5.4 Construction Lien Act II: Claims of Lien, Foreclosure, Priority & Residential Protections

Recording the Claim of Lien (MCL 570.1111)

A construction lien ceases to exist unless, within 90 days after the claimant's last furnishing of labor or material under its contract, a claim of lien is recorded with the register of deeds in each county where the property is located. A claim recorded in one county covers only property in that county.

The statutory claim of lien form states when the claimant first and last furnished labor or material, the legal description, the owner's name, the contract amount including extras, payments received, and the amount claimed. It must be sworn before a notary. A subcontractor, supplier, or laborer attaches proof of service of its notice of furnishing.

Service: Within 15 days after recording, the claimant serves a copy of the claim of lien, and any recorded proof of service, on the designee named in the notice of commencement, or on the owner if no designee is named. Service is personal or by certified mail, return receipt requested, and mail service is complete on mailing. Proof of this service is attached to any foreclosure complaint.

Counting the 90 Days

Day 0 is the last day the claimant furnished labor or material under its contract. Recording on day 90 is on time. Recording on day 91 is too late. Plan for the last day of contract work. A return visit only to fix a defect or honor a warranty is risky to rely on for extending the deadline. Don't wait for a warranty call to decide whether to lien.

Foreclosing the Lien (MCL 570.1117–1118)

• Deadline: foreclosure proceedings must be brought no later than 1 year after the claim of lien was recorded.
• Lis pendens: when the action starts, the plaintiff records a notice of lis pendens with the register of deeds.
• Court: the circuit court for the county where the property is located. The action is equitable. Everyone with an interest in the property that the foreclosure would affect must be made a party.
• Sworn statement proof: a contractor or subcontractor must show that the owner was given a sworn statement if one was requested or required (MCL 570.1117(7)).
• Attorney fees: the court may award reasonable attorney fees to a lien claimant who is the prevailing party, and to a prevailing defendant if the lien action was vexatious.
• The claimant may also sue on the underlying contract in the same action.

Priority (MCL 570.1119)

• Construction liens among lien claimants have equal priority.
• A construction lien arises at the first actual physical improvement. It has priority over interests, liens, and encumbrances recorded after it arises, and over garnishments made after it arises.
• A mortgage recorded before the lien arises has priority. Construction-loan advances made after the lien arises keep priority only if the lender followed the sworn statement and waiver process.

Protections for Residential Owners

1. Written contract and license statement. A contractor has no lien on a residential structure without a written contract, written amendments, and the licensing statement with its license number (MCL 570.1114).
2. Payment cap. The total of all liens cannot exceed the contract price, as amended, minus payments the owner made under sworn statements or waivers (MCL 570.1107(6)).
3. Waiver verification before relying on third-party waivers (MCL 570.1115(7)).
4. Interest limit. A subcontractor's or supplier's lien on a residential structure may include interest only as its contract allows, and not interest accruing more than 90 days after the claim is recorded (MCL 570.1107(7)).
5. Remedial construction. The Act is construed liberally, and substantial compliance is enough for a valid lien (MCL 570.1302).

The Repealed Recovery Fund

The Act once included a Homeowner Construction Lien Recovery Fund that paid subcontractor liens on homes whose owners had paid in full. 2010 PA 147 repealed those sections (MCL 570.1201–1207), effective August 23, 2010, and LARA lists the fund as abolished. Today, owners protect themselves through sworn statements, waivers, and the payment cap.

Liens and Licensing

• A person not licensed under Article 24 during the work may not impose or take any action to impose a lien on real property for work that required a license (MCL 339.2412(3)). The same person also cannot sue for payment (MCL 339.2412(1)).
• A lapsed license counts as no license (MCL 339.601(3)), so renew on time.

Worked Timeline

A roofer finishes a reroof on August 10, which is the last day of contract work. The owner does not pay the $4,800 balance.

• Last day to record the claim of lien: November 8 (90 days after August 10).
• If recorded November 1, serve the designee by November 16 (15 days).
• File foreclosure and record lis pendens by November 1 of the following year (1 year after recording).
• Before suing, make sure the owner received a sworn statement.