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Liening a job that stopped before starting?

I'm a subcontractor who was working on a commercial development that had a stop-work order that went into effect before I was actually on the property. I completed design work, some labor (in warehouse), and ordered parts for the job (sprinkler heads that were in a shortage at the time and were ordered in bulk to avoid possible future work delays). These materials were not ever delivered to the job site, but are currently in my warehouse. I have a couple of questions about my lien rights: 1) What should I use as first furnishing date? I have a contract date of 2/10/22, a materials delivery (to me) of 3/23/22, and no date for me or materials being on the site, although I suppose it might be 5/6/22 (listing the job as started and ended on the same day)? 2) I may be able to get the cost of the materials (minus shipping and restocking) back from my supplier. If so, how does this affect a lien? Can I lien for the full amount and then amend the lien if I recoup some costs? 3) If I delay my lien while resolving these questions (I have three months left to file), will it put me later in the line to get paid? I've heard that order of filing impacts order of pay in bankruptcies and want to know if it applies to other situations as well. Thank you in advance for any guidance or information you can provide.

3 replies

May 16, 2022

This is a difficult question without significant research (to investigate caselaw that interprets it) The Michigan Construction Lien Act Arguably you are entitled to a lien for the IMPROVEMENT you made to the property. Relevant definitions are: MCL 570.1104 (6) "Improvement" means the result of labor or material provided by a contractor, subcontractor, supplier, or laborer, including, but not limited to, surveying, engineering and architectural planning, construction management, clearing, demolishing, excavating, filling, building, erecting, constructing, altering, repairing, ornamenting, landscaping, paving, leasing equipment, and installing or affixing a fixture or material, pursuant to a contract." However, MCL 570.1103 (1) "Actual physical improvement" means the actual physical change in, or alteration of, real property as a result of labor provided, pursuant to a contract, by a contractor, subcontractor, or laborer which is readily visible and of a kind that would alert a person upon reasonable inspection of the existence of an improvement. Actual physical improvement does not include that labor which is provided in preparation for that change or alteration, such as surveying, soil boring and testing, architectural or engineering planning, or the preparation of other plans or drawings of any kind or nature. Actual physical improvement does not include supplies delivered to or stored at the real property. MCL 570.1107 says (1) 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, as described in the notice of commencement given under section 108 or 108a, the interest of an owner who has subordinated his or her interest to the mortgage for the improvement of the real property, and the interest of an owner who has required the improvement. Further, relevant sections are MCL 570.107a (construct lien for professional services, and 570.1120 Failure of owner or lessee to perform contract; compensation and additional damages. The problem is you still have to file a lien with in 90 days of the last date you worked or supplied something to the site. Finally, the filing date and order of lien should NOT affect the right to get paid as all liens should relate back to the date the construction project began.

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May 17, 2022

As Noted in Mr Weiner's reply "Actual physical improvement does not include supplies delivered to or stored at the real property." Your goods didn't get that far. Depending on the wording of your contract with the general, you might have a claim against him for breach. The purpose of the Construction Lien Act is to make sure people who increase the value of property by contributing improvements don't get screwed. The above response is provided as a courtesy and does not establish an attorney-client relationship. If you would like to contact me directly for a consultation, I am located in Port Huron (810) 987-3970. Since 1975.

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May 18, 2022

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