Some states have strict lien waiver rules, while other states are fairly lenient. Michigan is one of the states that have specific rules regarding the use of lien waivers. For one, a construction party is not allowed to waive their lien rights in a contract prior to performing work on a project.
Construction participants in Michigan are also required to use specific templates for their lien waivers. The required templates use a specific language that must be included in a Michigan lien waiver, and all construction parties have to follow them. This guide specifically explains the ins and outs of using a Full Unconditional Waiver of Lien in Michigan.
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- When do you use a Michigan Full Unconditional Waiver of Lien?
- How to fill out a Michigan Full Unconditional Waiver of Lien
- Best practices before signing a Michigan Full Unconditional Waiver of Lien
When do you use a Michigan Full Unconditional Waiver of Lien?
A construction participant must use a Michigan Full Unconditional Waiver of Lien if they meet these criteria:
1. You have received payment.
You must sign an unconditional lien waiver in Michigan only if you have received your payment and you have verified that it is ready for your disposal. This means that uncleared cheques and pending credit card transactions do not count. This specific lien waiver in Michigan must be used only when you have payment on hand.
2. You have received your full payment for the project.
You must use a full waiver only when you have received your full and final payment for a project. This implies that your work on the project is done, and all the payment in relation to that specific project has been satisfied.
If you are still awaiting payment, consider signing a Michigan Full Conditional Waiver of Lien. If your work on a project is still ongoing and you have received only a portion of your payment, consider using a Michigan Partial Unconditional Waiver of Lien.
Note that all lien waivers in Michigan have to be in a specific form, as described in Michigan Compiled Laws Section 570.1115. You may not customize your own lien waiver in Michigan; using an incorrect form will render your lien waiver invalid and unenforceable.
How to fill out a Michigan Full Unconditional Waiver of Lien
First, verify that your Michigan Full Unconditional Waiver is in the following form, as required by Michigan laws:
Remember that only the form above is the correct one for this type of lien waiver in Michigan, so be careful not to use a different lien waiver template.
Filling out the Michigan Full Unconditional Waiver simply means providing the correct information in the appropriate blanks:
1. Other contracting party
This is the name of the party who hired you for the project.
2. Description of your services
This is a description of the type of services that you provide to the project.
3. Description of the property
This is a description of the property location (e.g. legal property description) and it must be sufficient for identification.
4. Your information
This includes your signature, address, and telephone number.
5. Sign date
This is the date when you sign the lien waiver
As stated in the template, you must sign a Michigan Full Unconditional Waiver of Lien only when you have been fully paid and all payments related to your services in a project have been duly satisfied.
Best practices before signing a Michigan Full Unconditional Waiver of Lien
1. Ensure that you are using the correct type of Michigan lien waiver
A Michigan Full Unconditional Waiver of Lien must be used only when you have received your full payment for the project. If you are still waiting for payment, or if your work on a project is still ongoing, consider using another type of lien waiver form. It is very difficult to cancel a lien waiver that has already been executed, so do not make the mistake of signing the wrong lien waiver.
2. Verify that payment is on hand
You should not sign this lien waiver unless you have verified that your payment is on hand. Unprocessed checks and pending credit card transactions do not count as they can still fall through. Once you sign an unconditional lien waiver, you have relinquished your lien rights and you are not protected if a cheque bounces or a transaction gets rejected. Always make sure that the money is ready for your disposal before signing this type of Michigan lien waiver.
3. Retain a copy of your signed lien waiver
It is generally a good business practice to keep track of all the documents that you sign, including contracts, purchase orders, invoices, and lien waivers. The state-prescribed template itself recommends that you retain a copy of your Michigan lien waiver, and it will work well in your favor to have your own copy for your own reference.