In Michigan, if you are a licensed contractor, and a customer does not pay you for your labor and/or materials, what are your options? If you are getting nowhere with your own efforts to recover your payment, seek legal help promptly from a Bloomfield Hills business attorney.

If a customer does not pay you for your labor and/or materials, what will you have to do to get paid? Should you take legal action and file a lien against the property? What, exactly, is a lien, and what will a lien accomplish for you? Will you need an attorney to work on your behalf?

If you will keep reading this brief discussion regarding liens and a contractor’s payment rights in Michigan, you’ll find the answers you may need, but if you are the party that has not been paid, you will also need the personalized advice that a Bloomfield Hills business lawyer will provide.

What is the Michigan Construction Lien Act?

If you are a licensed contractor who has not been paid for your work and/or materials, you could end up in a serious financial predicament. Not getting paid could even threaten your ability to continue doing business, but you can be legally protected by the Michigan Construction Lien Act – if you take the appropriate steps.

The Construction Lien Act lets licensed contractors place a lien on a property to compel payment for materials or labor. If a contractor still isn’t paid after placing a lien on the property, the contractor may bring a foreclosure action to force the sale of the property to secure payment.

The Construction Lien Act protects the right of contractors to be paid for their labor and materials. It protects Michigan property owners from paying more than once for a contractor’s labor and materials, and it also offers relief to property owners who are the victims of fraud.

Additionally, the Act spells out a number of rules and sets a number of notice requirements and deadlines for contractors. Failure to meet any of these requirements may invalidate your claim. From the start, you’ll need personalized advice from a Bloomfield Hills business lawyer.

What Are the Deadlines for Taking Legal Action?

In Michigan, a licensed contractor has ninety days from the date of the last work or the last delivery of materials to file a Claim of Lien against a property owner. The Claim of Lien then must be served on the property owner within fifteen days of the filing date.

After a Claim of Lien has been served on the owner, a contractor in Michigan who has not been paid has up to one year to bring a lawsuit to recover payment. The Construction Lien Act sets strict deadlines and spells out the obligations of both licensed contractors and property owners.

If you are a contractor involved in a payment dispute, let a Detroit-area business attorney advise and represent you, prepare your Claim of Lien, and file the claim on your behalf with the court.

What Does the Construction Lien Act Require?

For residential work, a contractor does not have the right to file a Claim of Lien unless there is a written contract between the contractor and the owner (or lessee). Builders, mechanical and maintenance contractors, plumbers, and electricians also must be licensed to file a Claim of Lien.

And since 2018, design professionals in Michigan – architects, engineers, and surveyors – who have a written contract with a property owner may also file a Claim of Lien if necessary to compel payment, but the deadlines and notice requirements are different for design professionals.

A licensed contractor’s lien rights may not be waived in advance, and any such waiver is legally invalid. The Construction Lien Act can be quite confusing, and each claim for payment is different and unique. A business attorney will, if necessary, file a Claim of Lien on your behalf.

How Can Payment Disputes Be Resolved?

Construction-related payment disputes do not necessarily have to grow into expensive and lengthy courtroom battles. Arbitration and mediation are faster, less costly, and usually more successful alternatives for resolving payment disputes with customers privately and out-of-court.

Often, going through the arbitration or mediation process will settle a payment dispute swiftly, in just several weeks, whereas taking the case to court may mean that the dispute will take at least several months – and in some cases, even a year or more – to resolve.

In other cases, a simple letter from your attorney to a property owner may be enough to compel the property owner to pay you promptly. Your Bloomfield Hills business attorney can explain more about your out-of-court options and help you determine the best way to move forward.

When Should Contractors Contact an Attorney?

If you are a licensed contractor in the greater Detroit area, a payment dispute isn’t the only reason you may need to seek a business attorney’s services. A business attorney will help you draft, review, and negotiate construction contracts and represent you in contract disputes.

Construction contracts often include clauses that shift risk, create excessive liability, or require unreasonable resolution terms. A business lawyer will consider the strengths and weaknesses of a construction contract for you, identify potential areas of dispute, and spot potential liabilities.

If you need to take legal action – to recover a payment, because another party has breached a contract, or for any other reason – or if you are targeted by a lawsuit, you must have a Michigan business attorney advising and representing you from the very beginning of the legal process.

What Other Services Does a Business Attorney Provide?

Perhaps the key service that a business lawyer can provide for contractors is to help them avoid legal problems by putting remedies in place before problems can emerge. Implementing the right practices and policies can keep contractors from being targeted by costly, unnecessary lawsuits.

In a heavily-regulated business environment, the advice and services of a business attorney are invaluable. If you are a contractor in or near the Detroit area, ask a business attorney to advise you regarding contracts, payment disputes, and your other business-related legal concerns.

When legal problems emerge, contractors need quick resolutions that allow them to concentrate on their work. Kendal Law Group, A Detroit-area business attorney will help you with contracts and payment disputes, and that attorney will find – and help you put in place – the legal solutions you need.