July 24, 2007, Introduced by Reps. Stakoe, Meekhof, Ball, Hammon, Caul, Robertson, Hansen, Nofs and Caswell and referred to the Committee on Oversight and Investigations.
A bill to amend 1980 PA 497, entitled
"Construction lien act,"
by amending sections 107, 108a, 109, 110, 115, 119, and 203 (MCL
570.1107, 570.1108a, 570.1109, 570.1110, 570.1115, 570.1119, and
570.1203), section 107 as amended by 2006 PA 497, section 108a as
added and sections 109 and 119 as amended by 1982 PA 17, and
sections 110, 115, and 203 as amended by 2006 PA 572.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 107. (1) Each Subject to subsection (7), each
2 contractor, subcontractor, supplier, or laborer who provides an
3 improvement to real property has a construction lien upon the
4 interest of the owner or lessee who contracted for the
5 improvement to the real property, as described in the notice of
1 commencement given under section 108 or 108a, the interest of an
2 owner who has subordinated his or her interest to the mortgage
3 for the improvement of the real property, and the interest of an
4 owner who has required the improvement. A construction lien
5 acquired pursuant to this act shall not exceed the amount of the
6 lien claimant's contract less payments made on the contract.
7 (2) A construction lien under this act attaches to the
8 entire interest of the owner or lessee who contracted for the
9 improvement, including any subsequently acquired legal or
10 equitable interest.
11 (3) Each Subject
to subsection (7), each contractor,
12 subcontractor, supplier, or laborer who provides an improvement
13 to real property to which the person contracting for the
14 improvement had no legal title has a construction lien upon the
15 improvement for which the contractor, subcontractor, supplier, or
16 laborer provided labor, material, or equipment. The forfeiture,
17 surrender, or termination of any title or interest held by an
18 owner or lessee who contracted for an improvement to the
19 property, an owner who subordinated his or her interest to the
20 mortgage for the improvement, or an owner who has required the
21 improvement does not defeat the lien of the contractor,
22 subcontractor, supplier, or laborer upon the improvement.
23 (4) If the rights of a person contracting for an improvement
24 as a land contract vendee or a lessee are forfeited, surrendered,
25 or otherwise terminated, any lien claimant who has provided a
26 notice of furnishing or is excused from providing a notice of
27 furnishing under section 108
, 108a, or 109 and who performs the
1 covenants contained in the land contract or lease within 30 days
2 after receiving actual notice of the forfeiture, surrender, or
3 termination is subrogated to the rights of the contracting vendee
4 or lessee as those rights existed immediately before the
5 forfeiture, surrender, or termination.
6 (5) For purposes of this act, if the real property is owned
7 or leased by more than 1 person, there is a rebuttable
8 presumption that an improvement to real property under a contract
9 with an owner or lessee was consented to by any other co-owner or
10 co-lessee. If enforcement of a construction lien through
11 foreclosure is sought and the court finds that the improvement
12 was consented to by a co-owner or co-lessee who did not contract
13 for the improvement, the court shall order the entire interest of
14 that co-owner or co-lessee, including any subsequently acquired
15 legal or equitable interest, to be subject to the construction
16 lien. A deficiency judgment shall not be entered against a
17 noncontracting owner, co-owner, lessee, or co-lessee.
18 (6) If the real property of an owner or lessee is subject to
19 multiple construction liens, the sum of the construction liens
20 shall not exceed the amount the owner or lessee agreed to pay the
21 person with whom he or she contracted for the improvement as
22 modified by all additions, deletions, and other amendments, less
23 payments made by or on behalf of the owner or lessee, pursuant to
24 either a contractor's sworn statement or a waiver of lien, in
25 accordance with this act.
26 (7) After the effective date of the amendatory act that
27 added this subsection, a construction lien of a subcontractor or
1 supplier for an improvement to a residential structure shall only
2 include an amount for interest, including, but not limited to, a
3 time-price differential or a finance charge, if the amount is in
4 accordance with the terms of the contract between the
5 subcontractor or supplier and the contractor or subcontractor and
6 does not include any interest that accrues after 90 days after
7 the claim of lien is recorded.
8 (7) A subcontractor, supplier, or laborer is not entitled to
9 a construction lien on a residential structure.
10 Sec. 108a. (1) An owner or lessee contracting for an
11 improvement to a residential structure shall prepare and provide
12 a notice of commencement to a contractor , subcontractor,
13 supplier, or laborer who
has made a written request for the
14 notice pursuant to this section.
15 (2) The notice of commencement shall contain the following
16 information:
17 (a) The legal description of the real property on which the
18 improvement is to be made. A description conforming to section
19 212 or 255 of Act No. 288 of the Public Acts of 1967, being
20 sections 560.212 and 560.255 of the Michigan Compiled Laws, shall
21 be the land division
act, 1967 PA 288, MCL 560.212 and 560.255,
22 is a sufficient legal description.
23 (b) The name, address, and capacity of the owner or lessee
24 of the real property contracting for the improvement.
25 (c) The name and address of the fee owner of the real
26 property, if the person contracting for the improvement is a land
27 contract vendee or lessee.
1 (d) The name and address of the owner's or lessee's
2 designee.
3 (e) The name and address of the general contractor, if any.
4 The notice of commencement form shall contain the following
5 caption below the line for the general contractor's name and
6 address: (the name of the person with whom you have contracted to
7 provide substantially all the improvements to the property.)
8 (e) (f) The
following statement in boldface type on the
9 front of the form:
10 WARNING TO HOMEOWNER
11 Michigan law requires that you do the following:
12 1. Complete and return this form to the person a contractor
13 who asked for requests
it within 10 days after the date of the
14 postmark on the request.
15 2. If you do not complete and return this form within the 10
16 days you may have to pay the expenses incurred in getting the
17 information.
18 3. If you do not live at the site of the improvement, you
19 must post a copy of this form in a conspicuous place at that
20 site.
21 You are not required to but should do the following:
22 1. Complete and post a copy of this form at the place where
23 the improvement is being made, even if you live there.
24 2. Make and keep a copy of this form for your own records.
25 (f) (g) The
following statement:
26 "To lien claimants and subsequent purchasers:
27 Take notice that work is about to commence on an improvement
1 to the real property described in this instrument. A person
2 contractor having a construction lien may preserve the lien by
3 providing a notice of furnishing to the above named designee and
4 the general contractor, if any, and by timely recording a claim
5 of lien, in accordance with law.
6 A person contractor
having a construction lien arising by
7 virtue of work performed on this improvement should refer to the
8 name of the owner or lessee and the legal description appearing
9 in this notice. A person subsequently acquiring an interest in
10 the land described is not required to be named in a claim of
11 lien.
12 A copy of this notice with an attached form for notice of
13 furnishing may be obtained upon making a written request by
14 certified mail to the above named owner or lessee ; or the
15 designee." ; or the person with whom you have contracted."
16 (g) (h) The name and address of the person
preparing the
17 notice.
18 (h) (i) An
affidavit of the owner or lessee or the agent of
19 the owner or lessee which that verifies the notice.
20 (3) Each copy of the notice of commencement shall have a
21 blank notice of furnishing as described in section 109 attached
22 to it. The blank notice of furnishing shall be easily detachable
23 from the copy of the notice and need not be recorded.
24 (3) (4) Incorrect
information contained in the notice of
25 commencement furnished by or for an owner or lessee shall does
26 not affect adversely the rights of a lien claimant as against the
27 property of that owner or lessee.
1 (4) (5) The
owner, lessee, or designee, within 10 days after
2 the date of mailing of a written request by certified mail from a
3 contractor, subcontractor, supplier, or laborer, shall prepare
4 and provide a copy of the notice of commencement ,
together with
5 an attached blank notice of furnishing form, to the contractor. ,
6 subcontractor, supplier, or laborer requesting a copy of the
7 notice of commencement. A
contractor , subcontractor, supplier,
8 or laborer who requests a
notice of commencement from an owner or
9 lessee of a residential structure shall supply a blank notice of
10 commencement form together with the attached blank notice of
11 furnishing to the owner or
lessee at the time the request is
12 made.
13 (6) A contractor who has been provided with a notice of
14 commencement from the owner, lessee, or designee, within 10 days
15 after the date of mailing of a written request by certified mail
16 from a subcontractor, supplier, or laborer who has a direct
17 contract with the contractor, shall provide a copy of the notice
18 of commencement, together with an attached blank notice of
19 furnishing form, to the subcontractor, supplier, or laborer
20 requesting a copy of the notice of commencement. If the
21 contractor has not been provided a notice of commencement, the
22 contractor shall provide such subcontractor, supplier, or laborer
23 the name and address of the owner or lessee.
24 (7) A subcontractor who has been provided with a notice of
25 commencement from the owner, lessee, designee, contractor, or
26 subcontractor, within 10 days after the date of mailing of a
27 written request by certified mail from a subcontractor, supplier,
1 or laborer who has a direct contract with the subcontractor,
2 shall provide a copy of the notice of commencement, together with
3 an attached blank notice of furnishing form, to the
4 subcontractor, supplier, or laborer requesting a copy of the
5 notice of commencement. If the subcontractor has not been
6 provided a notice of commencement, the subcontractor shall
7 provide to such subcontractor, supplier, or laborer, the name and
8 address of the owner or lessee.
9 (5) (8) If
the owner, lessee, or designee has received a
10 blank notice of commencement form pursuant to subsection (5) (4)
11 and if the owner or lessee does not currently reside at the real
12 property described in the notice of commencement, the owner,
13 lessee, or designee shall post a copy of the notice of
14 commencement in a conspicuous place on the real property during
15 the course of the actual physical improvement to the real
16 property.
17 (9) Failure of the owner, lessee, or designee to provide,
18 upon written request, the notice of commencement, in accordance
19 with this section, shall operate to extend the time within which
20 a subcontractor or supplier may provide a notice of furnishing,
21 as described in section 109, until 20 days after the notice of
22 commencement actually has been furnished to the subcontractor or
23 laborer.
24 (10) Failure of the owner, lessee, or designee to provide
25 the notice of commencement, in accordance with this section,
26 shall operate to extend the time within which a laborer may
27 provide a notice of furnishing, as described in section 109,
1 until 30 days after the notice of commencement actually has been
2 furnished to the laborer, or until the time in which to provide
3 the notice of furnishing in accordance with section 109 expires,
4 whichever is later.
5 (11) Failure of the owner, lessee, or designee to post or
6 keep posted a copy of the notice of commencement as provided in
7 subsection (8) shall render the owner or lessee liable to a
8 subcontractor, supplier, or laborer who becomes a lien claimant
9 for all actual expenses sustained by the lien claimant in
10 obtaining the information otherwise provided by the posting.
11 (12) Failure of a contractor, who has been provided with a
12 notice of commencement from the owner, lessee, or designee, to
13 provide the notice of commencement upon the request of a lien
14 claimant who has a contract with the contractor for an
15 improvement to the property shall render the contractor liable to
16 the lien claimant for all actual expenses sustained by the lien
17 claimant in obtaining the information otherwise provided by the
18 notice of commencement. Failure of a contractor to provide the
19 name and address of the owner or lessee in accordance with
20 subsection (6) shall render the contractor liable to the lien
21 claimant for all actual expenses sustained by the lien claimant
22 in obtaining the name and address of the owner or lessee.
23 (13) Failure of a subcontractor, who has been provided with
24 a notice of commencement from the owner, lessee, designee,
25 contractor, or subcontractor, to provide the notice of
26 commencement upon the request of a subcontractor, supplier, or
27 laborer who has a direct contract with the subcontractor shall
1 render the subcontractor liable to such subcontractor, supplier,
2 or laborer for all actual expenses sustained by the
3 subcontractor, supplier, or laborer in obtaining the information
4 otherwise provided by the notice of commencement. Failure of a
5 subcontractor to provide the name and address of the owner or
6 lessee in accordance with subsection (6) shall render the
7 subcontractor liable to the lien claimant for all actual expenses
8 sustained by the lien claimant in obtaining the name and address
9 of the owner or lessee.
10 (6) (14) This
section shall only apply applies
to an
11 improvement to a residential structure.
12 Sec. 109. (1) Except as otherwise provided in sections 108 ,
13 108a, and 301, a
subcontractor or supplier who contracts to
14 provide an improvement to real property other than a residential
15 structure shall provide a notice of furnishing to the designee
16 and the general contractor, if any, as named in the notice of
17 commencement at the address shown in the notice of commencement,
18 either personally or by certified mail, within 20 days after
19 furnishing the first labor or material. If a designee has not
20 been named in the notice of commencement, or if the designee has
21 died, service shall be made upon the owner or lessee named in the
22 notice of commencement. If service of the notice of furnishing is
23 made by certified mail, service is complete upon mailing. A
24 contractor is not required to provide a notice of furnishing to
25 preserve lien rights arising from his or her contract directly
26 with an owner or lessee.
27 (2) Except as otherwise provided in sections section 108,
1 and 108a, a laborer who
contracts to provide an improvement to
2 real property other than a residential structure shall provide a
3 notice of furnishing to the designee and the general contractor,
4 if any, as named in the notice of commencement at the address
5 shown in the notice of commencement, either personally or by
6 mail, within 30 days after wages were contractually due but were
7 not paid. If a designee has not been named in the notice of
8 commencement, or if the designee has died, service shall be made
9 upon the owner or lessee named in the notice of commencement. If
10 service of the notice of furnishing is made by mail, service is
11 complete upon mailing by first class mail with postage prepaid.
12 (3) Except as otherwise provided in sections section 108,
13 and 108a, a laborer who
provides an improvement to real property
14 other than a residential structure shall provide a notice of
15 furnishing to the designee and the general contractor, if any,
16 named in the notice of commencement at the address shown in the
17 notice of commencement, either personally or by certified mail,
18 by the fifth day of the second month following the month in which
19 fringe benefits or withholdings from wages were contractually due
20 but were not paid. If a designee has not been named in the notice
21 of commencement, or if the designee has died, service shall be
22 made upon the owner or lessee named in the notice of
23 commencement. If service of the notice of furnishing is made by
24 certified mail, service is complete upon mailing.
25 (4) The notice of furnishing, if not given on the form
26 attached to the notice of commencement, shall be in substantially
27 the following form:
1 NOTICE OF FURNISHING
2 To: ...............................................................
3 (name of designee (or owner or lessee) from notice of commencement)
4 ...............................................................
5 (address from notice of commencement)
6 Please take notice that the undersigned is furnishing to ..........
7 ...................................................................
8 (name and address of other contracting party)
9 certain labor or material for ................................... ,
10 (describe type of work)
11 in connection with the improvements to the real property described
12 in the notice of commencement recorded in liber .............. , on
13 page ...... , .............................................records,
14 (name of county)
15 ................................................................. .
16 or (a copy of which is attached hereto)
17 WARNING TO OWNER: THIS NOTICE IS REQUIRED BY THE MICHIGAN
18 CONSTRUCTION LIEN ACT. IF YOU HAVE QUESTIONS ABOUT YOUR RIGHTS
19 AND DUTIES UNDER THIS ACT, YOU SHOULD CONTACT AN ATTORNEY TO
20 PROTECT YOU FROM THE POSSIBILITY OF PAYING TWICE FOR THE
21 IMPROVEMENTS TO YOUR PROPERTY.
22 ......................................
23 (name and address of lien claimant)
24 by ...................................
25 (name and capacity of party
26 signing for lien claimant)
27 ......................................
28 (address of party signing)
29 Date: ...................... .
30 (5) The failure of a lien claimant to provide a notice of
31 furnishing within the time specified in this section shall does
32 not defeat the lien claimant's right to a construction lien for
33 work performed or materials furnished by the lien claimant after
1 the service of the notice of furnishing.
2 (6) The failure of a lien claimant , to provide a notice of
3 furnishing within the time specified in this section shall does
4 not defeat the lien claimant's right to a construction lien for
5 work performed or materials furnished by the lien claimant before
6 the service of the notice of furnishing except to the extent that
7 payments were made by or on behalf of the owner or lessee to the
8 contractor pursuant to either a contractor's sworn statement or a
9 waiver of lien in accordance with this act for work performed or
10 material delivered by the lien claimant. This subsection does not
11 apply to a laborer.
12 (7) The failure of a laborer to provide a notice of
13 furnishing to the designee as required by subsection (2) shall
14 defeat defeats the laborer's lien for those wages for which the
15 notice of furnishing is required.
16 (8) The failure of a laborer to provide a notice of
17 furnishing to the designee as required by subsection (3) shall
18 defeat defeats the laborer's lien for those fringe benefits and
19 withholdings for which the notice of furnishing is required.
20 (9) The failure of a laborer to provide a notice of
21 furnishing to the general contractor within the time specified in
22 subsection (2) or (3) shall does not defeat the
laborer's right
23 to a construction lien, but the laborer shall be is liable
for
24 any actual damages sustained by the general contractor as a
25 result of the failure.
26 (10) One or more laborers may authorize an agent to prepare
27 and serve a notice of furnishing in the manner provided in this
1 section. Notice A
notice of furnishing under this section
may
2 contain the notice of furnishing of more than 1 laborer, and
in
3 which case it shall contain the information required in
4 susbsection subsection
(4) as to each laborer for whom it is
5 prepared. The court shall consider the notice of furnishing of
6 each lien claimant under this subsection shall be considered by
7 the court on its own
merits.
8 (11) This section does not apply if the real estate involved
9 is a residential structure. A subcontractor, laborer, or supplier
10 shall not provide a notice of furnishing to an owner, lessee,
11 designee, or general contractor for improvements provided to a
12 residential structure.
13 Sec. 110. (1) A contractor who contracts to provide an
14 improvement to real property other than a residential structure
15 shall provide a sworn statement to the owner or lessee in each of
16 the following circumstances:
17 (a) When payment is due to the contractor from the owner or
18 lessee or when the contractor requests payment from the owner or
19 lessee.
20 (b) When a demand for the sworn statement has been made by
21 or on behalf of the owner or lessee.
22 (2) A subcontractor shall provide a sworn statement to the
23 owner or lessee when a demand for the sworn statement has been
24 made by or on behalf of the owner or lessee and the owner or
25 lessee has complied with the requirements of subsection (6).
26 (3) A subcontractor who has provided an improvement to real
27 property other than a residential structure shall provide a sworn
1 statement to the contractor when payment is due to the
2 subcontractor from the contractor or when the subcontractor
3 requests payment from the contractor.
4 (4) A sworn statement shall list each subcontractor and
5 supplier with whom the person issuing the sworn statement has
6 contracted relative to the improvement to the real property. The
7 sworn statement shall contain a list of laborers with whom the
8 person issuing the sworn statement has contracted relative to the
9 improvement to the real property and for whom payment for wages
10 or fringe benefits and withholdings are due but unpaid and the
11 itemized amount of such wages or fringe benefits and
12 withholdings. The sworn statement shall be in substantially the
13 following form:
14 SWORN STATEMENT
15 State of Michigan)
16 ) ss.
17 County of .......)
18 ............(deponent), being sworn, states the following:
19 ................. is the (contractor) (subcontractor)
20 for an improvement to the following real property in
21 ................. County, Michigan, described as follows:
22 ...............................................................
23 (insert legal description of property)
24 The following is a statement of each subcontractor and
25 supplier, and laborer for whom payment of wages or fringe
26 benefits and withholdings is due but unpaid, with whom the
27 (contractor) (subcontractor) has (contracted) (subcontracted) for
1 performance under the contract with the owner or lessee of the
2 property, and the amounts due to the persons as of the date of
3 this statement are correctly and fully set forth opposite their
4 names:
5 Name,
6 address,
7 and
8 tele-
9 phone Amount
10 number of
11 of laborer
12 subcon- Amount fringe
13 trac- of benefits
14 tor, Type of Balance laborer and
15 sup- improve- Total Amount to com- wages with-
16 plier, ment con- Amount cur- plete due holdings
17 or fur- tract already rently (op- but due but
18 laborer nished price paid owing tional) unpaid unpaid
19 .....................................................................
20 Totals
21 (Some columns are not applicable to all persons listed)
22 The contractor has not procured material from, or
23 subcontracted with, any person other than those set forth and
24 owes no money for the improvement other than the sums set forth.
25 I make this statement as the (contractor) (subcontractor) or
26 as ......... of the (contractor) (subcontractor) to represent to
27 the owner or lessee of the property and his or her agents that
28 the property is free from claims of construction liens, or the
29 possibility of construction liens, except as specifically set
30 forth in this statement and except for claims of construction
31 liens by laborers that may be provided under section 109 of the
32 construction lien act, 1980 PA 497, MCL 570.1109.
33 WARNING TO OWNER OR LESSEE: AN OWNER OR LESSEE OF THE
1 PROPERTY MAY NOT RELY ON THIS SWORN STATEMENT TO AVOID THE CLAIM
2 OF A SUBCONTRACTOR, SUPPLIER, OR LABORER WHO HAS PROVIDED A
3 NOTICE OF FURNISHING OR A LABORER WHO MAY PROVIDE A NOTICE OF
4 FURNISHING UNDER SECTION 109 OF THE CONSTRUCTION LIEN ACT, 1980
5 PA 497, MCL 570.1109, TO THE DESIGNEE OR TO THE OWNER OR LESSEE
6 IF THE DESIGNEE IS NOT NAMED OR HAS DIED.
7 ON RECEIPT OF THIS SWORN STATEMENT, THE OWNER OR LESSEE, OR
8 THE OWNER'S OR LESSEE'S DESIGNEE, MUST GIVE NOTICE OF ITS
9 RECEIPT, EITHER IN WRITING, BY TELEPHONE, OR PERSONALLY, TO EACH
10 SUBCONTRACTOR, SUPPLIER, AND LABORER WHO HAS PROVIDED A NOTICE OF
11 FURNISHING UNDER SECTION 109 OR, IF A NOTICE OF FURNISHING IS
12 EXCUSED UNDER SECTION 108, OR 108A, TO EACH SUBCONTRACTOR,
13 SUPPLIER, AND LABORER NAMED IN THE SWORN STATEMENT. IF A
14 SUBCONTRACTOR, SUPPLIER, OR LABORER WHO HAS PROVIDED A NOTICE OF
15 FURNISHING OR WHO IS NAMED IN THE SWORN STATEMENT MAKES A
16 REQUEST, THE OWNER, LESSEE, OR DESIGNEE SHALL PROVIDE THE
17 REQUESTER A COPY OF THE SWORN STATEMENT WITHIN 10 BUSINESS DAYS
18 AFTER RECEIVING THE REQUEST.
19 ....................................
20 Deponent
21 WARNING TO DEPONENT: A PERSON WHO GIVES A FALSE SWORN
22 STATEMENT WITH INTENT TO DEFRAUD IS SUBJECT TO CRIMINAL PENALTIES
23 AS PROVIDED IN SECTION 110 OF THE CONSTRUCTION LIEN ACT, 1980 PA
24 497, MCL 570.1110.
25 Subscribed and sworn to before me on ...............(DATE)
1 ...........................................
2 Notary Public,......... County, Michigan.
3 My commission expires: ........................... .
4 (5) The contractor or subcontractor is not required to list
5 in the sworn statement material furnished by the contractor or
6 subcontractor out of his or her own inventory that was not
7 purchased specifically for performing the contract.
8 (6) On receipt of a sworn statement, the owner, lessee, or
9 designee shall give notice of its receipt, either in writing, by
10 telephone, or personally, to each subcontractor, supplier, and
11 laborer who has provided a notice of furnishing under section 109
12 or, if a notice of furnishing is excused under section 108, or
13 108a, to each
subcontractor, supplier, and laborer named in the
14 sworn statement. If a subcontractor, supplier, or laborer who has
15 provided a notice of furnishing or who is named in the sworn
16 statement makes a request, the owner, lessee, or designee shall
17 provide the requester a copy of the sworn statement within 10
18 business days after receiving the request.
19 (7) After the contractor or subcontractor provides the sworn
20 statement, the owner or lessee may withhold or, upon written
21 demand from the contractor, shall withhold from the amount due or
22 to become due to the contractor or to the subcontractor for work
23 already performed an amount sufficient to pay all sums due to
24 subcontractors, suppliers, or laborers, as shown by the sworn
25 statement, or due to lien claimants who have provided a notice of
26 furnishing under section 109. From the amount withheld, the owner
27 or lessee may directly pay subcontractors, suppliers, or laborers
1 the amount they are due as shown by the sworn statement. If the
2 contract provides for payments by the owner to the general
3 contractor in the normal course of construction, but the owner
4 elects to pay lien claimants directly under this section, the
5 first time the owner elects to make payment directly to a lien
6 claimant, he or she shall provide at least 5 business days'
7 notice to the general contractor of the intention to make direct
8 payment. Subsequent direct disbursements to lien claimants need
9 not be preceded by the 5-day notice provided in this section
10 unless the owner first returns to the practice of paying all sums
11 to the general contractor. As between the owner or lessee and the
12 contractor or subcontractor, all payments made under this
13 subsection are considered the same as if paid directly to the
14 contractor or subcontractor. If an amount is withheld under this
15 subsection from the contractor or subcontractor, the owner or
16 lessee, upon request, shall prepare and provide to the contractor
17 or subcontractor an itemized statement of the sums withheld. If
18 an amount is paid directly to a lien claimant under this section,
19 the owner or lessee shall, if requested by the contractor or
20 subcontractor, provide to the contractor or subcontractor an
21 itemized statement of the sums paid.
22 (8) An owner, lessee, designee, mortgagee, or contractor may
23 rely on a sworn statement prepared by a party other than himself
24 or herself to avoid the claim of a subcontractor, supplier, or
25 laborer unless the subcontractor, supplier, or laborer has
26 provided a notice of furnishing as required under section 109 or
27 unless the notice of furnishing is excused under section 108. or
1 108a.
2 (9) If a contractor fails to provide a sworn statement to
3 the owner or lessee before recording the contractor's claim of
4 lien, the contractor's construction lien is not invalid. However,
5 the contractor is not entitled to any payment, and a complaint,
6 cross-claim, or counterclaim may not be filed to enforce the
7 construction lien, until the sworn statement has been provided.
8 (10) If a subcontractor fails to provide a sworn statement
9 under subsection (2) to the owner or lessee before recording the
10 subcontractor's claim of lien, the subcontractor's construction
11 lien is valid. However, a complaint, cross-claim, or counterclaim
12 may not be filed to enforce the construction lien until the sworn
13 statement has been provided.
14 (11) A contractor or subcontractor who desires to draw money
15 and gives or causes to be given to any owner or lessee a sworn
16 statement required by this section that is false, with intent to
17 defraud, is guilty of a crime as follows:
18 (a) If the statement involved is for less than $200.00, the
19 contractor or subcontractor is guilty of a misdemeanor punishable
20 by imprisonment for not more than 93 days or a fine of not more
21 than $500.00 or 3 times the statement amount, whichever is
22 greater, or both imprisonment and a fine.
23 (b) If any of the following apply, the contractor or
24 subcontractor is guilty of a misdemeanor punishable by
25 imprisonment for not more than 1 year or a fine of not more than
26 $2,000.00 or 3 times the statement amount, whichever is greater,
27 or both imprisonment and a fine:
1 (i) The statement involved is for $200.00 or more but less
2 than $1,000.00.
3 (ii) The statement involved is for less than $200.00 and the
4 contractor or subcontractor has 1 or more prior convictions for
5 committing or attempting to commit an offense under this act.
6 (c) If any of the following apply, the contractor or
7 subcontractor is guilty of a felony punishable by imprisonment
8 for not more than 5 years or a fine of not more than $10,000.00
9 or 3 times the statement amount, whichever is greater, or both
10 imprisonment and a fine:
11 (i) The statement involved is for $1,000.00 or more but less
12 than $20,000.00.
13 (ii) The statement involved is for more than $200.00 but less
14 than $1,000.00 and the contractor or subcontractor has 1 or more
15 prior convictions for violating or attempting to violate this
16 act. For purposes of this subparagraph, however, a prior
17 conviction does not include a conviction for a violation or
18 attempted violation described in subdivision (a) or (b)(ii).
19 (d) If any of the following apply, the contractor or
20 subcontractor is guilty of a felony punishable by imprisonment
21 for not more than 10 years or a fine of not more than $15,000.00
22 or 3 times the statement amount, whichever is greater, or both
23 imprisonment and a fine:
24 (i) The statement involved is for $20,000.00 or more.
25 (ii) The statement involved is for $1,000.00 or more but less
26 than $20,000.00 and the contractor or subcontractor has 2 or more
27 prior convictions for committing or attempting to commit an
1 offense under this act. For purposes of this subparagraph,
2 however, a prior conviction does not include a conviction for a
3 violation or attempted violation described in subdivision (a) or
4 (b)(ii).
5 (12) For purposes of subsection (11), statements involved in
6 separate incidents pursuant to a scheme or course of conduct
7 within any 12-month period may be aggregated to determine the
8 total amount involved in the statements.
9 (13) If the prosecuting attorney intends to seek an enhanced
10 sentence for a violation under this section based upon the
11 defendant having 1 or more prior convictions, the prosecuting
12 attorney shall include in the complaint and information a
13 statement listing the prior conviction or convictions. The
14 existence of the defendant's prior conviction or convictions
15 shall be determined by the court, without a jury, at sentencing
16 or at a separate hearing for that purpose before sentencing. The
17 existence of a prior conviction may be established by any
18 evidence relevant for that purpose, including, but not limited
19 to, 1 or more of the following:
20 (a) A copy of the judgment of conviction.
21 (b) A transcript of a prior trial, plea-taking, or
22 sentencing.
23 (c) Information contained in a presentence report.
24 (d) The defendant's statement.
25 (14) If the sentence for a conviction under this section is
26 enhanced by 1 or more convictions, those prior convictions shall
27 not be used to further enhance the sentence for the conviction
1 pursuant to section 10, 11, or 12 of chapter IX of the code of
2 criminal procedure, 1927 PA 175, MCL 769.10, 769.11, and 769.12.
3 (15) This section does not apply if the real estate involved
4 is a residential structure. A contractor or subcontractor shall
5 not provide a sworn statement to an owner or lessee for
6 improvements provided to a residential structure.
7 Sec. 115. (1) A person shall not require, as part of any
8 contract for an improvement, that the right to a construction
9 lien be waived in advance of work performed. A waiver obtained as
10 part of a contract for an improvement is contrary to public
11 policy, and shall be is
invalid, except to the extent that
12 payment for labor and material furnished was actually made to the
13 person giving the waiver. Acceptance by a lien claimant of a
14 promissory note or other evidence of indebtedness from an owner,
15 lessee, or contractor shall does not of itself serve
to waive or
16 discharge otherwise valid construction lien rights.
17 (2) A lien claimant who receives full payment for his or her
18 contract shall provide to the owner, lessee, or designee a full
19 unconditional waiver of lien.
20 (3) A lien claimant who receives partial payment for his or
21 her contract shall provide to the owner, lessee, or designee a
22 partial unconditional waiver of the lien for the amount which the
23 lien claimant has received, if the owner, lessee, or designee
24 requests the partial unconditional waiver.
25 (4) A partial conditional waiver of lien or a full
26 conditional waiver of lien shall be is effective
upon payment of
27 the amount indicated in the waiver.
1 (5) For purposes of this act, retainage that is not payable
2 under a contract until the happening of a certain event in
3 addition to the providing of an improvement is not due as of the
4 date of the providing of the improvement is provided.
5 (6) A waiver of a lien under this section shall be is
6 effective when a person makes payment relying on the waiver
7 unless at the time payment was made the person making the payment
8 has written notice that the consideration for the waiver has
9 failed.
10 (7) Subject to subsection (8), an owner, lessee, or designee
11 shall not rely on a full or partial unconditional or conditional
12 waiver of lien provided by a person other than the lien claimant
13 named in the waiver if the lien claimant has either filed a
14 notice of furnishing under section 109 or is excused from filing
15 a notice of furnishing under section 108 or 108a unless the
16 owner, lessee, or designee has first verified the authenticity of
17 the lien waiver with the lien claimant either in writing, by
18 telephone, or personally.
19 (8) An agent who is authorized to prepare and serve a notice
20 of furnishing or to prepare, record, and serve a claim of lien on
21 behalf of a laborer or group of laborers is automatically
22 authorized to provide and responsible for providing waivers of
23 lien, unless or until the laborer or group of laborers notifies
24 the designee in writing that someone other than the agent is
25 authorized to provide appropriate waivers. An individual laborer
26 may also provide waivers under this section instead of the agent.
27 (9) The following forms shall be used in substantially the
1 following format to execute waivers of construction liens:
2 (a) PARTIAL UNCONDITIONAL WAIVER
3
4 I/we have a contract with ................................... to
5 (other contracting party)
6 provide .................... for the improvement to the property
7 described as .............................................., and
8 by signing this waiver waive my/our construction lien to the
9 amount of $ .............., for labor/materials provided
10 through ............................ .
11 (date)
12
13 This waiver, together with all previous waivers, if any, (circle
14 one) does does not cover all amounts due to me/us for
15 contract improvement provided through the date shown above.
16
17 If the owner or lessee of the property or the owner's or lessee's
18 designee has received a notice of furnishing from me/one of us
19 or if I/we are not required to provide one, and the owner, lessee,
20 or designee has not received this waiver directly from me/one of
21 us, the owner, lessee, or designee may not rely upon it without
22 contacting me/one of us, either in writing, by telephone, or
23 personally, to verify that it is authentic.
24 ..............................
25 ..............................
26 (signature of lien claimant)
27
28 Signed on: .............. Address: ...........................
29 (date)
30 ...........................
31 Telephone: ...........................
32
1 DO NOT SIGN BLANK OR INCOMPLETE FORMS. RETAIN A COPY.
2
3 (b) PARTIAL CONDITIONAL WAIVER
4
5 I/we have a contract with ................................... to
6 (other contracting party)
7 provide .................... for the improvement to the property
8 described as: ............................................., and
9 by signing this waiver waive my/our construction lien to the
10 amount of $ ............... , for labor/materials provided
11 through................................ .
12 (date)
13
14 This waiver, together with all previous waivers, if any,
15 (circle one) does does not cover all amounts due to me/us
16 for contract improvement provided through the date shown above.
17 This waiver is conditioned on actual payment of the amount
18 shown above.
19
20 If the owner or lessee of the property or the owner's or lessee's
21 designee has received a notice of furnishing from me/one of us or
22 if I/we are not required to provide one, and the owner, lessee, or
23 designee has not received this waiver directly from me/one of us,
24 the owner, lessee, or designee may not rely upon it without
25 contacting me/one of us, either in writing, by telephone, or
26 personally, to verify that it is authentic.
27 ..............................
28 ..............................
29 (signature of lien claimant)
30
31 Signed on: .............. Address: ...........................
32 (date)
33 ...........................
1 Telephone: ...........................
2
3 DO NOT SIGN BLANK OR INCOMPLETE FORMS. RETAIN A COPY.
4
5 (c) FULL UNCONDITIONAL WAIVER
6
7 My/our contract with ......................................... to
8 (other contracting party)
9 provide ..................... for the improvement of the property
10 described as: ......................................... has been
11 fully paid and satisfied. By signing this waiver, all my/our
12 construction lien rights against the described property
13 are waived and released.
14
15 If the owner or lessee of the property or the owner's or lessee's
16 designee has received a notice of furnishing from me/one of us or
17 if I/we are not required to provide one, and the owner, lessee,
18 or designee has not received this waiver directly from me/one of
19 us, the owner, lessee, or designee may not rely upon it without
20 contacting me/one of us, either in writing, by telephone, or
21 personally, to verify that it is authentic.
22 ..............................
23 ..............................
24 (signature of lien claimant)
25
26 Signed on: .............. Address: ...........................
27 (date)
28 ...........................
29 Telephone: ...........................
30
31 DO NOT SIGN BLANK OR INCOMPLETE FORMS. RETAIN A COPY.
32
33 (d) FULL CONDITIONAL WAIVER
1
2 My/our contract with ......................................... to
3 (other contracting party)
4 provide ..................... for the improvement of the property
5 described as: ........................................ has been
6 fully paid and satisfied. By signing this waiver, all my/our
7 construction lien rights against the described property
8 are waived and released.
9
10 This waiver is conditioned on actual payment of ............... .
11
12 If the owner or lessee of the property or the owner's or lessee's
13 designee has received a notice of furnishing from me/one of us or
14 if I/we are not required to provide one, and the owner, lessee,
15 or designee has not received this waiver directly from me/one of
16 us, the owner, lessee, or designee may not rely upon it without
17 contacting me/one of us, either in writing, by telephone, or
18 personally, to verify that it is authentic.
19 ..............................
20 ..............................
21 (signature of lien claimant)
22
23 Signed on: ............. Address: ..........................
24 (date)
25 ..........................
26 Telephone: ..........................
27
28 DO NOT SIGN BLANK OR INCOMPLETE FORMS. RETAIN A COPY.
29 Sec. 119. (1) Except as otherwise provided by subsection
30 (4), as between parties entitled to claim construction liens
31 under this act, their claims of lien shall be treated as having
32 equal priority.
1 (2) A construction lien under this act shall take takes
2 priority over all garnishments for the contract debt made after
3 commencement of the first actual physical improvement, without
4 regard to the date of recording of the claim of lien is recorded.
5 (3) A construction lien arising under this act shall
take
6 takes priority over all other interests, liens, or encumbrances
7 which that may attach to the building, structure, or
improvement,
8 or upon the real property on which the building, structure, or
9 improvement is erected, when if the other interests,
liens, or
10 encumbrances are recorded subsequent to after the
first actual
11 physical improvement.
12 (4) A mortgage, lien, encumbrance, or other interest
13 recorded before the first actual physical improvement to real
14 property shall have has
priority over a construction lien arising
15 under this act. The priority of the mortgage shall exist exists
16 as to all obligations secured by the mortgage except for
17 indebtedness arising out of advances made subsequent to after the
18 first actual physical improvement. An advance made pursuant to
19 the mortgage, but subsequent to after the first actual
physical
20 improvement shall have has
priority over a construction lien if,
21 for that advance, the mortgagee has received a contractor's sworn
22 statement as provided in section 110, has made disbursements
23 pursuant to the contractor's sworn statement, and has received
24 waivers of lien from the contractor and all subcontractors,
25 laborers, and suppliers who have provided notices of furnishing.
26 The construction lien of any lien claimant not set forth on the
27 sworn statement upon which an advance was made shall be is
1 subordinate to the lien of the mortgage, including the advance,
2 unless prior to before
the advance the lien claimant has provided
3 the designee with a notice of furnishing if required by section
4 109 or has recorded a claim of lien. Any advance made after a
5 notice of furnishing has been provided or has been excused as
6 provided in sections 108 , 108a, and
109 or a claim of lien has
7 been recorded shall be is
subordinate to the construction lien of
8 that lien claimant unless prior to before the
advance the
9 mortgagee has received from that lien claimant either a full
10 unconditional waiver of lien or a partial unconditional waiver of
11 lien for the full amount due the lien claimant as of the date
12 through which the lien is waived as shown on the lien waiver and
13 the date through which the lien is waived as shown on the partial
14 unconditional waiver is within 30 days prior to before the
15 advance.
16 (5) For purposes of this section, retainage which that is
17 not payable under a contract until the happening of a certain
18 event in addition to the providing of an improvement , is not due
19 as of the date of the providing of the improvement is provided.
20 Sec. 203. (1) A claim of construction lien does not attach
21 to a residential structure, to the extent payments have been
22 made, if the owner or lessee files an affidavit with the court
23 indicating that the owner or lessee has done all of the
24 following:
25 (a) Paid the contractor for the improvement to the
26 residential structure according to the contract, indicating in
27 the affidavit the amount of the payment. The owner or lessee
1 shall attach to the affidavit copies of the contract, any change
2 orders, and any evidence of the payment that the owner or lessee
3 has, including, but not limited to, a canceled check or a credit
4 card or other receipt.
5 (b) Not colluded with any person to obtain a payment from
6 the fund.
7 (c) Cooperated and will continue to cooperate with the
8 department in the defense of the fund.
9 (2) If there is no written contract as required by section
10 114, the filing of an affidavit under this section creates a
11 rebuttable presumption that the owner or lessee has paid the
12 contractor for the improvement. The presumption may be overcome
13 only by a showing of clear and convincing evidence to the
14 contrary.
15 (3) Subject to section 204, a person who has recorded a
16 claim of lien and who is precluded from having a construction
17 lien under subsection (1) may recover from the fund the amount he
18 or she would have been entitled to recover but for subsection
19 (1). A person who seeks recovery from the fund shall establish
20 all of the following:
21 (a) That he or she would be entitled to a construction lien
22 on a residential structure except for the defense provided in
23 subsection (1).
24 (b) That payment was made by the owner or lessee to the
25 contractor or subcontractor.
26 (c) That the contractor or subcontractor has retained or
27 used the proceeds or any part of the proceeds paid to the
1 contractor or subcontractor without having paid the person
2 claiming the construction lien.
3 (d) That he or she has complied with section 201.
4 (e) That he or she has not colluded with another person to
5 obtain a payment from the fund.
6 (f) That he or she has complied with any applicable
7 licensing acts.
8 (g) That he or she has made a reasonable effort to obtain
9 payment from the contractor or subcontractor.
10 (h) That the contractor or subcontractor with whom the
11 person claiming the construction lien contracted is licensed if
12 required by law to be licensed.
13 (i) That the contractor or subcontractor with whom the
14 person claiming the construction lien contracted is the same
15 individual or legal entity with whom the owner or lessee
16 contracted.
17 (j) If the person claiming the construction lien is a
18 supplier, that he or she has documentary proof that, unless the
19 supplier had provided material or equipment to the contractor or
20 subcontractor within the preceding year, before he or she
21 provided the material or equipment that is the subject of the
22 lien without obtaining advance payment in full, he or she did
23 both of the following:
24 (i) Required the contractor or subcontractor to whom he or
25 she provided the material or equipment to complete and submit a
26 credit application.
27 (ii) Before beginning to supply material or equipment to the
1 contractor or subcontractor without obtaining advance payment in
2 full, did either of the following, as applicable:
3 (A) If the contractor or subcontractor is a corporation
4 whose shares are publicly traded, obtained a report on the
5 contractor or subcontractor from a nationally or regionally
6 recognized organization that provides credit ratings of
7 businesses to determine the financial stability of the contractor
8 or subcontractor.
9 (B) If sub-subparagraph (A) does not apply, did both of the
10 following:
11 (I) Obtained a credit report on the owner or qualifying
12 officer or the principal partners, officers, shareholders, or
13 members of the contractor or subcontractor to determine the
14 financial stability of the contractor or subcontractor.
15 (II) If the contractor or subcontractor is less than 4 years
16 old, obtained a personal guaranty from the owner or 1 or more of
17 the partners, officers, directors, managing members, trustees, or
18 shareholders of the contractor or subcontractor.
19 (k) If the person claiming the construction lien is a
20 supplier seeking to recover for material or equipment supplied to
21 a contractor or subcontractor without obtaining advance payment
22 in full, that a credit report obtained by the supplier on the
23 contractor or subcontractor did not disclose any of the
24 following:
25 (i) That the contractor or subcontractor was, at the time of
26 the application, or had been, within 2 years before the
27 application, insolvent.
1 (ii) That the contractor or subcontractor was, at the time of
2 the application, subject to a receivership.
3 (iii) Total delinquent judgments of more than $1,000.00.
4 (4) A subcontractor, supplier, or laborer who seeks
5 enforcement of a construction lien on a residential structure
6 through foreclosure shall join the fund as a defendant in the
7 foreclosure action within the period provided in section 117(1).
8 The subcontractor, supplier, or laborer shall serve a summons and
9 complaint on the office of the fund administrator within the
10 department by certified or registered mail or by leaving a copy
11 at the office. The failure to serve a summons and complaint under
12 this subsection bars recovery from the fund. After a defendant is
13 served with a summons and complaint in an action to foreclose a
14 construction lien, the department may intervene in the action as
15 a party defendant with respect to other construction liens.
16 (5) The attorney general shall make every reasonable effort
17 to defend the fund and may assert any defense to a claim of lien
18 that would have been available to the owner or lessee.
19 (6) A payment from the fund shall not include interest on
20 the unpaid principal amount due, including, but not limited to, a
21 time-price differential or a finance charge, that accrued after
22 90 days after the claim of lien was recorded.
23 (7) A payment from the fund to a supplier shall not include
24 money due for material or equipment supplied to a contractor or
25 subcontractor without obtaining advance payment in full if either
26 of the following applies:
27 (a) The contractor or subcontractor was delinquent in paying
1 the supplier for material or equipment for more than the
2 following number of 180
days after the first business day of
the
3 month following the shipment of the material or equipment. :
4 (i) In
2007, 180 days.
5 (ii) In
2008, 150 days.
6 (iii) In
2009, 120 days.
7 (iv) In
2010 and each year after 2010, 90 days.
8 (b) The contractor or subcontractor was indebted to the
9 supplier in an amount equal to or more than the credit limit
10 established by the supplier for the contractor or subcontractor
11 at the time the material or equipment was supplied.
12 (8) Payment from the fund shall be made only if the court
13 finds that a subcontractor, supplier, or laborer is entitled to
14 payment from the fund. Subject to section 204, after the judgment
15 has become final the department shall pay the amount of the
16 judgment out of the fund.