Notice of Furnishing - Who Should Send Them?

A construction lien is a great tool for companies looking to collect on a bill that a property owner has not paid, whether it is because they don’t have the money or are in bankruptcy.

But there are some extremely important parts of the Michigan Construction Lien Act that must be followed to the letter of the law to make sure you get paid through the lien process.

The first is the “Notice of Commencement.” You should always request this notice from the time you start on a new project if you don’t have a contract directly with the owner. The owner or the person asking for the property improvement prepares this notice, which includes information like the property’s legal description, the general contractor’s name and who should receive notices if there is a need for a lien down the road.

The owner or lessee must give this Notice of Commencement to any subcontractor, supplier or laborer within 10 days of receiving a written request for one. Any request for a Notice of Commencement must be made via certified mail to follow the Act’s strict requirements. So a trip to the post office is an important first step.

The Act requires that a property owner or its representative record the Notice of Commencement with the Register of Deeds in the county in which the property is located and physically post a copy on the property as well.

Get this paperwork in place before you put a shovel in the ground. If you need to file a lien, you’ll need to know the right person to send the paperwork. Without having this Notice of Commencement, you’ll be searching in the dark and payment may not come.

Another form the Act requires is called a “Notice of Furnishing.” No, this has nothing to do with furniture or interior design. Think of it as an alert to the owner about what you’re supplying – labor or materials – to the job.

In other words, it is a piece of paperwork that clearly outlines what you are furnishing or providing on the project in terms of labor or material. This labor and material is connected to the improvements you’re making to the project or real property.

A Notice of Furnishing also alerts the owner that a particular subcontractor, supplier or laborer is involved and will expect to be paid. The owner then can track the project, especially when it comes to payment issues.

Let there be no doubt about it – you must have this required form and it must have the names of the people you are providing the materials to as well as the labor and the materials you’ve provided. Think of it as a way of making sure everyone’s on the same page when it comes to the project at hand.

Who should send a Notice of Furnishing? All of your subcontractors, suppliers and laborers. Making sure everyone is clear on what is being provided will be key if you need to file a lien down the road.

The Notice includes the person or party you have a contract with and briefly describes the work in general terms. For example, you might say plumbing, heating or brick laying as the work you’re providing on the job site. In terms of supplies, you would say lumber, equipment or building materials. The more specific you can be the better.

The Notice should be signed with your company name and your title, or your role within the company as president, partner, owner or the like. You should send it to the owner or lessee via certified mail with a return receipt. Make sure to keep a copy for your records as well.

The Notice of Furnishing must take place within 20 days of your first date of working on this particular job. If you do not file this Notice within that time range, it may affect your ability within the courts to get your payment on the work you’ve done. If you are a laborer, you have 30 days after your wages were due to send your Notice of Furnishing. This Notice of Furnishing should be clearly posted at the job site.

If you want to make use of the Michigan Construction Lien Act, contact the experienced, trustworthy attorneys at The Lien Company to file the appropriate lien and related papers. We will make it easy to put a lien in motion and follow through on it to make sure you are paid for the work you have done.

Physical Improvements and Liens in Construction

You’ve sent invoices. You’ve made phone calls. But the job you are working on or have completed still has gone unpaid. To protect your business – and pay your own bills – you need to collect what is owed to you.

One of the ways the law allows you to collect on an unpaid job is through a lien. Liens are a legal way to ask for the money owed to you and your business. The Michigan Construction Lien Act is an excellent tool for collecting on outstanding bills.

A lien shows your interest in a job or project; think of it like your marker of sorts on a property. Liens are effective because they prevent the property owner from receiving a mortgage or selling it until the liens are satisfied. That is why it is an important way for you to receive the payments owed to your construction business.

Under Michigan law, you can file a construction lien on a property if you have provided materials to the job site or provided labor to that property. You can file a lien if you are the contractor, subcontractor or materials supplier.

In other words, anyone who provides an improvement to the real estate as described in your contract with that property owner may file a lien.

Here’s where the law comes in. What is an improvement? One of the first things the Act describes is what it means to make an “actual physical improvement” to the property. This is important because you cannot file a lien unless you can show there have been visible changes on the project.

You must be able to say without a doubt that you made physical improvements to a job site or project.

For the law to kick in, it says that a reasonable person – meaning the average Jo or Joe on the street – could see that an improvement was made to the project. This change would come about because of the work or labor provided by a contractor, subcontractor or worker on the project as part of your contract.

A potential lender and owner also must be able to see that a physical improvement has happened. This helps to protect your interests as a construction company if the property’s mortgage was still in process when your work began.

However, some labor is not included in this description. For example, “actual physical improvement” does not include your work in terms of prepping the project – this means surveying, soil boring and testing. It also includes the creation of architectural or engineering plans. The Act goes so far as to say it does not include the prep of any plans or drawings of any kind.

There is a risk in taking on any job, and that risk includes not getting paid. But liens allow you to reduce that risk and ensure that your work is valued and receives the payment it deserves.

If you want to make use of the Michigan Construction Lien Act, contact the experienced attorneys at The Lien Company. We will prepare, file, and serve your lien to make sure your rights are protected. You are entitled to be paid for the work you’ve done and we can help.

www.LienCompany.com

Who Can File a Lien?

You did your part on a construction project, but the bill has not been paid. You want to file a lien on the property to make sure you get what is due. But who exactly can file a lien?

This is where the Michigan Construction Lien Act comes in. This piece of legislation helps construction companies file a lien and receive the payments due to them according to the law.

The Act is very specific as to who is allowed to file a lien. Ultimately, the law is broad enough that a variety of people and companies working on a job site are eligible to file a lien if they have not been paid according to their contract with the property owner.

Each and every contractor, subcontractor, supplier or laborer who provides an improvement to real property may seek out a lien on that project.

The definitions of these jobs are fairly broad as well. A contractor is considered any person who provides an improvement to a real property – as long as there is a contract in place with the owner or lessee of that same property. The contractor typically is anyone who has direct contract with the property’s owner.

A subcontractor means a person who has a contract between themselves and the main contractor to provide any part of an improvement to the property. The subcontractor would not have a contract between themselves and the owner or lessee. This person has no direct contract with the owner.

A supplier is someone who provides materials for a project. A supplier does not provide any labor on a project. And a supplier does not have a direct contract with the property’s owner.

A laborer refers to a person who provides an improvement to a real property through his or her personal work. This, too, requires a contract to be in place for this person to have legal rights in terms of filing a lien on a project.

A key part of these definitions is that there needs to be a contract between the property owner or lessee and the person or company doing the improvements. Having this document protects everyone, especially the construction company doing the work.

Who does not qualify? The Act does not cover those companies that are providing services such as surveying, engineering, construction management, architectural planning, clearing, demolishing, excavating, filling or adding fixtures or material. And, in those rare cases where this happens, suppliers of suppliers also do not qualify as being able to file a lien.

A contract outlines in legal form what improvements the owner or lessee wants completed on the project. This contract must be in writing for residential projects; don’t leave it as a conversation or scribbles on a napkin. Your friend or business associate may feel like that’s enough, but the law does not. What’s a residential project? The law defines a residential project as one with no more than two residential units. This also includes additional structures, like a parking garage.Get it in writing, and make it binding. This is your business you’re protecting.

You provide real work; you deserve to be paid the value of that work. Having a contract as well as the ability to put a lien in place is protected under this law. It reduces the risks of running a construction business, and it maintains your ability to do the work you love for years to come.

If you want to make use of the Michigan Construction Lien Act, contact the experienced attorneys at The Lien Company to file the appropriate lien and related papers. Placing a lien improperly or untimely can cost you thousands of dollars.  We will make it easy to put a lien in motion and follow through on it to make sure you are paid for the work you have done. 

www.LienCompany.com