Michigan is one of the states that require construction professionals to use statutorily designed templates for lien waivers. The required lien waiver templates have a specific language that must be included in order for any waiver to be considered valid.
Having to use a specific template actually works in the construction participant’s favor. This way, they are protected from signing away their lien rights without their full knowledge.
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This guide will explain the basics of one specific type of Michigan lien waiver: the Partial Conditional Waiver of Lien.
- When do you use a Michigan Partial Conditional Waiver of Lien?
- How to fill out a Michigan Partial Conditional Waiver of Lien
- Best practices before signing a Michigan Partial Conditional Waiver of Lien
When do you use a Michigan Partial Conditional Waiver of Lien?
Before you sign a Michigan Partial Conditional Waiver of Lien, you must first ask yourself if you meet these conditions:
1. You are still waiting to receive payment.
This is a conditional waiver, which means that it will take effect only when you have received your payment. It, therefore, offers you protection in case a cheque bounces or your client does not honor their end of the deal. Use this waiver as long as you are not yet sure if you have received payment. When in doubt, using a conditional lien waiver in Michigan is better than using an unconditional lien waiver.
2. You are waiting only for a partial payment.
This is also a partial waiver, so the payment that you are waiting to receive must not be your full payment yet. Your work on a project is still ongoing, and you are only expecting to receiving a portion of your entire payment for the project.
If you are receiving your full payment on a project, sign a Michigan Full Conditional Waiver of Lien.
Keep in mind that Michigan has specific templates for all four types of lien waivers, so make sure that you have the correct waiver on hand before you start filling out the information and signing away your lien rights. You may verify that you have the correct lien waiver form by cross-checking your form with the form shown in Michigan Compiled Laws Section 570.1115.
How to fill out a Michigan Partial Conditional Waiver of Lien
First, make sure that your Michigan Partial Conditional Waiver of Lien looks like this:
PARTIAL CONDITIONAL WAIVER
I/we have a contract with ………………………………. to
(other contracting party)
provide ……………….. for the improvement to the property
described as: …………………………………….. , and
by signing this waiver waive my/our construction lien to the
amount of $ …………… , for labor/materials provided
This waiver, together with all previous waivers, if any,
(circle one) does does not cover all amounts due to me/us
for contract improvement provided through the date shown above.
This waiver is conditioned on actual payment of the amount
If the improvement is provided to property that is a
residential structure and if the owner or lessee of the
property or the owner’s or lessee’s designee has received a
notice of furnishing from me/one of us or if I/we are not
required to provide one, and the owner, lessee, or designee
has not received this waiver directly from me/one of us, the
owner, lessee, or designee may not rely upon it without
contacting me/one of us, either in writing, by telephone, or
personally, to verify that it is authentic.
(signature of lien claimant)
Signed on: ………….. Address: ………………………
DO NOT SIGN BLANK OR INCOMPLETE FORMS. RETAIN A COPY.
Make sure that your Michigan Partial Conditional Waiver of Lien form has all the required statements as shown above. Always keep in mind that this is the only valid partial conditional waiver form in Michigan.
Once you have the correct Michigan lien waiver form, simply fill in the blanks as required:
1. Other contracting party
This is the name of the party who directly hired you for the project.
2. Description of your services
This is a description of the type of service that you provide to the project (e.g. type of labor or materials furnished).
3. Description of the property
This is the location description for the project. It must be sufficient for identifying the project location.
4. Amount of partial payment that you are waiving
This is the amount of payment that you are expecting to receive in exchange for handing over this waiver.
5. Through date
This is the date covered by the payment that you are expecting to receive. Make sure that you write the correct date, because all the payment for your services rendered up to this date will not be recoverable via a mechanics lien once you sign this lien waiver.
6. Your information
This includes your signature, address, and telephone number.
7. Sign date
This is the date when you sign the lien waiver.
It is very important that you write all the required information, most especially the amount and the through date. If you leave them blank, another party may fill them out for you and you might end up waiving your lien rights for the incorrect payment.
It is just as important to remember that you must use the state-prescribed lien waiver form in Michigan. Customizing your own lien waiver form is not allowed.
Best practices before signing a Michigan Partial Conditional Waiver of Lien
1. Never sign a blank or incomplete Partial Unconditional Waiver of Lien
If a property owner or a higher-tier party hands you a blank Michigan lien waiver, fill out the required details first before you sign it. Signing a blank lien waiver is a terrible business practice, especially because anyone can fill out the information and cause you to lose your lien rights for a coverage period or a payment amount that you did not agree with.
2. Verify that the Through Date and Amount on your lien waiver are correct
The Through Date is the last date covered by the payment that you are expecting to receive for signing this waiver. Once you receive the payment, all your services rendered up to that date is implied to be fully paid for. A good way to ensure that you wrote the correct Through Date and Amount is to verify them against the information listed on the invoice corresponding to the payment that you are expecting to get.
3. Keep a copy of your signed Michigan lien waiver
Make a copy of your signed Michigan Partial Conditional Waiver of Lien before handing it to the requesting party. Having a copy of your lien waiver will allow you to have a reference for which portion of your lien rights has been waived, and it can be very helpful during payment disputes. Sometimes a conditional lien waiver is also served together with the relevant invoice. Make sure that you make a copy for yourself before giving the lien waiver to the property owner or another higher-tier party.