Michigan’s Design Professional Lien Rights Were Recently Amended
At the end of 2018, Michigan amended a portion of its Construction Lien Act regarding mechanic’s lien rights & procedures for design professionals. This amendment specifically addresses what a design professional can do in the event it is unpaid and the owner does not proceed with the project.
Michigan Construction Lien Act (MCL 570.1101)
To be clear, Michigan’s Construction Lien Act provided design professionals mechanic’s lien rights prior to this amendment. What statute didn’t account for, at least not well, was what happened if the project owner didn’t move forward with the project.
Under the amended statute, design professionals should record a Notice of Professional Services Contract (or Notice of Professional Services Subcontract) with the register of deeds. This notice should be filed once the written contract is executed but no later than 90 days after last providing professional services.
“(2) A design professional may record a notice under subsection (1) at any time after the written contract is executed regardless of whether the professional services under the written contract have been commenced or completed, and regardless of whether the erection, alteration, repair, or removal of the structure or the other improvement to which the professional services relate has been, or is ever, commenced or completed. However, a design professional shall not record a notice later than 90 days after the design professional, or another person acting by, through, or under the design professional, last performed professional services.” 570.1107a
There are two sections to the statute. The time frames are the same, but if you “subcontract for professional services with design professional” the notice requirements are slightly different. The notice for those subcontracting must include written approval from the owner.
“(1) A person that furnishes professional services under a written subcontract with a design professional who has recorded a notice under section 107a, and whose engagement has been approved in writing by or on behalf of the owner of the property, may record with the register of deeds for the county in which the property is located a notice of the subcontract…” 570.1107b
Jeffrey Gallant recaps the high points in his article “New and Improved” Design Professional Lien Rights and Procedures in Michigan, including that a “lead” design professional must file its notice before the subcontract design professional can file its notice.
Gallant’s recap (formatting added):
“The Design Professional Notice
(a) is valid for one year after it’s recorded, but subsequent notice can be recorded if needed;
(b) has a priority date (relative to other interests and encumbrances on the property) based on the date the notice is recorded unless actual physical construction work commences;
(c) has a priority date based on the first date of actual physical construction work, if construction commences.
The amended CLA also maintains equal priority between construction lien claimants, irrespective of whether the lien claimant is a design professional, contractor, subcontractor or supplier.”
Does This Mean No More Notices of Furnishing or Mechanic’s Liens?
Nope! As Gallant confirms, design professionals must still comply with serving a notice of furnishing and filing a lien within the required time frame.
The Notice of Professional Services Contract is an additional security, helping you if the project doesn’t move forward. Whereas the general mechanic’s lien statute (notice>lien>suit) is there to help you once the project is under construction.
Wondering about mechanic’s lien rights in Michigan? Check out our post on Pure Michigan!