For general contractors, subcontractors and suppliers in Michigan, the construction lien is one of the most powerful legal tools they have to get paid for their work. Knowing how to enforce a construction lien is key. Here are the ways a subcontractor can preserve a construction lien and enforce it against a contractor, developer or property owner.
If you believe the contractor will not pay you as agreed, file the lien before the owner pays the contractor. Otherwise, the fact that the contractor has been paid could absolve the owner of the responsibility that you as the subcontractor be paid. In addition, in Michigan, you have just 90 days after the date you last worked on the project or furnished supplies for it.
Give proper notice
Most construction contracts and subcontracts contain strict guidelines for how and when to notify the other party of a lien claim. Failure to follow these rules can cause the claim to fail, regardless of the merits.
Be careful when modifying the contract
Make sure that when you are modifying the contract that you are not unintentionally waiving your right to file for a construction lien. Avoid agreeing to an overly broad or global waiver or release unless you are absolutely sure that is what you want.
Include a Time Impact Analysis
When a contractor or subcontractor must extend their work due to another party, the business suffers direct and indirect costs, but the indirect costs like extended general conditions are typically the largest. A Time Impact Analysis (TIA) details these losses, and may be required as part of the claim.
Using a construction lien (also known as a contractor’s lien or mechanic’s lien) to get paid can involve intricate legal maneuvering. Working with an attorney who practices construction law can help you avoid errors and get properly compensated for your work.