The validity of your Michigan mechanics lien relies not only on the accuracy and promptness of your lien document, but also on your compliance with certain notice requirements. Serving the required preliminary notices is very important, especially if you want full protection for your lien rights.
In Michigan, failing to serve the statutory pre-lien notices will not necessarily revoke your right to file a mechanics lien. However, serving these notices will protect your right to get paid the full amount for your services.
This guide will explain the basics of serving Michigan preliminary notices, from how to complete the forms to the essential tips that can help you in securing your lien rights.
What pre-lien notices must be served in Michigan?
The notice requirements in Michigan vary depending on your role in a project. In general, there are important notices that you must be aware of: the Notice of Furnishing and the Sworn Statement.
The Notice of Furnishing is mandatory for all parties who do not have a direct contractual relationship with the property owner. This preliminary notice is served on the owners to inform them of your participation in the project and to make them aware of their liability if you do not receive your due payment.
The Sworn Statement is a separate document that is required for general contractors and subcontractors working on residential projects. This statement is a list of all the subcontractors, sub-subcontractors, or materialmen working under you, as well as the associated payments and contract amounts related to their services.
For all other types of projects, a sworn statement is a requirement only upon formal request from a property owner or a general contractor. Property owners and general contractors typically request a Sworn Statement so they have a list of all the parties who might record a mechanics lien against the property if payments are not disbursed accordingly.
When must you serve the pre-lien notices in Michigan?
The Notice of Furnishing must be served within 30 days of your first day of work. There is no fixed deadline for serving the Sworn Statement. However, serving this statement is necessary before you can enforce a mechanics lien.
What happens if you fail to serve the Notice of Furnishing or the Sworn Statement?
Failing to serve the Notice of Furnishing in Michigan will not automatically revoke your right to file a mechanics lien. However, it can limit the coverage of your mechanics lien claim. Without a Notice of Furnishing, you will only be entitled to money that is yet to be paid to the party that hired you.
Say, for example, that you still need to receive $20,000 from a general contractor, but the general contractor is only owed $10,000 by the property owner. Since the property owner has already disbursed most of the payment and you did not serve a valid Notice of Furnishing, your mechanics lien can only claim a maximum of $10,000.
Failing to serve a Sworn Statement is also not fatal to your lien rights. However, since this notice is mandatory for parties working on residential projects and for those who have received a formal request from a higher-tier party, you may not enforce your mechanics lien unless you have served this statement.
Payment, complaints, and counterclaims may not be denied until you have served a sworn statement. So while failing to serve a Sworn Statement will not invalidate your mechanics lien, it will delay the payment process.
How to serve a Michigan Notice of Furnishing
1. Prepare your Notice of Furnishing form
The Notice of Furnishing must have the following pieces of information:
- Name and address of the property owner
- Name and address of the contracting party
- Your name and address
- A description of the type of work that you are providing to the project
- Name of county where the Notice of Commencement has been filed
- Name and capacity of the person signing
- Date signed
Note that these pieces of information may be taken directly from the Notice of Commencement, which should be available in the project location and which you may also request from the property owners. You may directly attach a copy of Notice of Commencement together with your Notice of Furnishing.
The Notice of Furnishing must be in substantially the following form:
2. Serve the Michigan Notice of Furnishing
The Notice of Furnishing must be served on the property owner and the general contractor within 30 days of your first day of work. It must be sent either by personal delivery or by registered or certified mail with return receipt requested.
Note that you must keep documented proof of your service of this preliminary notice. Keep a copy of the mailing receipts or ensure that the property owner or their agents has signed an acknowledgment of receipt to prove that you have complied with this requirement.
How to serve a Sworn Statement in Michigan
1. Prepare your Sworn Statement and have it notarized
The Sworn Statement in Michigan must contain the following information:
- Name of county where project is located
- Legal property description
- Your name
- A table that details the following:
o Name, address, and telephone number of subcontractor, supplier, or laborer working for you
o Type of improvement furnished
o Total contract price
o Amount already paid
o Amount currently owing
o Balance to complete (optional)
o Amount of laborer wages due but unpaid
o Amount of laborer fringe
o benefits and withholdings due but unpaid
o Respective Totals - The following statement:
The contractor has not procured material from, or subcontracted with, any person other than those set forth and owes no money for the improvement other than the sums set forth.
I make this statement as the (contractor) (subcontractor) or as ………. of the (contractor) (subcontractor) to represent to the owner or lessee of the property and his or her agents that the property is free from claims of construction liens, or the possibility of construction liens, except as specifically set forth in this statement and except for claims of construction liens by laborers that may be provided under section 109 of the construction lien act, 1980 PA 497, MCL 570.1109.WARNING TO OWNER OR LESSEE: AN OWNER OR LESSEE OF THE PROPERTY SHALL NOT RELY ON THIS SWORN STATEMENT TO AVOID THE CLAIM OF A SUBCONTRACTOR, SUPPLIER, OR LABORER WHO HAS PROVIDED A NOTICE OF FURNISHING OR A LABORER WHO MAY PROVIDE A NOTICE OF FURNISHING UNDER SECTION 109 OF THE CONSTRUCTION LIEN ACT, 1980 PA 497, MCL 570.1109, TO THE DESIGNEE OR TO THE OWNER OR LESSEE IF THE DESIGNEE IS NOT NAMED OR HAS DIED.
IF THIS SWORN STATEMENT IS IN REGARD TO A RESIDENTIAL STRUCTURE, ON RECEIPT OF THE SWORN STATEMENT, THE OWNER OR LESSEE, OR THE OWNER’S OR LESSEE’S DESIGNEE, MUST GIVE NOTICE OF ITS RECEIPT, EITHER IN WRITING, BY TELEPHONE, OR PERSONALLY, TO EACH SUBCONTRACTOR, SUPPLIER, AND LABORER WHO HAS PROVIDED A NOTICE OF FURNISHING UNDER SECTION 109 OR, IF A NOTICE OF FURNISHING IS EXCUSED UNDER SECTION 108 OR 108A,1 TO EACH SUBCONTRACTOR, SUPPLIER, AND LABORER NAMED IN THE SWORN STATEMENT. IF A SUBCONTRACTOR, SUPPLIER, OR LABORER WHO IS ENTITLED TO NOTICE OF RECEIPT OF THE SWORN STATEMENT MAKES A REQUEST, THE OWNER, LESSEE, OR DESIGNEE SHALL PROVIDE THE REQUESTER A COPY OF THE SWORN STATEMENT WITHIN 10 BUSINESS DAYS AFTER RECEIVING THE REQUEST.
Michigan statutes recommended the Sworn Statement to be in substantially the following form:
SWORN STATEMENT
State of Michigan
)
)
ss.
County of
)
………. (deponent), being sworn, states the following:
………. is the (contractor) (subcontractor) for an improvement to the following real property in ………. County, Michigan, described as follows:
(insert legal description of property)
The following is a statement of each subcontractor and supplier, and laborer for whom payment of wages or fringe benefits and withholdings is due but unpaid, with whom the (contractor) (subcontractor) has (contracted) (subcontracted) for performance under the contract with the owner or lessee of the property, and the amounts due to the persons as of the date of this statement are correctly and fully set forth opposite their names:
Name, address, and telephone number of subcontractor, supplier, or laborer
Type of improvement furnished
Total contract price
Amount already paid
Amount currently owing
Balance to complete (optional)
Amount of laborer wages due but unpaid
Amount of laborer fringe
benefits and withholdings due but unpaid
Totals
(Some columns are not applicable to all persons listed)
The contractor has not procured material from, or subcontracted with, any person other than those set forth and owes no money for the improvement other than the sums set forth.
I make this statement as the (contractor) (subcontractor) or as ………. of the (contractor) (subcontractor) to represent to the owner or lessee of the property and his or her agents that the property is free from claims of construction liens, or the possibility of construction liens, except as specifically set forth in this statement and except for claims of construction liens by laborers that may be provided under section 109 of the construction lien act, 1980 PA 497, MCL 570.1109.
WARNING TO OWNER OR LESSEE: AN OWNER OR LESSEE OF THE PROPERTY SHALL NOT RELY ON THIS SWORN STATEMENT TO AVOID THE CLAIM OF A SUBCONTRACTOR, SUPPLIER, OR LABORER WHO HAS PROVIDED A NOTICE OF FURNISHING OR A LABORER WHO MAY PROVIDE A NOTICE OF FURNISHING UNDER SECTION 109 OF THE CONSTRUCTION LIEN ACT, 1980 PA 497, MCL 570.1109, TO THE DESIGNEE OR TO THE OWNER OR LESSEE IF THE DESIGNEE IS NOT NAMED OR HAS DIED.
IF THIS SWORN STATEMENT IS IN REGARD TO A RESIDENTIAL STRUCTURE, ON RECEIPT OF THE SWORN STATEMENT, THE OWNER OR LESSEE, OR THE OWNER’S OR LESSEE’S DESIGNEE, MUST GIVE NOTICE OF ITS RECEIPT, EITHER IN WRITING, BY TELEPHONE, OR PERSONALLY, TO EACH SUBCONTRACTOR, SUPPLIER, AND LABORER WHO HAS PROVIDED A NOTICE OF FURNISHING UNDER SECTION 109 OR, IF A NOTICE OF FURNISHING IS EXCUSED UNDER SECTION 108 OR 108A,1 TO EACH SUBCONTRACTOR, SUPPLIER, AND LABORER NAMED IN THE SWORN STATEMENT. IF A SUBCONTRACTOR, SUPPLIER, OR LABORER WHO IS ENTITLED TO NOTICE OF RECEIPT OF THE SWORN STATEMENT MAKES A REQUEST, THE OWNER, LESSEE, OR DESIGNEE SHALL PROVIDE THE REQUESTER A COPY OF THE SWORN STATEMENT WITHIN 10 BUSINESS DAYS AFTER RECEIVING THE REQUEST.
……….
Deponent
WARNING TO DEPONENT: A PERSON WHO GIVES A FALSE SWORN STATEMENT WITH INTENT TO DEFRAUD IS SUBJECT TO CRIMINAL PENALTIES AS PROVIDED IN SECTION 110 OF THE CONSTRUCTION LIEN ACT, 1980 PA 497, MCL 570.1110.
Subscribed and sworn to before me on ………. (DATE)
……….
Notary Public, ………. County, Michigan.
My commission expires: ……….
Keep in mind that this document has to be notarized before service. Do not sign your Sworn Statement form until you are in the presence of an authorized notary officer.
2. Serve the Sworn Statement to the requesting party
Once you have prepared the form and it has been notarized, it’s time to deliver the document. If you are a general contractor working on a residential project, you must serve the notice on the property owner. If you are a subcontractor in a residential project, you have to serve the notice on the general contractor.
If you are working for a non-residential property, you must serve the Sworn Statement on the party that requested for it.
The pre-lien notice may be served via personal delivery or registered or certified mail, with return receipt requested. The party who receives the notice is required by law to notify you in writing, by telephone, or in person that they have received your statement. You may also request them for an acknowledgment of receipt to ensure that your sworn statement has been delivered.
Best practices when serving the Michigan pre-lien notices
1. Make use of the Notice of Commencement when gathering the required information
In Michigan, property owners are required to file a Notice of Commencement and this notice includes most of the required information that you need in your preliminary notices. The name and address of the owner are found in this document, as well as the legal property description which you may need for your Sworn Statement.
Note that this notice may be found posted in a conspicuous location on the property premises, and you may also directly ask a property owner for a copy.
2. Serve the Notice of Furnishing and Sworn Statement promptly
Serving the preliminary notices in Michigan promptly is very important if you want to maintain full coverage for your lien rights. Delivering the Notice of Furnishing before payment is exchanged between the property owner and a general contractor is key, and you must also serve a Sworn Statement before you may enforce your mechanics lien.
While failing to serve these pre-lien notices will not result in the invalidation of your mechanics lien, serving them promptly will help in getting you paid the full amount quicker.
3. Keep your invoices and contracts organized
Running a business requires paying keen attention to all the paperwork. When your contracts and accounts are all organized, it will be easy for you to assemble the Sworn Statement and prepare the Notice of Furnishing. While a Sworn Statement is not required for all construction parties, any higher party can request for such a document and you must be ready to deliver.
Make sure that you keep all your paper trail organized as it will also help you prove your claims in court, in the event that your mechanics lien gets questioned.
Further reading