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What options do I have if I forgot to send a Preliminary Notice at the beginning of the project?

WisconsinPreliminary Notice

We had provided the first materials of this project on 9/13/2019 and were promptly paid 30 days after. I did not send a preliminary notice as an oversight since we were being paid. Then in November, on the 27th, we shipped the balance of the job. Now we are having a dispute over this payment. It isn't technically late, but they are claiming backcharges on us for things that we did not do. Point is, I didn't send a Preliminary Notice and now I would like to begin with the lien process. Is there anything we can do about this? I feel we could change the first delivered date for this portion to the 27th of November and just send a Prelim Notice based on that dollar amount and then immediately after send a Notice of Intent to Lien as is our intention at this point. Any help is appreciated. Thanks.

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Dec 26, 2019

A little more information is needed to adequately answer your question. Specifically, I would need to know if you are acting as a prime contractor or subcontractor, the substance of your contract, and if the character of the project is residential or commercial in nature. It also may be easier to discuss this matter over the phone - please feel free to give me a call at 414-727-6250. Thank you, Bryan Kroes Hurtado Zimmerman SC

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Dec 26, 2019

Bryan is right that more information would go a long way for being able to provide a specific answer. Still - let's look at some of Wisconsin's notice rules a little more deeply. Before diving in, it's also worth mentioning that it's a good idea to send notice on all jobs - regardless of whether there have been any payment problems, and regardless of whether notice is even required. Sending notices improves transparency and communication on projects leading to more collaborative jobs and fewer payment issues. Plus, by the time you know that there's going to be a payment problem, it might already be too late.

Wisconsin's preliminary notice requirements

First, note that the baseline rule for Wisconsin construction businesses is that notice will usually be required. There are circumstances that act as exceptions to this rule, but they're just that - exceptions. And, as mentioned above, it's usually a good idea to go ahead and send notice anyway. With that in mind, let's look at the notices and notice rules first. Then, we can look at the (extensive) exceptions.

Notice of Lien Rights

For parties hired directly by the property owner, a notice called a "Notice of Lien Rights" must be sent. This notice must either be included in the terms of the contract, itself, or it must be sent within 10 days of first furnishing labor or materials to the project. For an example of what that form might look like: Wisconsin Notice of Lien Rights by Prime Contractor Form.

Subcontractor Identification Notice

Parties hired by someone other than the property owner must usually send what's called a "Subcontractor Identification Notice." The timeframe on this notice is more laid back - it must be sent within 60 days of first furnishing and at least 30 days prior to filing a lien claim. For an example notice: Wisconsin Subcontractor Identification Notice Form.

Exceptions to Wisconsin's notice requirements

Wisconsin's lien statute sets out substantial exceptions to Wisconsin's notice requirements - most notably for commercial construction projects. Under that section, the following parties do not need to send a notice in order to preserve lien rights: (a) laborers or mechanics employed by a prime contractor or subcontractor (i.e. individuals working for daily wages), (b) certain prime contractors (explored further at § 779.02(2)(a) of Wisconsin's lien statute) (c) subs, suppliers, rental equipment companies, etc. working on wholly nonresidential (i.e. commercial) construction projects or residential projects of 4 family living units or more, (d) by prime contractors with some ownership or controlling interest in the property being improved, (e) by subs, suppliers, equipment rental companies, etc. who are performing at a project where the prime contractor isn't required to send notice. Of course, that's a summary of the relevant exceptions. To read the text of the exceptions, yourself: § 779.02(1) of the Wisconsin mechanics lien statute.

What if notice is required but sent late?

Even if notice is required and sent late, there can be some benefit to sending late notice. For prime contractors, late notice can ultimately be considered inconsequential if certain criteria are met. For subs, suppliers, equipment rental companies, etc. - notice can be sent late, but late notice will only protect work or materials furnished after the notice is finally sent. Further detail on either notice being sent late can be found here: What if I Send the Wisconsin Preliminary Notice Late?

Before pursuing a mechanics lien, other recovery options might be worth exploring

Finally, it's worth noting that there are a number of recovery options that might be worth exploring before pursuing a mechanics lien. For one, sending a demand letter can be an effective tool. Demand letters let recipients know you're serious about getting paid and willing to do what it takes to make sure it happens. They'll usually contain specific legal threats and place a deadline on making payment. Further, because mechanics liens are so powerful, the mere threat of a lien claim will often go a long way toward getting paid. Sending a document like a Notice of Intent to Lien puts the customer and property owner on notice that there's a serious dispute at hand and that, if necessary, a lien will be filed to force payment. What's more, Wisconsin is one of the few states which actually requires that a Notice of Intent to Lien be sent prior to a lien filing - so, in order to proceed with a valid and enforceable lien claim, one would have to be sent anyway. For more information on Wisconsin's notice and Notice of Intent to Lien requirements: Wisconsin Preliminary Notice Guide and FAQs.

Other recovery options outside of the Wisconsin mechanics lien process

Of course, mechanics liens are only one avenue for recovery. And, even in a situation where lien rights might not be leveraged into payment, there will be other options - such as a breach of contract claim - that could be on the table. And, for clarity on what other options may be most appropriate, it'd be wise to consult a Wisconsin construction attorney, just as Bryan mentioned.

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