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Wisconsin Home Improvement Contractors: Issues to consider before suing an ownerBy Chad W. Koplien Contractors providing home improvement services for owners of existing residential structures should consider the following issues prior to suing an owner for non-payment. Assess Potential CounterclaimsThe first step in determining whether a contractor should pursue collection is an honest assessment of the risk of countersuit. The Wisconsin Home Improvement Code (the "code") provides an owner with penalty damages and forces a negligent or non-compliant contractor under certain circumstances, to pay for the owner’s costs and attorneys’ fees. Given these risks, filing suit or filing for Arbitration should be a last resort. All efforts should be made to try and negotiate with the owner, with all discussions memorialized in a follow up letter, and any settlement should be memorialized in a signed release form prepared by a lawyer. Check the Collectability of the OwnerOnly where the contractor has assessed the risks of countersuit to be low, negotiations have failed, and the determination has been made that the owner is collectible, should the contractor initiate litigation. Collectability can be assessed by checking the bankruptcy notices or reviewing the Wisconsin CCAP website to determine if the owner is subject to other judgments or is involved in pending litigation. Check your Mechanic's LienHand in hand with litigation, should be the determination of whether the contractor has a valid mechanic’s lien filed on the property. A properly filed lien along with a breach-of-contract claim, compounded by an attorneys’ fee clause (with teeth), will provide the contractor with maximum leverage in successfully litigating and collecting on a delinquent account. Determine Whether to Hire an AttorneyAfter the contractor has gone through the evaluation process and given itself the green light on filing suit or for arbitration, it will need to evaluate whether it is comfortable or competent to represent its business in the lawsuit or retain an attorney or retain a collection firm. This decision is first governed by the amount in dispute. A contractor should be able to handle for itself, the basic nonpayment situation, so long as there is little risk of countersuit, and so long as the amount in dispute is $5,000 or under. If the dispute is over $5,000, and the contractor is organized as an LLC or corporation, it must retain counsel to file a large claim civil suit and cannot represent itself in large claims. How to Self-Litigate the Case
The information on these pages provides legal information about Wisconsin statutes designed to help contractors acquire general background information on construction liens in Wisconsin. It is important to note that legal information is not the same as legal advice. Legal advice is the application of the specific applicable laws to a contractor's specific fact scenario. Although we go to great lengths to make sure our information is accurate and useful, you must retain a lawyer, and enter into an attorney-client relationship if you want to obtain professional assurance that our information, and your interpretation of it, is appropriate to your particular situation. Purchase Wisconsin-specific downloadable fill-in-able unlimited usage construction forms here and non-Wisconsin-specific downloadable fill-in-able unlimited usage construction forms here. |
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