Lien Law Forms

Michigan Construction Lien Law

Commercial Sector

NOTICE:
The information presented on these pages is intended as an introduction to the framework of the Michigan Construction Lien Law. It is not a substitute for professional legal advice.

The Construction Association of Michigan (CAM) recommends that every company engaging in commercial construction in Michigan have at least one person on staff that has a thorough understanding of this state’s construction lien law and public works bonding law for governmental projects.

Lien Law Training at CAMTEC

The Construction Association of Michigan Training and Education Center (CAMTEC) offers an excellent course, Lien Law & Payment Bonds, to provide quality instruction in this subject. The course is taught by Marty A. Burnstein, a leading Detroit area construction attorney who brings a wealth of practical experience to the classroom, based on over thirty years as a construction lawyer.

Burnstein has served as an arbitrator and mediator for the American Arbitration Association and as a mediator for the Oakland County Circuit Court. He has authored numerous articles on construction-related issues in CAM Magazine, The Builder and other industry publications. Burnstein regularly appears as an expert guest on the subject of construction law for radio and television shows.

In addition to teaching the Lien Law & Payment Bonds course at CAMTEC, Marty Burnstein has taught more than 500 seminars and workshops on various aspects of construction law since 1975.

To register for the next Lien Law & Payment Bonds course at CAMTEC, call (248) 972-1000.

• Basic Components of the Law
• Private Construction Work
• Federal Construction Work
• Michigan Dept. of Transportation (MDOT) Contracts
• State and Local Public Work
• Construction Liens Forms
• Types of Waivers of Lien

Private Construction Work

MICHIGAN’S CONSTRUCTION LIEN ACT (As Amended) A Contractor, Subcontractor, Subcontractor of a Subcontractor, Supplier, and Individual Laborer who provides an improvement to real estate shall have a Construction Lien against the land provided the following steps are taken:

A. CONTRACTOR (i.e. direct contract, oral or written, with the Owner or Lessee/Tenant)
(1) Must record Claim of Lien within 90 days after furnishing last labor or material.
(2) Must serve copy of recorded Claim of Lien within 15 days of recording on the Owner’s/Lessee’s Designee personally or by certified mail.
(3) Must prepare Proof of Service of Claim of Lien to attach to lawsuit.
(4) Must start suit to enforce Construction Lien, if not paid, within 1 year after recording Claim of Lien and attach Proof of Service of Claim of Lien to lawsuit. If not already done, must send sworn statement on Owner.

B. SUBCONTRACTOR OR SUPPLIER (i.e., Contract, oral or written, with Contractor or Subcontractor – does not include Laborer)
(1) Must serve upon the Owner’s/Lessee’s Designee and General Contractor, if any, personally or by certified mail a Notice of Furnishing within 20 days after furnishing first labor or material.
(2) Must prepare Proof of Service of Notice of Furnishing.
(3) Must record Claim of Lien with attached Proof of Service of Notice of Furnishing within 90 days after furnishing last labor or material.
(4) Must serve copy of recorded Claim of Lien within 15 days of recording on the Owner’s/Lessee’s Designee personally or by certified mail
(5) Must Prepare Proof of Service of Claim of Lien to attach to lawsuit.
(6) Must serve upon Contractor, Owner, or Lessee, if requested or money due, a Sworn Statement.
(7) Must start suit to enforce Construction Lien, if not paid, within 1 year after recording Claim of Lien and attach Proof of Service of Claim of Lien to Lawsuit.

C. Before the start of the actual improvement, the Owner or Lessee shall record a Notice of Commencement, which shall be posted conspicuously on the property and which may be obtained from the Owner/Lessee, the Owner’s/Lessee’s Designee, or from the person with whom you have contracted, by a written request, certified mail. The Notice of Commencement shall state:
(1) Legal description of property.
(2) Name and address of Owner/Lessee of real estate contracting for the improvement.
(3) Name and address of Owner’s or Lessee’s Designee to receive all required notices, and
(4) Name and address of General Contractor, if any.

Federal Construction Work

Under the MILLER ACT, Federal law requires the principal contractor in contracts above $100,000 to furnish Payment and Performance Bonds to the U.S. Government:

1. Where the subcontractor, supplier or laborer has a direct contract with the prime or principal contractor, no notice is required, but suit must be started on the bond within one year after furnishing the last labor or material.

2. Subcontractors, suppliers and laborers having no direct contract with the principal contractor must give the principal contractor written notice within 90 days after doing the last work or furnishing the last materials, stating the amount claimed and name of the party for whom the labor material was furnished. The notice must be served either personally or by registered mail, return receipt requested, and suit must be started on the bond within one year after furnishing last labor or material.

State and Local Public Work

Because public jobs are not subject to construction liens, Michigan law requires the principal contractor to furnish to the governmental unit in contracts in excess of $50,000, a Payment and Performance Bond for the protection of subcontractors, suppliers and laborers on public jobs for the state, cities, counties, townships, school districts, or any other political subdivision of the state. The requirements are:

1. That a subcontractor or material supplier having a direct relationship or contract with the prime/principal contractor need only start suit if not paid within 90 days after delivery of the last material or labor.

2. A subcontractor or material supplier performing without a direct contractual relationship to the prime/principal contractor (i.e. performing for a subcontractor of any sort) must, within 30 days after furnishing the first labor or materials to be supplied, notify in writing (by certified mail), the principal contractor, identify the party for whom he is working, the work being performed, and the particular site on which the work is being performed.

3. Within 90 days after supplying the final labor or material, the subcontractor or supplier, when he has no direct contractual relationship with the prime contractor, must notify in writing by certified mail the principal contractor and the governmental unit involved that he has furnished or supplied the last of the labor or material for which the claim is made, stating the amount claimed, name of the party to whom the material was furnished or for whom the labor was done.

4. In all cases, court action must be commenced within one year from the date on which the owner made final payment to the principal contractor.

Michigan Dept. of Transportation (MDOT)
Construction and Maintenance Contracts

The remedy here is against the Payment Bond furnished by the principal prime contractor.

The requirements are:
1. A subcontractor within 60 days after furnishing the last labor or material, shall serve a written notice in duplicate upon the board of agency contracting on behalf of the Michigan Department of Transportation.
· Identify who he is, the nature of the labor or materials furnished, and the name of the party for whom he is working;
· Declare that he is relying upon the security of the bond
· Request the Board to furnish within 10 days, a copy of the Notice to the surety company.

2. A supplier, subcontractor of a subcontractor, and all other except laborers, shall within 60 days after furnishing last labor or material, serve a written notice in duplicate upon the board or agency contracting on behalf of the Michigan Department of Transportation, stating:
· That the contractor or subcontractor is indebted to him in a specific amount describing the labor or materials furnished.
· Requesting the board to furnish within 10 days, a copy of the Notice of the surety company.

A lawsuit must be started on the payment bond within one year after completion and acceptance of the project.

Forms Used in Construction Lien Process

• Notice of Commencement (Commercial Work)
• Notice of Commencement for Residential Structures Only
• Notice of Furnishing
• Proof of Service of Notice of Furnishing
• Claim of Lien
• Proof of Service of Claim of Lien
• Sworn Statement (Commercial Work)
• Sworn Statement (Residential Structures Only)
• Partial Conditional Waiver (Commercial Work Only)
• Partial Unconditional Waiver (Commercial Work Only)
• Partial Conditional Waiver (Residential Structures Only)
• Partial Unconditional Waiver (Residential Structures Only)
• Full Conditional Waiver (Commercial Work Only)
• Full Unconditional Waiver (Commercial Work Only)
• Full Conditional Waiver (Residential Structures Only)
• Full Unconditional Waiver (Residential Structures Only)
• Release and Discharge of Construction Lien
• Partial Release and Discharge of Construction Lien

All Michigan Construction Lien Forms - available in electronic form or on CD – can be purchased in person or by mail at the CAM Plan Room or by calling 248-972-1000, ext. 1108 to order. Cost is $25.00 for CAM Members and $50.00 for Non-Members, plus $5.00 shipping.

Types of Waivers of Lien

Full Unconditional Waiver of Lien: An absolute and complete waiver of lien, but is conditioned and effective upon actual payment of the amount indicated in the waiver.

Full Conditional Waiver of Lien: Also an absolute and complete waiver of lien, but is conditioned and effective upon actual payment o f the amount indicated in the waiver.

Partial Unconditional Waiver of Lien: A waiver only of labor and or material furnished through the date of actual payment or through a certain date and in certain amount.

Partial Conditional Waiver of Lien: Also a partial waiver but is conditioned and effective upon actual payment of the amount indicated in the waiver.