A Wisconsin undertaking must come with a surety affidavit stating worth of 125 percent or more of the claim for lien, according to Wisconsin Legislature. In Minnesota, a deposit made in place of a payment bond is held 120 days after the last item of labor and materials was furnished to the public work, according to Minnesota Legislature Office of the Revisor of Statutes. The two figures come from separate statutes, so this guide keeps each one tied to its own state. The six checks below are grouped as before, during and after.
Key takeaways
- an exception to surety sufficiency is taken by the lien claimant within 10 days after notice of the filing, according to Wisconsin Legislature.
- a Minnesota deposit in place of a payment bond is held 120 days after the last item of labor and materials was furnished, according to Minnesota Legislature Office of the Revisor of Statutes.
- add the Minnesota 120-day date to the bid schedule once the last-furnished date is known.
Why lien security belongs in the bid
Security that stands in for a lien or a payment bond is a cost in its own right, so it belongs on its own line in the bid rather than inside general overhead. A Wisconsin annotation to its statute says that, by its plain language, the purpose of a release bond is to let a property owner whose property is the subject of a construction lien, or a general contractor acting on the owner's behalf, substitute a bond for the property, according to Wisconsin Legislature.
That substitution is why the security carries a price at all. The Wisconsin surety figure is measured against the amount of the claim for lien, so the security amount moves with the claim amount. An estimator who keeps the claim amount in its own cell can update the security figure without rebuilding the whole bid.
The Minnesota deposit is made with the commissioner in place of a payment bond. Its hold period is counted from the last item of labor and materials furnished, which starts from a different point than the Wisconsin 10-day exception window, which runs from notice. Because the start date is set by the job's last delivery of labor and materials, the schedule should carry that date next to the bid total so it is not reconstructed later.
Before: surety worth and notice
The first check is the surety's worth. The affidavit must state that the surety is worth, over and above all debts and liabilities in property within Wisconsin not exempt from execution, an amount in the aggregate equal to 125 percent or more of the amount of the claim for lien, according to Wisconsin Legislature. Read the affidavit against the claim amount rather than filing it unread.
The second check is notice. The person against whom the lien is claimed, or another interested party depositing the security, must serve the lien claimant with notice of the filing of the undertaking or deposit and, for an undertaking, a copy of it. That notice must state where and when the undertaking was filed or the security was deposited, according to Wisconsin Legislature.
The table below lists the rule and its figure for each state.
The Minnesota rule described here concerns a deposit made with the commissioner, so the affidavit check applies to Wisconsin undertakings. Keep the notice and the affidavit in the same file, and record the date the notice was served beside the affidavit.
Illustrative example: surety worth
Suppose a claim for lien is 8 units. At 125 percent, the affidavit must show worth of 10 units or more, because 125 percent of 8 is 10. Use this only to check the arithmetic in the file.
During: exceptions and challenges
The third check is the 10-day window for exceptions. If the lien claimant takes exception within 10 days after notice of the filing of the undertaking or deposit, the court in which any action to foreclose the lien may be brought determines any question of sufficiency of the surety, according to Wisconsin Legislature. The same section allows that court, on notice and on motion of any party, to order a deposited sum of money to be invested, according to Wisconsin Legislature.
Write the date of service on the notice in the file, because the 10-day count runs from that notice. Keep any written exception from the lien claimant beside the notice, and note the date it arrived, so the file shows whether the exception came inside the window.
Minnesota sets a separate timing rule for challenges. If an action is commenced to obtain the benefit of the deposit in place of a payment bond, a judgment must not be entered within 30 days after giving the notice of the claim, according to Minnesota Legislature Office of the Revisor of Statutes. In that action, the state or any person entitled to the protection of the deposit may be admitted on its motion as a party, and the court shall determine the rights of all parties in the premises, according to Minnesota Legislature Office of the Revisor of Statutes.
Put the 30-day mark on the calendar next to the notice date, but keep it as its own entry, since the Minnesota text refers to notice of the claim. A dispute over a specific lien belongs with counsel, because this article gives no legal advice on any one lien. Where a Wisconsin exception and a Minnesota action arise on one job, keep the two timelines in separate columns so one state's count is never read against the other's.
After: return or disbursement
The fourth check is the 120-day hold. The deposit made with the commissioner shall be held for 120 days after the last item of labor and materials was furnished to the public work that is the subject of the contract, according to Minnesota Legislature Office of the Revisor of Statutes. Enter that last-furnished date in the job file, since the 120-day count runs from it.
The fifth check is the return when no claim is filed. If a claim is not filed within the 120-day period, the deposit shall be returned to the person making it, according to Minnesota Legislature Office of the Revisor of Statutes. If a claim is filed within the 120-day period, the deposit shall be disbursed by the commissioner of management and budget under an order of the court, according to Minnesota Legislature Office of the Revisor of Statutes. Keep that court order with the job file, since disbursement runs under the order.
The sixth check is proration when the deposit falls short. If the amount of the deposit is insufficient to pay the claims in full, the court may direct that they be paid on a prorated basis, according to Minnesota Legislature Office of the Revisor of Statutes. Record any direction on proration beside the disbursement order, so both sit in one place.
On the Wisconsin side, the clerk of circuit court in whose office the undertaking or other security was filed or deposited shall, on request and without notice, return it to the party that filed or deposited it, according to Wisconsin Legislature. Note the date of any such request in the file, because the Wisconsin text ties the return to a request.
Records to keep
One file for each lien keeps these records together.
- a copy of the surety affidavit, with the worth figure and the claim amount it is measured against
- the notice served on the lien claimant, with its statement of where and when the security was filed or deposited
- the date the notice was served, which is the reference point for the 10-day exception window
- any exception the lien claimant takes, with the date it was taken
- the date of the last item of labor and materials furnished, for the Minnesota 120-day count
- any court order for disbursement, proration or investment
- any request for return of an undertaking or security in Wisconsin
The affidavit belongs to the first check, and the notice belongs to the second check. The exception date and the investment order belong to the third. The last-furnished date and the 120-day count belong to the fourth and fifth checks, and the disbursement and proration orders belong to the fifth and sixth. The Wisconsin return request sits under the Wisconsin return text in the After section. Filing each record under its check makes it easier to find the source sentence when a question comes up on the job.
Dates to carry into the bid: the notice date and the last-furnished date are the two dates the checks above return to most often, so they belong on the estimate schedule as well as in the file.
Keep the Wisconsin and Minnesota records under separate headings in the same job folder. That way, a figure from one state is never read against the other state's rule. Store the Minnesota last-furnished date and the 120-day date together, so the hold period can be checked without reopening the contract.
Limits of these two states
The Wisconsin figures come from the Wisconsin statute, and the Minnesota figures come from the Minnesota statute. This article does not say that the two states follow the same procedure, and a figure from one state does not set the rule for the other.
The Wisconsin page labels the release-bond sentence as an annotation, according to Wisconsin Legislature. Treat that sentence as commentary on the section and check the section text itself before quoting it in a bid.
The Wisconsin affidavit sentence refers to a furnished undertaking, while the notice sentence refers to an undertaking or a deposit of other security, according to Wisconsin Legislature. Read each state's section in full before applying any figure to a specific job.
The Minnesota 30-day rule applies to an action, while the 120-day rule applies to the hold on the deposit. Any question about how a court would apply either count to one job is a question for counsel.
This article gives no bond premium rate and no price for the security, so the cost line still has to come from the surety. Use the figures here as checkpoints in the file rather than as pricing inputs.
Next step: Add a line for lien security and a 120-day hold to your bid checklist for Minnesota public work.
FAQ
How much must a surety be worth on a Wisconsin lien undertaking?
The surety's affidavit must state worth of 125 percent or more of the claim for lien, according to Wisconsin Legislature. Compare the stated worth against the current claim amount before the affidavit goes into the file, since the figure is measured against that claim.
How long is a Minnesota deposit held?
It is held 120 days after the last item of labor and materials was furnished to the public work, according to Minnesota Legislature Office of the Revisor of Statutes. Enter both the last-furnished date and the 120-day date on the bid schedule, so the hold period is visible when the job closes. If no claim is filed in that period, the deposit is returned to the person making it, according to Minnesota Legislature Office of the Revisor of Statutes.
What if a deposit cannot cover all claims?
The court may direct that the claims be paid on a prorated basis when the deposit is insufficient to pay them in full, according to Minnesota Legislature Office of the Revisor of Statutes. Proration is a court direction, so keep any such direction with the disbursement order in the job file. How the court sets proration is not covered in this guide, so ask counsel before relying on any figure.