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Question:
Please explain what a contractor's "Lien rights" are, and what are "Lien Waivers"?
Answer:
Put simply, a lien is a claim of partial ownership of your home. Any
contractor or material suppliers that provide improvements or repairs on your home have the right to place a lien on your property if they are not paid for the services or materials they have provided. The State of Wisconsin
has strict guidelines that contractors and suppliers must follow to preserve their lien rights. If they do not follow the rules, or meet the deadlines, they relinquish their lien rights, and must use other methods of
collection.
But first, all of the contractors and suppliers must separately inform you that they have such rights. By law, all general (Prime) contractors must state their lien rights (a prepared paragraph with verbiage
provided by the State) on the front page of the contract in no smaller than 8 point bold type. The paragraph also states that all sub-contractors and suppliers hired by the general contractor also have lien rights on your
property and that they may be contacting you by mail. All sub-contractors or suppliers hired by the general contractor must send the homeowner a prepared form (again, verbiage provided by the State) sent by registered mail that
states they are supplying labor or materials on your home, and refers to the paragraph in the general contract. They have exactly 60 days from the start of their particular job or delivery of materials to mail the form, and
must include a second copy for the homeowner to send to their lender.
NOTE: This form is rarely used, so don't be surprised if you do not receive anything in the mail from sub-contractors or suppliers.
A
"Lien Waiver" is a form signed by the various sub-contractors and suppliers involved in your job stating that they "waive" their lien rights on your property. This usually means that they have been paid in
full, or trust that they will be paid in full. Remember, only those who inform you of their lien rights in writing and in a timely manner can enforce their lien rights on your home. For more info on Liens see the article above
titled "Notice of Intent to File Lien".
Answered by: Patrick Benkowski, CR
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