Michigan Construction Cases and Liens

Traverse Legal attorneys handle construction cases, including construction lien issues, across a variety of matters. Traverse Legal lawyers represent contractors, sub-contractors, lenders (banks, mortgage companies), building suppliers and home owners. We also represent persons who are injured on construction sites and other construction related injury cases. Contact us today and we will help you resolve your construction-related case or lien issue.

Michigan Notice of Commencement (Residential)

MICHIGAN NOTICE OF COMMENCEMENT (RESIDENTIAL) A Notice of Commencement announces that work is about to begin on a home building or remodeling project and provides interested parties with information needed to follow the construction lien procedures properly. The document can be requested by any of the parties involved in the building project, a written request should be sent by certified mail and must be accompanied by a blank NOTICE OF COMMENCEMENT and NOTICE OF FURNISHING form. The homeowner is required to complete and return a copy of the NOTICE OF COMMENCEMENT and the blank NOTICE OF FURNISHING form to the requesting party within 10 days. A copy of the Notice of Commencement should also be posted at a conspicuous place at the job site. NOTE: The Notice of Commencement is required to be recorded at the County Register of Deeds office for Commercial Construction projects ONLY. The language on the Notice of Commencement form for commercial construction is different. §       Written request to homeowners should include blank Notice of Commencement and Notice of Furnishing §       Homeowners should complete and return form within 10 days §       Notice of Commencement should be posted at the work site §        Notice of Commencement for COMMERCIAL projects must be recorded at Register of Deeds office prior to the beginning of project

Michigan Notice of Commencement (Commercial Property)

MICHIGAN NOTICE OF COMMENCEMENT (COMMERCIAL PROPERTY) The NOTICE OF COMMENCEMENT announces that work is about to begin on a physical improvement to building (non-residential) and provides interested parties with information needed to follow the construction lien procedures properly. The property owner or lessee is required to complete and record the NOTICE OF COMMENCEMENT at the County Register of Deeds office PRIOR to the commencement of any physical improvement. The document can be requested by any of the parties involved in the building project, a written request should be sent by certified mail and must be accompanied by a blank NOTICE OF COMMENCEMENT and NOTICE OF FURNISHING and the blank NOTICE OF FURNISHING form to the requesting party within 10 days. A copy of the Notice of Commencement should also be posted at a conspicuous place at the job site. NOTE: The Notice of Commencement is required to be recorded at the County Register of Deeds office for Commercial Construction projects ONLY. The language on the Notice of Commencement form for commercial construction is different. §        Notice of Commencement for COMMERCIAL projects must be recorded at Register of Deeds office prior to the beginning of project §       Written request to property owner or lessee should include blank Notice of Commencement and Notice of Furnishing §       Notice of Commencement should also be posted at the work site

Michigan Discharge of Lien

Michigan Discharge of Lien

Once the Claim of Lien has been fully paid, the lien claimant must deliver to the owner or lessee, (or owner's agent) a true copy of recorded Discharge of Lien. This releases all rights to the property and informs all parties that the debt has been paid. The Discharge of Lien should be recorded by the lien claimant at the county Register of Deeds to officially release the lien from the property. The lien claimant is responsible for providing a copy of the filed "Discharge of Lien" to the owner, lessee, or owner's agent. §        Discharge of Lien must be recorded at Register of Deeds office upon full payment to release the Claim of Lien from the property. §       Lien claimant is responsible for providing a copy of the filed “Discharge of Lien” to the owner, lessee or owner agent.

Michigan full Unconditional Waiver

Michigan Full Unconditional Waiver

A waiver should always be given by a contractor, subcontractor or supplier whenever payment is made. In simple terms, it is a receipt for payment. But most importantly, it announces to the homeowner that the construction lien rights are being relinquished – either in full, if full payment is received; or in part, if partial payment was received. Waivers are legal documents and must use prescribed wording. To be considered legal documents, and to serve the purpose for which they were designed, use the appropriate type of waiver as identified below. Be certain that the kind of waiver form that you sign is appropriate to the situation. FULL UNCONDITIONAL WAIVER states that full payment has been received and that there is no claim of lien against the homeowner's property.

Michigan Full Conditional Waiver

Michigan Full Conditional Waiver

A waiver should always be given by a contractor, subcontractor or supplier whenever payment is made. In simple terms, it is a receipt for payment. But most importantly, it announces to the homeowner that the construction lien rights are being relinquished – either in full, if full payment is received; or in part, if partial payment was received. Waivers are legal documents and must use prescribed wording. To be considered legal documents, and to serve the purpose for which they were designed, use the appropriate type of waiver as identified below. Be certain of the kind of waiver that you sign is appropriate to the situation. FULL CONDITIONAL WAIVER states that as soon as full payment is received, or some condition of payment as agreed upon is met, there will be no claim of lien against the homeowner's property.

Michigan Partial Unconditional Waiver

Michigan Partial Unconditional Waiver

A waiver should always be given by a contractor, subcontractor or supplier whenever payment is made. In simple terms, it is a receipt for payment. But most importantly, it announces to the homeowner that the construction lien rights are being relinquished – either in full, if full payment is received; or in part, if partial payment was received. Waivers are legal documents and must use prescribed wording. To be considered legal documents, and to serve the purpose for which they were designed, use the appropriate type of waiver as identified below. Be certain of the kind of waiver that you sign is appropriate to the situation. PARTIAL UNCONDITIONAL WAIVER is a "receipt" for partial payment which may still have a condition pending, or will be effective as soon as payment is received.

Michigan Conditional Waiver

Michigan Partial Conditional Waiver

A waiver should always be given by a contractor, subcontractor or supplier whenever payment is made. In simple terms, it is a receipt for payment. But most importantly, it announces to the homeowner that the construction lien rights are being relinquished – either in full, if full payment is received; or in part, if partial payment was received. Waivers are legal documents and must use prescribed wording. To be considered legal documents, and to serve the purpose for which they were designed, use the appropriate type of waiver as identified below. Be certain of the kind of Waiver that you sign is appropriate to the situation. PARTIAL CONDITIONAL WAIVER is a "receipt" for partial payment which may still have a condition pending, or will be effective as soon as payment is received. With partial waivers a balance may still be owing, or more work may remain to be done. A lien right still exists for any unpaid debts until the contract is paid in full.

Michigan Sworn Statement

Michigan Sworn Statement

The Sworn Statement is an itemized list of all individuals who have provided improvements, materials or labor and an accounting of all monies due to them. A homeowner, upon paying the contractor, should expect him or her to pay the subcontractors, suppliers or laborers on the construction project. The Sworn Statement indicates who is owed money, the amounts, and for what supplies or work done. This gives an official record of the items for which the contractor is billing the homeowner. By law, the contractor shall provide a sworn statement to the owner or lessee, when the contractor request payment or when a demand for the sworn statement has been made by or on behalf of the owner or lessee. Homeowners please note: If you choose to pay a subcontractor, supplier or laborer directly without obtaining a Sworn Statement, you are taking a risk! Be sure to obtain one before making any payments to avoid having to pay twice if any problems should arise later. §       Sworn Statement should list each subcontractor, supplier or laborer that the contractor or subcontractor is contracting with to complete the project while giving a detailed accounting the monies owed or spent §       Contractor should provide a completed Sworn Statement to the owner or lessee upon request for payment, or upon request by or on behalf of the owner or lessee §       Subcontractor should also provide a Sworn Statement if requested by the owner or lessee §       Subcontractors should provide a Sworn Statement to the general contractor upon their request for payment.

Michigan Claim of Lien

Michigan Claim of Lien

The Claim of Lien must be properly completed, signed, dated and notarized. Claims of Lien must be recorded within 90 days from the last day of work, or furnishing of supplies at the County Register of Deeds within the county that the property is located. If you are a supplier, subcontractor or laborer, you should file the A Proof of Service of Notice of Furnishing (10KB PDF) along with the Claim of Lien form at the Register of Deeds office.  A Proof of Service of Claim of Lien should also be prepared to prove that all parties have been properly served a copy of the Claim of Lien. Within 15 days of filing the Claim of Lien, a true copy of the recorded claim of lien must be provided to the homeowner, lessee (or designee if listed on the Notice of Commencement). If a lawsuit is not filed within one year from the date of recording the Claim of Lien, the property owner or that person's agent may request an affidavit from the county clerk stating that legal proceedings to enforce the lien were not started as required by law. The affidavit then must be filed with the Register of Deeds to discharge the expired Claim of Lien. §       Claim of Lien must be recorded at Register of Deeds office within county where property is located within 90 calendar days from the last date of furnishing labor or materials. Forms must have proper margins, and the required original signatures. §       Subcontractors/suppliers/laborers should file the Proof of Service of Notice of Furnishing with the Claim of Lien form. §       True copies of the recorded Claim of Lien must be provided (certified mail or hand delivered) to property owner, lessee or designee within 15 days of recording claim of lien. §       To enforce the Claim of Lien, a lawsuit in circuit court must be commenced within 1 year from the recording date of the claim of lien. If no lawsuit, claim of lien expires and the property owner can get the claim of lien discharged by court affidavit after the one year. Claim of Liens are not renewable after the year.

Michigan Notice of Furnishing

MICHIGAN NOTICE OF FURNISHING & PROOF OF SERVICE OF NOTICE OF FURNISHING A Notice of Furnishing provides proof that a supplier, subcontractor or laborer has provided labor or materials towards a construction project. If you are a subcontractor or supplier, provide the Notice of Furnishing within 20 days of the first delivery of goods or services to the property owner, lessee or designee. If you are a laborer, send your Notice of Furnishing within 30 days after wages are due. (Special provisions in the law allow later filings in case a union representative files for unpaid fringe benefits for a group of workers.) A copy of the Notice of Furnishing should also be provided to the general contractor or builder. The Notice of Furnishing should be sent by certified mail or hand delivered. The PROOF OF SERVICE OF NOTICE OF FURNISHING is a notarized form that verifies that the Notice of Furnishing was sent to the contractor, owner, or other responsible party. If a Claim of Lien is filed later, this document will be necessary to establish the lien rights of the plaintiff. The Proof of Service of Notice of Furnishing must be filed at the county Register of Deeds along with the Claim of Lien. §       Subcontractors/suppliers and Laborers are required to provide a Notice of Furnishing to the property owner, lessee or designee within 20 days of the first date of work or delivery of materials. Laborers have 30 days from when wages were contractually due. The form should be sent by certified mail or hand delivered. Complete a Proof of Service of Notice of Furnishing after providing Notice of Furnishing and file this form with the Claim of Lien form. §       General contractors have the right to file claim of liens if they are properly licensed, if required by law AND if have a “written” contract with the property owner or lessee.

                                              

Blank Construction Lien forms

Forms for construction liens here.

Michigan Register of Deeds

IMPORTANT NOTE:

The Register of Deeds has specific legal requirements for preparing, filing and recording of documents.

NEW RECORDING REQUIREMENTS (PA 103 of 1937 as amended, effective 3/4/2002):

1) Minimum 2 ½ inch top blank margin
2) Remaining margins minimum ½ inch
3) White paper color, 8.5” x 11” to 8.5” x 14” size
4) Black color of type or printing
5) Minimum 10 pt. type size
6) Names printed or typed beneath the original signatures

You should check with your Register of Deeds office if you have questions regarding these requirements BEFORE your forms are prepared and recorded.

Time Limits For Liens

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What happens if the contractor leaves unpaid bills behind?

The first notice will be filing a CLAIM OF LIEN on the homeowner’s property. This legal notice informs the homeowner that a person who furnished the labor or materials has not been paid. If no CLAIM OF LIEN has been filed within 120 days (90 days to file the lien, 15-30 days for service) after the job has been completed, one can assume that everything has been paid for properly. A CLAIM OF LIEN is recorded with the county Register of Deeds so that a person buying the property would become aware of unpaid liens during the title search process.

When a homeowner receives notice that a claim of lien was filed against their property, he or she may wish to first consult an attorney. This guide is no substitute for legal counsel in the event a lien is filed, but it explains the basic steps that must be followed to make sure everyone has complied with the law. You should always contact an attorney for legal advice relating to your personal situation.

The lien claimant who wishes to enforce the claim of lien on the property must file a lawsuit in circuit court within one year to foreclose on the lien. The foreclosure action will first determine whether the lien is valid. The court will make the determination as to whom should make payments. If a lien is placed against a home and the homeowner has already paid the contractor, their attorney should make certain that the lien claimant has included the FUND as a defendant party to the lawsuit so that the FUND is notified of the action against the homeowner and will then be able to represent the FUND in court. To gain the protection offered by the FUND, be certain tochoose a licensed contractor.  Carefully monitor the work and the payments being made. If you have any problems, you may wish to consult an attorney, or check with the lending institution which is helping finance the project for advice.

Role Of The Homeowner

If there is a problem that cannot be worked out with the contractor, the homeowner may withhold funds; file a formal complaint against the licensee with the Michigan Department of Labor & Economic Growth, Commercial Enforcement Division (517) 241-9202; ask the local building official to help; complain to a private arbitration mediation program; or may consult an attorney for assistance. When a person decides to work with a contractor to build or improve a home, there are several things that should be considered:

• Make sure the contractor is licensed. State law requires residential builders, home improvementcontractors (when labor and materials equal $600 or more), electrical contractors, mechanical contractors and plumbing contractors to be licensed. Contractors are issued licenses to bedisplayed at the place of business and contractors are required to carry a pocket license card at alltimes. To check if a residential builder or maintenance and alteration contractor is properly licensed,contact the Michigan Department of Labor & Economic Growth Residential Builders licensing unitat (517) 241-9254 or visit the Department’s License Information web site at http://www.michigan.gov/commerciallicensing. Working with an unlicensed contractor could prove tobe very risky!
• Make sure the contract and any changes are in writing. If different materials or design changes are decided upon, those changes should be written down and agreed to by both the homeowner and the contractor. The homeowner should be given a copy of the contract and any changes to the contractto keep. The contractor’s license number should be written on the contract.
• With the contract, the homeowner may be asked to provide information that is used to prepare a NOTICE OF COMMENCEMENT. This document is a formal notice that work is beginning on the property and notifies everyone involved in the project the name and address of the owner (or his/her designee) so that the proper legal notices and bills can be sent. Be sure the information is filled out completely and correctly! Post a copy of the NOTICE OF COMMENCEMENT at the work site.
• As work progresses the homeowner should receive a NOTICE OF FURNISHING from each person or company providing labor or materials. These notices should be retained so that the homeowner can check whether or not these people are paid.
• When the contractor asks for any payment, he or she is required to provide a SWORN STATEMENT, which is a notarized document showing every subcontractor, supplier and laborer who provided labor and materials to the project. This statement should be checked against the NOTICE OF FURNISHINGS to see if each subcontractor, supplier or laborer is getting paid. The homeowner should not make any payments to the contractor until a SWORN STATEMENT is received.
• Upon reviewing the information on the SWORN STATEMENT and advising the homeowner as to what arrangements are being made with each supplier and subcontractor, the contractor will as  the homeowner for a payment – the contractor’s “draw”. Payment options for the homeowner could be:  (1) pay all bills through the contractor, OR (2) upon giving the contractor 5 days written notice, pay the subcontractors, suppliers and laborers directly.

No matter what payment plan is used, WAIVERS OF LIEN should be given. These forms are agreements by the subcontractors, supplier or laborers that they will not file claims of lien against the property because they have already been paid or have an agreement with the contractor on how they will be paid. WAIVERS may be complete and unconditional if the subcontractor, supplier or laborer has been paid in full; or partial and conditional stating terms under which the contractor will be making payments. The contractor cannot sign a waiver on behalf of the subcontractor, supplier and laborer, to waive their lien rights.

Construction Lien Recovery Fund

In 1982, the HOMEOWNER CONSTRUCTION LIEN RECOVERY FUND (hereafter referred to as FUND) was established under the Construction Lien Act (PA 497 of 1980, as amended) to provide a means of redress in the event that all debts owed on a home building or remodeling project are not paid by the licensed contractor. Work, supplies, or equipment needed for the project are purchased by the contractor that the homeowner has hired to do the work. However, if that contractor does not pay for the work or materials provided, the subcontractors, suppliers, and laborers have no recourse but to try to get the homeowner to pay them – after all, their goods are permanently attached to the property. To get a homeowner to pay, the law allows them to file a "construction lien" (claim of lien) on the property. This legal device clouds the title to the property just as unpaid taxes do. The unpaid claimant may go to court to "foreclose" on the lien and force the property owner to sell the home to pay the debts if they could not pay otherwise.

The FUND was created to protect both the homeowners who have contracted with a licensed builder or remodeler for construction or improvements on the home, and the subcontractors, suppliers and laborers who have provided materials or labor on the job. The FUND does not protect from losses on apartment buildings, "spec" homes, or commercial construction. In the past, if a homeowner had completely paid the contractor for the work done, but the subcontractors, suppliers or laborers were not paid for materials or labor they had furnished, the loss was often borne by the homeowner who had to pay twice to protect his or her property from a lien. Now, under the Construction Lien Act, unpaid subcontractors, suppliers, or laborers may present their claims to the FUND. Every licensed residential builder, electrical contractor, plumbing contractor, and mechanical contractor is required to contribute into the FUND. Provisions in the law also allow subcontractors, suppliers, and laborers to voluntarily join and participate in the benefits of the FUND.

Michigan Construction Liens

Traverse Legal handles construction liens cases, across a variety of matters. We represent contractors, sub-contractors, lenders (banks, mortgage companies), building suppliers and home owners. When the economy is weak, as it is now in Michigan, issues concerning construction liens increase. Contact us today and we'll help you resolve your construction lien issue.