What rights does an employee of a contract have to place a lien on a property?

4 months ago
State: Michigan

Can an employee of a contractor who has not been paid by the contractor for work done on my property place a lien on the property for the unpaid wages? If so, what procedures and notifications are necessary? If not, what recourse do I have if a lien is threatened or placed? Thanks.

Senior Legal Associate Levelset

Generally – yes. In Michigan, it appears that employees are entitled to mechanics lien rights as “laborers”.

In Michigan, mechanics lien rights are available to a wide variety of parties including contractors, subcontractor, suppliers, and laborers. Under § 570.1104, a “laborer is defined as “an individual who, pursuant to a contract with a contractor or subcontractor, provides an improvement to real property through the individual’s personal labor.

While that definition of a “laborer” isn’t exactly screaming “employees have lien rights”, note that laborers are entitled to file mechanics liens for wages (“all earnings of an employee, whether determined on the basis of time, task, piece, commission, or other method of calculation, for labor or services, except fringe benefits and withholdings,”) and fringe benefits and withholdings (“compensation due an employee pursuant to a written contract or written policy…“).

Required notices
First: It’s worth noting that if a Notice of Commencement wasn’t properly and timely filed, or if the Notice of Commencement was filed but not provided to the laborer upon the laborer’s request, then the deadlines we’re about to dive into will be extended.

With that in mind, laborers must send a Notice of Furnishing like other Michigan claimants, but the time for doing so is a bit different. Plus, the time for sending notice based on unpaid wages differs from the time for sending notice based on unpaid benefits and withholdings.

Under § 570.1109(2), a laborer who contracts to provide an improvement to real property must provide a Notice of Furnishing to the project’s designee and general contractor (as named in the Notice of Commencement) within 30 days of when their wages were due but not paid. Under § 570.1109(3), their deadline to send a Notice of Furnishing is the 5th day of the second month following the month during which fringe benefits or withholdings were due but not paid.

Regarding how to fend off a mechanics lien claim – it can be tough to prevent the filing of a lien claim through some official process. Though, once a lien claim has been filed, that lien might be bonded off or challenged. However, note that threats to challenge or bond off a lien because the filing would be improper might be effective – especially considering there can be penalties when an improper lien gets filed.

Finally, I think these resources might be helpful:
(1) I Just Received a Notice of Intent to Lien – What Should I Do Now?
(2) A Mechanics Lien Was Filed on My Property – What Do I Do Now?

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Thank you!

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