Lien waivers are integral to construction project payments. In exchange for payment, construction participants are typically required to hand a lien waiver to property owners or other higher-tier parties.
In Michigan, there are specific rules that must be followed for a lien waiver to be considered valid. There are situations where participants are prohibited from waiving their lien rights as part of a contract, and there is a template that must be used for each type of lien waiver.
This guide talks about the Michigan Partial Unconditional Waiver of Lien.
When do you use a Michigan Partial Unconditional Waiver of Lien?
There are two situations that must apply to your case before you choose to sign a Michigan Partial Unconditional Waiver of Lien:
1. You have received payment.
Since this is an unconditional waiver, you must sign it only when you have verified that you have received payment. Getting a cheque or processing a credit card transaction does not count as receiving payment unless you have cleared the money in the bank. Remember that a cheque may bounce or a pending credit card transaction may be rejected. Sign a Michigan unconditional waiver only when you are certain that your payment is on hand.
2. You are receiving only partial payment for your ongoing work on a project.
This waiver is also a partial waiver, which means that you should have received only a portion of your full payment, and you are expecting to receive regular payments in the future. Sign this waiver when you have not received your full payment yet.
If the two conditions mentioned above do not quite apply to your case, consider signing a different type of Michigan lien waiver. It is very important that you only sign a Michigan Partial Unconditional Waiver of Lien only when you have verified that your payment has been cleared in the bank. Otherwise, you risk the chance of not getting paid altogether if you have already waived your lien rights and your payment does not go through.
Also, remember that Michigan is one of the states that require construction parties to use a specific template. Be careful with Michigan lien waiver forms that you see online, and make sure that your chosen template aligns with the statutory form as described in Michigan Compiled Laws Section 570.1115.
How to fill out a Michigan Partial Unconditional Waiver of Lien
As mentioned, Michigan state laws have a specific template for a Michigan Partial Unconditional Waiver of Lien. This document has to be in the following form:
The Michigan Partial Unconditional Waiver of Lien template has the required language as prescribed by Michigan laws. Failure to use the form shown above means that your lien waiver will not be enforceable.
To fill out the Michigan Partial Unconditional Waiver of Lien, simply write the information required in the blanks:
1. Other contracting party
This is the name of your client or the party who directly hired you for the project.
2. Description of your services
This is a brief description of the type of services that you provide to the project.
3. Description of the property
This is the property location description (e.g., legal property description), which should be sufficient for identification.
4. Amount of partial payment that you are waiving
This is the amount of payment that you have received in exchange for submitting this lien waiver form.
5. Through date
This is the date covered by the payment that you received. Your lien rights for all the services that you performed until this date will be waived once you sign the lien waiver.
6. Your information
This includes your signature, address, and telephone number.
7. Sign date
This is the date when you sign the lien waiver
Make sure that you include all the required statements in your Michigan Partial Unconditional Waiver of Lien, as shown in the template. Remember that using this template is mandatory in Michigan; customizing your own template will most likely invalidate your lien waiver.
Best practices before signing a Michigan Partial Unconditional Waiver of Lien
1. Do not sign a blank or incomplete Partial Unconditional Waiver of Lien
The template itself reminds you to never sign a lien waiver if it is blank or incomplete. A third party might fill in the details, which can lead to you waiving your lien rights for the wrong payment period or the wrong payment amount. Keep in mind that signing a lien waiver relinquishes your lien rights — you must sign a lien waiver only when you agree with all the information written on the lien waiver form.
Also, make sure that you keep a copy of the form that you completed for your own reference.
2. Make sure that the Through Date and Amount on your lien waiver are accurate
The payment for all your services up until the Through Date may not be recoverable via a mechanics lien once you have signed a lien waiver. You must, therefore, double-check that you have written the correct Through Date; otherwise, you may end up waiving your lien rights for a longer period than you intended. Also, make sure that you write the correct amount. This amount must match the payment that you received.
3. Verify that you have received payment
Receiving payment does not mean that you have gotten a cheque. A cheque may bounce, and once you have signed a lien waiver, your client has little incentive to actually rectify their mistake and pay you properly. Make sure that the payment has been received and is ready for your disposal before you sign any unconditional lien waiver in Michigan.
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