker 1 00:11:57 Okay. 60 days of first work, the sub's gotta send the owner a notice that says, basically I'm working on the project. If I'm not paid, I could file lie.
Speaker 2 00:12:06 Yep. It's like you read the statute. <laugh>, it's the <laugh> it's, it's, it's as simple as that, it's again, statutory required notice, but so once assuming those take place, the next step in the lean process is serving the owner of the property with, uh, notice of intention to file claim for lie. Okay. Um, can essentially be done at any time. Um, the, the timing of it, the, the deadline of it is somewhat based on the deadline of the claim for lie itself, because, uh, the notice of intention must be served on the owner at least 30 days before filing of the claim for lie. Okay. So, so essentially giving notice, Hey, I haven't been paid on this project. Um, and if I'm, you know, not paid within 30 days, I'm gonna file lie against your, your property, essentially, a fair warning of there's an issue here, particularly when it comes to subcontractors, the homeowner may have no idea that the subs haven't been paid.
Speaker 1 00:13:10 Um, so at what point is the subcontractor or anybody who's not the prime, when does their lien have to be filed?
Speaker 2 00:13:18 So the, the lien itself, the next step, the final step is they need to file the lien within six months of the last date of work on the project by that lean claimant. Okay. Um, gotcha.
Speaker 1 00:13:31 And so 30 days before that they need to send an intent to lean to the owner. Do they have to send it to the prime contractor too?
Speaker 2 00:13:39 It is only required to be sent to the owner of the property itself. Gotcha.
Speaker 1 00:13:44 Okay. And then, so the prime contractor, he has this language in his contract. Does he have to send a notice of intent to lie before he files a lie?
Speaker 2 00:13:53 Yes.
Speaker 1 00:13:53 Same timeframe.
Speaker 2 00:13:55 Yep. Same, same exact process. The O the only difference in, um, in the procedure is that initial notice, otherwise the procedure is the same, uh, regardless of whether they're the prime or a sub. Okay. After that notice of intent. Okay. And then claim for
Speaker 1 00:14:12 Leave the last work you file the lien. When you file the lien, do you have to send notice that the lien was filed?
Speaker 2 00:14:18 Yeah. Within 30 days of filing, you have to serve the owner of the property with a copy of the claim for lie
Speaker 1 00:14:26 That's okay. And, and in Wisconsin, when we say serve and send notice, how is that required to be done? Yeah,
Speaker 2 00:14:31 <laugh> I was generally just gonna comment on that. Um, Wisconsin under the lie statute says service may be made by registered or certified mail delivery by, uh, essentially, you know, ups or FedEx provided a signature required hand delivery. Um, the same procedures as a service of a summons and complaint, or any other method where the recipient makes, uh, written confirmation of delivery.
Speaker 1 00:15:02 Gotcha. Okay. And so let me ask you a question it's effective when sent, right? Not when received
Speaker 2 00:15:07 Well, that's somewhat of a debate in Wisconsin. Okay. The, the statute specifically says delivery by registered or certified mail. Gotcha. Which is the word delivery was added. Uh, I think around 2006, when some major revisions were made to the statute, um, there's an old case prior to the change in the law in statute that says, uh, the time of the time of service is the data mailing. But once the legislature added the word delivery, it's in my mind created the obligation that it must be delivered, uh, in order to be effective. So that notice of intent date can be really significant if you, if you wait too long, send it out on the last date and they don't accept it. Um, I've, I've heard of cases at the, the circuit court level, you know, reviewing it going well, the homeowner rejected it and that's sufficient to, to deems delivery because it was attempted to be delivered and they refused it. Yeah. Um, but yeah, it, it's always a question. And obviously I always advise clients to air on the side of caution when it comes to this, that you don't wanna leave it to the last minute. And you know, it, especially if it's a significant amount, I go the route of, if we can't get serviced by registered mail, going, getting a process server and getting it done. So there can be no question on it.
Speaker 1 00:16:37 Well, and just in general, I mean, these are the deadlines. You don't have to wait that long. You can always do it sooner. There's no penalty for doing it early.
Speaker 2 00:16:45 Right. And, you know, particularly on the sub side is hard, but usually I tell clients, Hey, about the 90 day mark, that's when you should start thinking seriously about getting your notices out one, because it's still fresh in people's mind. And two, you don't want to be at the last minute deciding whether, you know,
Speaker 1 00:17:06 Whether you
Speaker 2 00:17:07 The got sufficient service or not. Yeah.
Speaker 1 00:17:10 Yeah, absolutely. Okay. So that is the process for the residential contractors. How is it different on commercial jobs that are not public?
Speaker 2 00:17:19 So in commercial jobs, it's, uh, simpler in that you skip the initial notice requirements. Okay. And you can just move right towards the two step process of notice of intent and then filing claim for lie.
Speaker 1 00:17:30 So they have to send notice of intent 30 days before they file the lien. And the lien must be filed six months after the last time that they were out there.
Speaker 2 00:17:37 Correct.
Speaker 1 00:17:39 Oh, that's easy. Wow.
Speaker 2 00:17:41 <laugh> yeah. It's a nice and clean, fairly simple process. And it compared to a lot of states, it's a, a lot of time to do it. And which, which as imagine does cause complications for project owners in that, um, you know, you may be a dispute, you may be trying to figure out whether that sub's actually gonna file the lien or not. And you can't, uh, really do anything to remove that lien or resolve it from a title perspective for, you know, roughly six months
Speaker 1 00:18:14 Really. Oh. Because you're waiting for their six month period to, to lapse to see if they're gonna file it or not. Right. Gotcha. So question, how long are lien's good for in Wisconsin after you file it? How long is it good for, until you have to file suit to enforce? Or what does that look like?
Speaker 2 00:18:29 You have two years to file a foreclosure action. Otherwise the lean lapses from the date of filing.
Speaker 1 00:18:35 Gotcha. Uh, and if you have to file lean to enforce your suit, can you get your attorney's fees back?
Speaker 2 00:18:41 No, you can't, you can't include attorney's fees or interest in the ween itself. Um, and if you were to get a foreclosure judgment, it would not include interest or attorney's fees. The only way to get the attorney's fees is through a breach of contract action, um, where your contract permits attorney's fees, recovery.
Speaker 1 00:19:06 So, and if you're a sub or material supplier, you're not gonna have a contract with the owner, that's gonna allow for that.
Speaker 2 00:19:12 Correct. You you'd have your claim against a general contractor for the attorney. Now, if the, you know, if the general contractor hasn't paid has been paid by the owner, um, and they haven't paid the subs or suppliers, Wisconsin has some pretty significant contractor trust fund rules. Um, they call it actually theft by contractor. Okay. And that, um, contractors required to hold payments and trust for payment of claims for by subs and suppliers on the project. And if they use that money for any other purpose, it's deemed theft, it's a crime. And in addition to that, the civil penalty is triple damages and attorney's fees. So
Speaker 1 00:19:59 That's, that's pretty, that's pretty steep. So you can't Rob Peter to pay Paul in Wisconsin.
Speaker 2 00:20:05 What's that? You
Speaker 1 00:20:05 Said you can't Rob Peter to pay Paul in Wisconsin, if you're a general,
Speaker 2 00:20:09 No, you can't. And, uh, recent case law, uh, that generally benefits substance suppliers came out that said a general contractor who withholds both the disputed and undisputed portion of payments, trying to leverage a settlement has committed theft by contractor by refusing to pay amounts that are, uh, undisputed.
Speaker 1 00:20:33 Yay. One for the little guys, man.
Speaker 2 00:20:35 <laugh> yeah. It, it, it, it, it really has created and you know, it was the cause of action was always there, but the, the court confirmed it in a fairly direct, uh, appellate decision that made it very clear. You cannot withhold undisputed payments trying to leverage a settlement, um, or you're committing theft. And it does, I, I think alter the dynamic a little bit. That's great when it comes to payment.
Speaker 1 00:21:04 That's awesome. So what have, what are the criminal penalties and have you ever had to do that or seen that done?
Speaker 2 00:21:10 Um, I'm not sure offhand exactly what the criminal penalties are. They would be the same as, as theft. Gotcha. And I think it ranges based on the amount and, um, the amount of issue, depending on whether it's a misdemeanor felony. Um, we have been through that process. Usually it's usually on the criminal side, we've been assisting homeowners who have paid prime contractors who have just, uh, usually when you, you can get the attention of the police. And, uh, da is when, when essentially the homeowner is paid a general contractor and they've just absconded with the money. It's, I
Speaker 1 00:21:49 Mean, there's a bunch of, and then they're,
Speaker 2 00:21:51 Yeah, they got all these liens, the mounts pile up the homeowner has to pay off the lien. They've paid twice. Um, and it's sometimes hard to get some attention on it, but there are a number of municipalities and counties that, uh, do do take on these cases and prosecute them. Um, and there have been significant, you know, prosecutions of those crimes. Awesome.
Speaker 1 00:22:16 That's awesome. Okay. So let's dive in for a second, uh, material suppliers. I always get the question cause it's different in all 50 states, what level of incorporation does a material supplier have to prove to have a lien? So like, uh, does it have to be delivered? Does it, they have to prove it was actually used there. Can they just, what does that look like in Wisconsin?
Speaker 2 00:22:35 Yeah, so the, the standard in the statute is that the material work must be used or consumed for improvement of the land. Okay. Um, there's no test that I've seen in Wisconsin that, you know, regarding incorporation or not. Gotcha. Um, generally though, you'd have to meet the standard. It must be used or consumed, you know, delivery to the project site would be pretty good evidence that it was used or consumed. But if there was evidence that Hey, it was delivered and then the prime contractor took that material and used it on a different project site, it might be an issue of fact. But, um, if that were the case, I'd say you probably, aren't gonna be entitled to a lean against the, the first project,
Speaker 1 00:23:24 Which kind of answers my next question for like materials that are specially fabricated made specifically for that job, but are not delivered. Can, can material suppliers have leans for that?
Speaker 2 00:23:36 I, I don't believe so. Um,
Speaker 1 00:23:38 Because the definition is used and consumed. So if it was not even sent there, it wouldn't be
Speaker 2 00:23:43 Right. I generally side towards no, cuz again, not used or consumed the, the issue does it could present some interesting arguments though about, um, for instance, architectural plans can be, we can be a basis of a we and they're not directly used or consumed all, I guess they're used for the improvement of the property. So I guess it depends, you know, how, what of that work got to the specialty manufactured materials? You know, it were there designs that went along with it that were used for advancement of the project, although the materials never. So I think there, you know, there's a little complication of argument. Yeah, <laugh> exactly. So I, I guess my point is if, if that, if I had the client in that case, I, I wouldn't say, oh no, we're not gonna pursue the lie at all. Um, you're out of luck. It's probably more of a matter of what we need to get into some of the details of this to figure out, uh, whether we have a basis to assert a lean or not.
Speaker 1 00:24:44 Gotcha. And is the, if you have a construction lender, are they at all involved in the lean process?
Speaker 2 00:24:50 Generally? No. I mean, they, they have their interest in making sure the lean, the leans are removed from the project, but they're, they're not by
Speaker 1 00:25:00 Statute notice or anything
Speaker 2 00:25:01 Like that. No notice required to them. Although the initial notice is given to the homeowner, uh, they do include in it that you should give a copy of this to your lender. Um gotcha.
Speaker 1 00:25:14 Gotcha. All right. Good deal. Okay. So public work projects. Um, so basically you can't have a lie on public work projects, right? I mean, I think it's pretty much, can you have a lean on public works
Speaker 2 00:25:26 Generally? No. Gotcha. Uh, so the, the way the statute requires is that at a certain threshold dollar amount state and local governments are required to be bonded. And if they're bonded, then there's no right to lean against those projects. Gotcha. The statute doesn't the whole lie statute. Doesn't specifically exempt public projects or public property from liens, but it's, it says if there's a bond on the project, there's no right to a lie. Gotcha.
Speaker 1 00:25:59 Okay,
Speaker 2 00:25:59 Cool. So I I've seen scenarios where a bond was required, but never obtained Uhhuh and, and, uh, it never got to a court decision on one of the liens were valid, but you know, subs were filing liens and, and making claims against the project. Um, which, you know, arguably is permitted. If that bond isn't in place, they're not
Speaker 1 00:26:22 A bond. Cool. All right. So they have to have a bond. Um, so the, the, does the prime contractor provide the bond or does it, how does that work?
Speaker 2 00:26:31 Yeah. Prime contractors required to provide on public works projects, both, um, payment and performance bonds.
Speaker 1 00:26:39 Okay. So then somebody that works on a public project that doesn't get paid, how do they, what is the process of number one? How do they get the bond and what do they have to do to file a bond claim?
Speaker 2 00:26:49 So a bond claim must be filed within one year of the last work, on the entirety of the project. Okay. So that's, that's the one timing requirement is claim must be filed within one year. Gotcha. Um, as a prerequisite, to being able to file a claim as a sub or sub sub supplier, there's a notice requirement that you must give notice to the prime contractor within 60 days of the first work of performing by that, by that claimant. Gotcha. Um, but there's some exceptions that if that sub is listed in a contract or document appended to a contract with the prime contractor, if the amount is less than 5,000 or if the claimant is an employee or laborer. Gotcha. Um, or so you often get into this question of, well, what is sufficient notice to the prime contractor that they're doing work there's in this case, there isn't a statutory required, you know, blurb that's required to be given.
Speaker 2 00:27:56 So, you know, you could look at emails or, Hey, we're doing work on this. Here's my submittals for the project, those sorts of things, you know, generally can open the door to saying, oh, look, there's notice here. Um, you know, they showed up at a job meeting and there's meeting minutes of it. Um, so, so it's, you know, a lot of subs don't, you know, do an overt notice to the prime contractors as far as I've generally seen in the industry. Um, and usually it's after the fact when someone's not paid, they're coming back later and trying to figure out, do we have, you know, as our name listed in the prime contract somewhere, or the schedule values or something like that.
Speaker 1 00:28:38 So if you're on a public project, it would just be a good note, a good, a good rule thumb to send notice to the GC, Hey, I'm working on this project certified mail or something like that. And they could be like, Hey, here you go. You got it. Um, and so then how would a sub sub or a, or a prime get a, or a sub sub or a material supplier, get a copy of the, of the bond to file a claim.
Speaker 2 00:28:58 So on, on public works projects, um, I mean, other than just simply requesting it from the individual involved, the easiest probably would be to do an open records request to get it. Um, I don't believe public works contracts require it. And if they do, you know, that whether the prime contractor cooperates or not, um, so on, on, uh, pub on private projects, you can also post a bond. And if you do it avoids lean rights for the project, similar to a public works project. So it's essentially a very similar process. If, if the contract with the prime contractor requires a bond and they provide a bond, um, then the project isn't subject to lean. Okay. Um, does
Speaker 1 00:29:48 That file that bond in the real property record so everybody could see it or
Speaker 2 00:29:52 No, it's not filed anywhere. That statute specifically says that the, a sub essentially can request a copy from the prime contract and they're required to provide it. Gotcha. But having been in that scenario, they don't necessarily do it. Yeah. Um, usually the way to get it is to start the process of filing the we and they'll and they go, wait, wait, wait, you know, you can't file lien. There's a bond and say, well, show me a copy of the bond and
Speaker 1 00:30:18 You can file on that instead.
Speaker 2 00:30:20 Yeah,
Speaker 1 00:30:20 Yeah. And so then they, basically, you, if you wanted to file a claim on a bond on a private project, the timelines would still be, would the timeline still be a same, the same?
Speaker 2 00:30:29 Yeah. The exact timelines, the exact notice requirements and exceptions. Exact same procedure.
Speaker 1 00:30:36 Gotcha. So on your public works project, you have year after the project's complete to file your bond claim. Did I understand that, right?
Speaker 2 00:30:44 Yeah. You have one year from the date of final completion to file the claim, although you can file it sooner. Gotcha.
Speaker 1 00:30:50 And then how long is the bond claim good for, do you have to, before you file suit to enforce it?
Speaker 2 00:30:55 So the, the claim is actually a filing of suit. So you need to file, you need to file suit within one year of that last work.
Speaker 1 00:31:03 Gotcha. And then if you file just on the bond claim, can you get your attorney's fees back for that? Or do you have
Speaker 2 00:31:10 No there's no attorney's fees or interest component
Speaker 1 00:31:13 Still, still under the contract.
Speaker 2 00:31:15 Right.
Speaker 1 00:31:16 Gotcha. Gotcha.
Speaker 2 00:31:18 Wisconsin also has a, um, another process on bonded projects, both private and public Uhhuh. That's generally referred to as a lean on funds.
Speaker 1 00:31:29 Okay. Tell
Speaker 2 00:31:29 Me about that. And so on a, on a bonded project, you can submit a claim to the owner. Okay. You know, either public or private and notifying them. I haven't been paid, this is the amount due and I'm making a claim on funds for the project and that owner public or private is required to withhold those funds from payment to the prime contractor. Um, and there's a notice and, and timing of dispute requirement, uh, on the prime contractor side. But generally that owner has to hold those funds until resolution of that. So if, if you're not paid and it's a bonded project and you're at a point, well, I don't wanna necessarily file suit yet because that's gonna take a lot of time and effort, one of one, one way to, to make yourself known and to raise the issue in front of the owners to file a, a claim on funds. The there's no specific, uh, deadlines for doing it is essentially. But once, once that money's paid out, there's no obligation on the, on the owner anymore. So you gotta get it. You gotta make that claim before the money's paid out.
Speaker 1 00:32:39 So is that just a notice that sent certified mail or does it have to be filed someplace?
Speaker 2 00:32:43 No, it that's just a notice to the owner certified mail, um, same service process. Yeah. There's no specific statutory form or specific requirements of it, uh, of what needs to be in it. But, um, there's a sort of a short, statutory provision on it that
Speaker 1 00:33:01 Cool. And if they pay it out after they got that notice, they'd have to pay again, potentially.
Speaker 2 00:33:06 Yes. Okay. Yeah. It, if that allows a direct claim against the owner
Speaker 1 00:33:12 For not only. Okay. So the bond is there you'd have a claim against the surety, but you could have a direct claim against the owner for the payment of funds after you file, after you have a lie on the funds.
Speaker 2 00:33:22 Yes. Cool.
Speaker 1 00:33:24 Very cool. Awesome. All right. Did I miss anything or is there anything else you'd want to add?
Speaker 2 00:33:31 I don't think so. Okay.
Speaker 1 00:33:33 Wow. That's easy. You wouldn't have to write a book to get leans right. In Wisconsin. So that's kind of <laugh>, you know, like I like Texas is pretty complicated. California's pretty complicated. There's a lot of, and there's other states like Wyoming and, um, Iowa, which are real simple, which is that's, that's what I think it should be. The one thing that I, you know, kind of reviewing Wisconsin, um, is that's kind of long, right? So mm-hmm <affirmative> what do you tell your clients? Yes, these are the rules, but what do you tell them is their best bet at making sure that they get paid?
Speaker 2 00:34:03 Yeah, usually it's, it's the 90 day at 90 days, if you haven't been paid, you should be starting the lean process. Um, and I understand that can be challenging with the, the timing of payments on projects and they get extended in particular public works projects, although you're protected for the, with the one year, um, bond claim. Um, so usually at that 90 days, start the process start getting a notice of intent out so that you, you are in place to be able to file that lie. Because a lot of times, once that notice of intent goes out, there's negotiation, there's communications back and forth. And a lot of times those communications can be useful. The threat of the lie can often be better leveraged than the lean itself. Absolutely. You know, the, the owner's going, no don't file the lean against project. I don't wanna lean, it's gonna mess up my title and they have more of incentive to avoid the lean in the hassle of it.
Speaker 2 00:35:09 But once you file it, they're likely gonna have to do something to address that lie. And that may not always be payment. It may be escrow funds with a title company. Um, and once they do that, they may go, well, right. You filed the lean. I don't like it, but it's not directly affecting me at the moment. So right now I can ignore you for a while. Um, so again, the, the threat of the, we is often better leveraged than the lean itself, because once you file the, we, if the, if the owner is satisfied in sitting there, they may, I tell, you know, owner clients all the time. If you're not looking to refinance close, any financing, sell your property, you might have told you, sit it out and see if they're gonna actually file the foreclosure. Yeah. Um, because filing AEN is very inexpensive, the filing fees, $5. Yeah. Um, but pursuing a foreclosure gets expensive very quickly.
Speaker 1 00:36:06 Absolutely. Especially if you can't get your fees back, that's something definitely to consider.
Speaker 2 00:36:09 Right.
Speaker 1 00:36:10 Well, awesome. I thank you for your time today, Brian, and we'll put all of your contact information and the show notes, and so people could reach out to you if they have any questions. Um, do you have a website or an email that we should refer them to, that you wanna let 'em know about?
Speaker 2 00:36:21 Yeah. Hertado, Zimerman, uh, dot com is our website. Awesome. And, um, our contact information is, is all there. Um, if anyone needs to contact me.
Speaker 1 00:36:33 Awesome. Well, thank you so much, Brian. I appreciate you taking the time today to explain all this to us.
Speaker 2 00:36:38 All right. Thanks for having me.
Speaker 1 00:36:39 Thanks. Thank you for listening to this episode of quick getting screwed. I hope you found it helpful if you like what you hear, please like us and follow our podcast. If you want further informations, you can find [email protected]
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