Hello
This post specifically applies to contractors in Michigan, but I would be interested in any similar laws in other states.
The Construction Lien Act requires that when a contractor requests payment (for this purpose in a residential job) that it include a notarized sworn statement of all subcontractors (including all contact information), suppliers of materials, and work that is being billed. On receipt of this sworn statement the owner (or their agent) is required to notify all on the sworn statement that the payment was made. This sworn statement should correspond to any Notice of Furnishing (made when for example subcontractors work on the job) although the sworn statement can be relied on in the absence of such notices of furnishing.
Is this followed by contractors? and if it isn’t what are the consequences as to right to initiate a lien? Further, are there any other consequences to not furnishing this sworn statement as required by law?
Thanks in advance for any information
rmort
Replies
It's been awhile since I attended a MI lien seminar so forgive me if I don't get the details right.
Your question is several steps into the process. The first step is the Notice of Commencement. Is the Notice of Commencement properly posted?
There are specific time limits to provide the notice of furninshing but if the notice of commencement has not been posted by the homeowner, the timeline might not have started.
In any event, you seem to be asking questions from several different points of view. I know it's difficult reading but the entire act is posted online somewhere in MI. Of course it's written in legalese so the average carpenter can't understand it.
Are you a sub or the GC or the homeowner?
In any event, a lien can be filed even if none of the formalities were properly done. It might not be enforceable buy often they are still effective.
Bob's next test date: 12/10/07
Hi Jim
I am a homeowner with several small contractor friends and you are correct I am trying to understand it both from the homeowner and the contractor's perspective. When both are points of view are understood, the relationship benefits. It is what these acts are suppose to do, but while it does seem to protect everyone, it also seems quite onerous on both partsFor some work we are having done by a GC, there is no Notice of Commencement, I only recently became aware of the Act and my friends seem to be quite unaware of this act. Is this something you would want as a contractor or would just avoid
I have looked at secondary sources about the lien act such as
http://mcpanet.com/Perfecting_the_lien.html and
http://www.cis.state.mi.us/bcsc/forms/conlien/llf-600.pdf (a consumers guide)According to these sources a Notice of Commencement"Residential – There is no requirement that the Notice of Commencement be recorded but if the homeowner does not live in the property being improved then a copy of the Notice of Commencement must be posted at the site." It also states a request for notice of Commencement must be request by certified mail.So do most, homeowners/contractors ignore it completely? As a homeowner, would you initiate one --- As a contractor, would you request one?
As a homeowner, if you want to qualify for the state protection if you get scammed, you need to follow the procedure to the letter of the law. As a homeowner, I probably would not worry as long as I was in control of the money and I knew who was coming and going. But, it's very easy to fill out the notice of commencement and post it, isn't it. You don't need to record it, you only have to paste it in a conspicuous spot...like next to the building permit. If you do that, you are covered without question. Then, it will be up to the vendors and trades to copy the information and supply you with a notice of furnishing. They will have all the information they need to protect their ability to file a proper lien and perfect it. 99% of the time, they will not file their furnishings in a proper timeframe. The big boys will. For instance, when I had a credit account with Stock Lumber, they ALWAYS requested the notice of commencement. I never sent one on the smaller jobs because there wasn't one. I did pay the bills though so they the issue was moot. On the bigger jobs, I did have the notices and was able to supply the information as requested. I don't remember the requests coming certified though. That might have been a change in the law. Most contractors don't have a clue about the lien law. I tried hard to understand it and failed LOL. Bob's next test date: 12/10/07
thanks again. There have been recent changes to the act in Michigan so that may be it. Again, it seems kind of weird to me that if you just ask for one a get why bother with the certified letter.As a contractor, are you giving up anything not following the procedure, starting with the letter of commencement?Do you give the sworn statement with every request for payment? In Michigan it says you are required to do this - but are you off the hook if there is no letter of commencement?
I can't answer without doing some research. I just don't remember. Bob's next test date: 12/10/07
thanks a lot for taking the time to talk to me.
I am confused, not that it is hard to do.You make it sound like the HO is suppose to furnish this notice of commencing.The OP makes it sound like the GC is suppose to furnish it.I know in many states that the contractor has to furnish the HO with a statement that the contractor, subs, and suppliers have the right to lein the project. AKA a right to lien notice. The idea is that the contractor is suppose to be knowledgable about such things and the HO not so. And this alerts the HO so that they can then make sure that they get lien wavers when they pay..
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
In Michigan, it is clear that the Notice of Commencement is furnished by the HO.I have not found nor in any hiring for remodeling been given a notice about the possibility of a lien. I don't know if this is required by Michigan Law. Does anyone else?
Your notice of commencement invites the would be lieners to file their liens. You are providing the proper identification of the property to lien it. Bob's next test date: 12/10/07
I have done just that since a big addition for a local big-time attorney (corporate construction and RE) several years ago - his contract with me required it, and he explained why. No ones's ever challenged it, but I felt better. Kind of weird that I beat him up in 8th grade!
It was the poolhouse/pergola guy, BTW. Georgia.
Forrest