Published: February 8, 2011
Author: Larry Libman

This article originally appeared in the Wisconsin Builders Association February 3, 2011 Builder Buzz Blog post.

Wisconsin’s Commercial Lien Law authorizes real estate brokers in a commercial real estate transaction to place a lien on a property to ensure payment of a commission which is due. While this law provides protection for real estate brokers from unscrupulous sellers, it could end up costing an unwary buyer thousands of dollars. These liens are similar to construction liens which may also arise and attach to a buyer’s real estate after closing. Broker’s commission liens, however, are not applicable to residential properties containing eight or fewer dwelling units.

Under Wisconsin Statutes §779.32, if a real estate broker with a written listing contract takes the required steps, the broker will obtain a lien on the property for any amount of commission owed to the broker which is not paid at closing.

To obtain such a lien, the broker must:

1. Include the proper language in the listing contract alerting the seller that the broker has the legal right to obtain a lien on the property for earned, but unpaid commissions;
   
2. Record a “Notice of Interest” with the register of deeds in the county where the applicable real estate is located at least 30 days before the closing; and
3. Record the lien with the register of deeds no more than 30 days after the closing.

If a buyer closes on the purchase of a commercial property from an unscrupulous seller without getting title insurance coverage to protect against such liens, the buyer could find out after the closing, and potentially after the seller is gone, that a listing broker, with whom the buyer may have had little or no contact, has a lien against the buyer’s property. Buyers can protect themselves from the risk of having such a lien put on their property by making sure that their title insurer provides coverage over such liens, comparable to the coverage that is generally provided for construction liens.

For more information about Wisconsin's Commercial Lien Law, contact Larry Libman at 608.283.6727 or llibman@axley.com.

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