In previous blog posts, we’ve discussed the importance of lien waivers. This is especially the case in Wisconsin, where the law is strictly construed against lien claimants. Those asked to sign lien waivers in this state, therefore, should do so with extreme caution.
The Strict Treatment of Lien Waivers Is Spelled Out In Wisconsin’s Statutes
Wisconsin’s lien waiver statutes are like nothing I’ve seen anywhere else in the United States. The mechanics lien statutory scheme devotes an entire provision to lien waivers and makes it clear that anyone who signs the waiver is stuck with the waiver under nearly all circumstances. The statute -§779.05 Wis. Stats. – provides:
Any document signed by a lien claimant or potential claimant and purporting to be a waiver of construction lien rights under this subchapter, is valid and binding as a waiver whether or not consideration was paid therefor and whether the document was signed before or after the labor, services, materials, plans, or specifications were performed, furnished, or procured, or contracted for. Any ambiguity in such document shall be construed against the person signing it.
There are three key things to take from this provision:
1) It doesn’t matter whether you actually received payment or not. If you sign a lien waiver, you waive your lien rights. It doesn’t appear that there is any such thing as a “conditional” lien waiver in Wisconsin, therefore, and while the argument could be made if your lien waiver expressly said “conditional” upon it, because of the strict construction against the lien claimant within this statute, I would be very reluctant to sign such a document.
2) Lien waivers signed before you do or finish the work are just as effective. Don’t let contractors or property owners bury a “no liens clause” in your contract.
3) Everything will go against you if you sign a lien waiver because the law explicitly says the documents will be construed against the signing party.
The Lien Claimant’s Alternative to Lien Waivers in Wisconsin
Wisconsin’s lien waiver statute does have a few optimistic points for the lien claimant. The statute goes on to say the following:
Any waiver document shall be deemed to waive all lien rights…except to the extent that the document specifically and expressly limits the waiver to apply to a particular portion of such labor, services, materials, plans, or specifications.
As such, you can include some limitations within the mechanics lien waiver to exclude certain work, labor or materials.
The statute also provides the following:
A lien claimant or potential lien claimant of whom a waiver is requested is entitled to refuse to furnish a waiver unless paid in full for the labor, services, materials, plans, or specifications to which the waiver relates.
Accordingly, you are entitled by law to refuse to sign any lien waivers until you have been paid in full. The legislature in Wisconsin likely has rose-colored glasses on with this point, however, as anyone in the construction industry knows that while you may have a legal right to refuse to sign a lien waiver, the need for cash can reign supreme and contractors and developers will take advantage of this.
Finally, if you do sign a lien waiver when you shouldn’t have, you’re not completely without rights. The waiver of lien only applies to your lien rights and do not affect your contract rights to proceed against the party who hired you to be paid pursuant to the contract. This, too, is made clear in the statute.