Here’s 8 Things You Should Know about Michigan Construction Liens
Ah, Pure Michigan! I love that slogan, despite being born and raised in Ohio. There is something so calming and soothing about it. Contractors, subcontractors and material suppliers furnishing to private construction projects in Michigan, you can maintain that calm feeling once you read this post on Construction Lien Rights in Michigan.
#1 – File the Notice of Commencement
For private projects in Michigan, the project owner is required to file a Notice of Commencement prior to the project starting.
#2 – Provide the Notice of Commencement
The information needed to serve the Notice of Furnishing is contained within the Notice of Commencement. The owner has 10 days, from written request, to provide you with a copy of the Notice of Commencement.
#3 – Serve the Notice of Furnishing
Unless you are contracting directly with the owner, you should serve the Notice of Furnishing upon the owner, lessee, designee and prime contractor within 20 days from first furnishing. Oh, and make sure to send the notice via certified mail!
Sec. 109. (1) Except as otherwise provided in sections 108, 108a, and 301, a subcontractor or supplier who contracts to provide an improvement to real property shall provide a notice of furnishing to the designee and the general contractor, if any, as named in the notice of commencement at the address shown in the notice of commencement, either personally or by certified mail, within 20 days after furnishing the first labor or material. If a designee has not been named in the notice of commencement, or if the designee has died, service shall be made upon the owner or lessee named in the notice of commencement. If service of the notice of furnishing is made by certified mail, service is complete upon mailing. A contractor is not required to provide a notice of furnishing to preserve lien rights arising from his or her contract directly with an owner or lessee.
#4 – It’s a Trap
It’s in your best interest to serve the notice by the deadline, however, in Michigan, a late notice may be served any time within the lien filing period, but the lien, when later filed, will be limited to the unpaid portion of the contract at the time the notice is served. This late notice is sometimes referred to as a Trapping Notice.
#5 – File the Lien
The construction lien deadline is calculated from your last furnishing date. You should file the lien within 90 days from your last furnishing, and serve a copy of the lien upon the owner within 15 days from filing the lien.
#6 – It’s Unpaid Balance
If the notice is not served within 20 days from first furnishing materials or services, the lien in Michigan is an unpaid balance lien, which means the lien is limited to the unpaid portion of the contract at the time the notice was served.
#7 – Suit and Release
In the event the lien filing does not prompt payment, you should file suit to enforce the lien within 1 year from your lien filing. If the lien does prompt payment, make sure you release the lien in a timely manner.
#8 – No Waiver of Construction Lien
Statute is rather specific about waiving lien rights within a contract. Take a look:
570.1115 Waiver of construction lien. Sec. 115. (1) A person shall not require, as part of any contract for an improvement, that the right to a construction lien be waived in advance of work performed. A waiver obtained as part of a contract for an improvement is contrary to public policy, and shall be invalid, except to the extent that payment for labor and material furnished was actually made to the person giving the waiver. Acceptance by a lien claimant of a promissory note or other evidence of indebtedness from an owner, lessee, or contractor shall not of itself serve to waive or discharge otherwise valid construction lien rights.
Lien rights in Michigan are purely awesome so don’t lose them! If you have questions about securing lien rights on Michigan projects, or any project within the US, its possessions & Canada, contact us!