Whose Benefit Is It Anyway? Understanding Homeowners' Rights In Subcontractor Agreements

Most people building a home enter into an agreement with a general contractor. In turn, that general contractor enters into agreements with subcontractors to actually build the home. At first glance, it may seem that those subcontracts are intended to benefit the homeowner, as the work under the subcontract will result in the construction of their home. However, in a recent decision, the Wisconsin Court of Appeals found that a homeowner was not a third-party beneficiary to a subcontract.

In Brekken v. Hegland Custom Construction, Inc., No. 2023AP675, 2024 WL 4041355 (Wis. Ct. App. September 4, 2024), a homeowner, Brekken, contracted with Gordon Larson Construction. In turn, Larson entered into a subcontract with Hegland Custom Construction for framing and carpentry work on the home being built for Brekken. During the course of the project, Brekken made payments directly to Hegland. Ultimately, Brekken disputed some change orders on the project and refused to make