5 essential things to know about Michigan mechanics liens
Contractors & suppliers have strong lien rights in Michigan. If a contractor or supplier isn’t paid on an Michigan job, they can turn to filing a lien to speed up payment and protect themselves. However, there are specific requirements and rules that must be followed. Here are 5 essential things you need to know about Michigan’s mechanics lien law.
Subcontractors of any tier have mechanics lien rights
On commercial projects, general contractors, subcontractors (of any tier), material suppliers, and laborers can file a mechanics lien if they aid in the improvement of real property. Material suppliers to material suppliers do not have lien rights. On residential projects, only licensed contractors and subcontractors have lien rights if they are licensed as a “residential builder” or “residential maintenance and alteration contractor.” Plumbing, electrical, and mechanical subcontractors are excluded from this license requirement. On residential projects (with 2 or less units), a general contractor only has lien rights if there is a written contract with the property owner.
The deadline to file a Michigan mechanics lien is a fixed 90 days
For all lien claimants, the deadline to file a mechanics lien in Michigan is 90 days after the last date of furnishing labor or materials to the project.
Project participants must either provide a notice of furnishing or sworn statement
Those who do not have direct contact with the property owner (or the owner’s agent) are required to deliver a Notice of Furnishing within 20 days of the first furnishing of labor or materials on the project. Those who contacted directly with the property owner (general contractors) on residential projects are required to deliver a Sworn Statement to the property owner. Subcontractors on residential projects are required to deliver the Sworn Statement to the general contractor. The Sworn Statement is a list of all the subcontractors, material suppliers, and laborers that the party has contracted with, and the amount unpaid to these parties.
All project participants entering a contract must be licensed
Make sure you are licensed as a “residential builder” or “residential maintenance and alteration contractor” on a residential project if you are required to be. If you are unlicensed or the license is expired, the lien will be invalid and you may be liable to the property owner for damages and may be guilty of a misdemeanor or felony. Also, not just the individual person needs to be licensed, as the entity that enters into the contract must be licensed as well.
The claim of lien must include a legal property description
While many states allow for a property description that is sufficient to accurately describe the property, Michigan requires that the Claim of Lien include the legal property description to be listed.
Sending a Notice of Furnishing (Preliminary Notice) is required for all Michigan Subs and Suppliers