Construction participants often exchange lien waivers when a payment is made. This way, property owners can have peace of mind that they will not be dealing with a mechanics lien.
There are four types of lien waivers in Michigan. Contractors, subcontractors, and material suppliers in the state must know which type of lien waiver to sign before they relinquish their lien rights.
This guide explains all the basic details of one specific type of Michigan lien waiver: the Full Conditional Waiver of Lien.
- When do you use a Michigan Full Conditional Waiver of Lien?
- How to fill out a Michigan Full Conditional Waiver of Lien?
- Best practices before signing a Michigan Full Conditional Waiver of Lien
When do you use a Michigan Full Conditional Waiver of Lien?
Before signing a Michigan Full Conditional Waiver of Lien, ask yourself whether these conditions apply to your situation:
1. You have not yet received payment.
A conditional type of lien waiver means will take effect only once payment is received by the signing party. You must, therefore, use a Michigan conditional waiver when you have not yet received your payment yet. Remember that receiving a cheque or processing a credit card transaction does not automatically mean you have the payment — a cheque may bounce or a credit card transaction may get rejected.
2. You are expecting to receive your full payment for the project.
Singing this waiver implies that your work on the project is done and you are expecting to receive your final paycheck (excluding possible disputed claims). If your work on a project is still ongoing and you are expecting to receive regular payments in the future, consider signing a Michigan partial release lien waiver instead.
Signing a conditional lien waiver is always a better idea than signing an unconditional lien waiver. As long as your work on a project is complete and you have finished all the agreed-upon tasks in the contract, the Michigan Full Conditional Release Waiver is the right waiver for you.
However, note that you may not use just any form for a Michigan Full Conditional Waiver of Lien. Michigan Compiled Laws Section 570.1115 requires all parties to use a specific format for each type of lien waiver — failing to sign the correct form may render your lien waiver ineffective.
TIP: Be careful about signing a random Michigan lien waiver form you find online. Make sure that the form you are signing agrees to what Michigan statutes prescribe.
How to fill out a Michigan Full Conditional Waiver of Lien?
The Michigan Full Conditional Waiver of Lien form must be in substantially the following format and must employ the following language:
In filling out the Michigan Full Conditional Waiver of Lien, simply write the information required in the blanks:
1. Other contracting party
Write the name of the party who directly hired you for the project.
2. Description of your services
Write a brief description of the type of labor or materials that you provided to the project.
3. Description of the property
Write a brief description of the property location that is sufficient to identify the project site.
4. Amount of actual payment that you are waiving
Write the amount of payment that you are expecting to receive in exchange for signing this lien waiver.
5. Your information
Write your name, signature, address, and telephone number.
6. Sign date
Write the date when you sign the lien waiver
Remember to include all the statements as shown in the form above. You also need to read and understand those statements before you sign your Michigan Full Conditional Waiver of Lien.
Also note that you may not customize a Michigan lien waiver by adding your own provisions. The safest bet is to stick to the form as prescribed by the Michigan statutes to avoid any issues.
Best practices before signing a Michigan Full Conditional Waiver of Lien
1. Never sign a blank Michigan Full Conditional Waiver of Lien
You must always fill in the blanks as required in the form before you sign any Michigan lien waiver. This is because waiving your lien rights is a serious deal — once you sign a waiver, you relinquish your lien rights over the amount stated in the waiver. If you submit a signed blank waiver, anyone can write whatever information in it and you might end up giving up your lien rights for the wrong amount.
2. Make sure that you are using the correct lien waiver form
Michigan is one of the states that require construction participants to use a state-specific lien waiver. Using a random lien waiver form from the Internet will not suffice — you have to make sure that the lien waiver you are signing is the same lien waiver form as mandated in Michigan Compiled Laws Section 570.1115.
3. Sign a conditional lien waiver if possible
A conditional lien waiver takes effect only on the condition that you actually receive the payment. On the other hand, an unconditional lien waiver allows for no such conditions — your lien rights are revoked the moment you sign the document. Because of this major difference, you are strongly advised to sign a conditional type of lien waiver whenever possible.