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Do we have grounds for lien if client won’t allow us to finish project or pay for what has been done thus far?

We have a contract with a client for bathroom remodel. All is going smoothly, delayed a bit due to polar vortex weather, waiting on tile delivery, client decisions but all good until client is not happy with thickness of grout line from tub to first tile. We explained why that needed to happen, to save the integrity of their niches. Client is heated and they want to discuss how to move forward privately, we told them the only option at this point is to rip out and retile. Client comes back and wants to “cut ties”. We tell them that we will mutually release from the contract if they pay the rest of the labor fee (with a 5% discount for work not completed, even though they are refusing us to complete it) as well as reimburse us for materials (receipts provided) and city permit costs paid by our company. They are refusing to pay stating that the final labor pay is due when work is completed, however they are refusing to let us complete it. Do we have grounds for a lien? We just want what our contract states and to be paid for the 95% of work completed and materials/permit purchased.

1 reply

Feb 19, 2019

I'm sorry to hear about your situation - it's incredibly frustrating when owners won't listen to reason, and even worse when they refuse to pay what's rightfully owed. Before diving too far into the weeds of whether a lien claim might be appropriate, it's worth mentioning that the mere threat of a lien filing will often be enough to compel an owner to make payment in order to avoid the possibility of a lien claim. Plus, if a warning or threat of lien isn't enough to compel payment, actually filing the mechanics lien could still be an option. You can learn more about that here: What is a Notice of Intent to Lien? Anyway, let's look at the ability to lien. As a general matter - mechanics liens rights are available to those who perform construction work for the improvement of real property. Where property has been improved and the work has gone unpaid, typically, lien rights will arise - regardless of whether the project is actually completed. But, the ability to lien is very much tied to what is owed, so, if payment isn't owed, then lien rights might not exist. Looking to Michigan's lien statute, Each contractor, subcontractor, supplier, or laborer who provides an improvement to real property has a construction lien upon the interest of the owner or lessee who contracted for the improvement to the real property..." That right is not tied to the completion of the work, but to whether property was improved. So, the fact that a Michigan project has not yet been completed should not prohibit Michigan claimants from being able to file their mechanics lien. And again - since mechanics liens are not disallowed prior to project completion, and because mechanics liens tie to the value of the improvement to the property (via the contract price), it follows, then, that where a contractor has been terminated on a job prior to their completion, but that contractor has not been paid what they're owed for prior work done, then a Michigan contractor will be entitled to file a mechanics lien for amounts they're owed and unpaid - even if work has not been completed due to the fault of the owner. Recall, though - based on the above, filing a lien for services not actually performed could result in an improper claim. For more on Michigan's lien laws, and for background on the notice and deadline requirements surrounding Michigan lien claims, this resource should be valuable: Michigan Lien & Notice FAQs.

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