Mich. Comp. Laws § 570.1119

Claims of lien having equal priority; priority of construction lien over garnishments and over other interests, liens, or encumbrances; attachment; effect of recording; priority of recorded mortgage, lien, encumbrance, or other interest over construction lien; advances; retainage.

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CONSTRUCTION LIEN ACT

Act 497 of 1980

570.1119 Claims of lien having equal priority; priority of construction lien over garnishments and over other interests, liens, or encumbrances; attachment; effect of recording; priority of recorded mortgage, lien, encumbrance, or other interest over construction lien; advances; retainage.

Sec. 119.

(1) Except as otherwise provided by subsection (4), as between parties entitled to claim construction liens under this act, the liens have equal priority. This subsection applies and the construction liens have equal priority regardless of whether the lien arises at the time of the first actual physical improvement or at the time a notice is recorded under section 107a or 107b.

(2) A construction lien under this act has priority over all garnishments for the contract debt made after the lien arises, without regard to the date of recording of the claim of lien.

(3) A construction lien arising under this act has priority over all other interests, liens, or encumbrances that may attach to the building, structure, or improvement, or on the real property on which the building, structure, or improvement is erected, if the other interests, liens, or encumbrances are recorded after the construction lien arises.

(4) A mortgage, lien, encumbrance, or other interest recorded before the construction lien arises has priority over a construction lien arising under this act. The priority of the mortgage exists as to all obligations secured by the mortgage except for indebtedness arising out of advances made after the construction lien arises. An advance made pursuant to the mortgage, but after the construction lien arises, has priority over a construction lien if, for that advance, the mortgagee has received a contractor's sworn statement as provided in section 110, has made disbursements pursuant to the contractor's sworn statement, and has received waivers of lien from the contractor and all subcontractors, laborers, and suppliers who have provided notices of furnishing. The construction lien of a lien claimant not set forth on the sworn statement on which an advance was made is subordinate to the lien of the mortgage, including the advance, unless before the advance the lien claimant provided the designee with a notice of furnishing if required by section 109 or recorded a claim of lien. An advance made after a notice of furnishing has been provided or has been excused as provided in sections 108, 108a, and 109 or after a claim of lien has been recorded is subordinate to the construction lien of the lien claimant unless before the advance the mortgagee received from the lien claimant either a full unconditional waiver of lien or a partial unconditional waiver of lien for the full amount due the lien claimant as of the date through which the lien is waived as shown on the lien waiver and the date through which the lien is waived as shown on the partial unconditional waiver is within 30 days before the advance.

(5) For purposes of this section, retainage that is not payable under a contract until a certain event happens in addition to an improvement being provided, is not due as of the date the improvement is provided.

(6) For purposes of determining priorities under this section, a construction lien arises as follows:

(a) Except as provided in subdivision (b), at the time of the first actual physical improvement.

(b) As to a lien claimed by a person after the person has recorded a notice under section 107a or 107b, at the time a notice is recorded, subject to any applicable limitation under section 107a(4) or 107b(4).

History: 1980, Act 497, Eff. Jan. 1, 1982 ;-- Am. 1981, Act 191, Eff. Jan. 1, 1982 ;-- Am. 1982, Act 17, Eff. Mar. 1, 1982 ;-- Am. 2018, Act 367, Imd. Eff. Dec. 12, 2018

Notes of Decisions

Cited in 18 cases, 1983–2019 · leading case: M D Marinich, Inc v. Michigan National Bank

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M D Marinich, Inc v. Michigan National Bank (1992) michctapp · cites it 11× “The trial court conducted an evidentiary hearing and held that plaintiffs construction lien related back to the first actual physical improvement made on the project in January 1985, which gave plaintiff priority under MCL 570.1119(3); MSA 26.316(119)(3) over defendant’s…”

Jeddo Drywall, Inc. v. Cambridge Investment Group Inc. (2011) michctapp · cites it 7× “The trial court entered default judgments against several defendants, and Jeddo and Stock filed motions for summaty disposition against AmTrust, arguing that their construction liens had priority over the mortgage held by AmTrust.”

C D Barnes Associates Inc. v. Star Heaven, LLC (2013) michctapp · cites it 2× “232, provide that a construction lien for work performed on a condominium unit or for an improvement furnished to a condominium unit attaches only to the condominium unit on which the work was performed or for which the improvement was furnished.”

Estate of Darryl Houston Price v. Lori Jean Kosmalski (2012) mich · cites it 2× “40 (real estate taxes), and MCL 570.1119(3) (construction liens). However, there is no statutory exception for receivership expenses.”

Sears, Roebuck & Co. v. Hamlin (In Re Hamlin) (1983) mieb · cites it 11× “§ 570.1119(3). Thus, by virtue of section 362(b)(3) and section 546(b), Sears, Roebuck was not stayed from perfecting its inchoate lien subsequent to the debtors’ commencement of the bankruptcy proceeding.”

Advanta National Bank v. McClarty (2003) michctapp “By operation of MCL 570.1119(3), Erb Lumber had priority, and, con *125 sequently, Advanta’s mortgage was junior.”

Stocker v. Tri-Mount/Bay Harbor Building Co. (2005) michctapp · cites it 5× “MCL 570.1119(4) provides that a mortgage “recorded before the first actual physical improvement to real property shall have priority over a construction lien arising under this act.”

Lepore v. Parker-Woodward Corp. (1993) mied · cites it 4× “Mich.Comp.Laws § 570.1119(3). Rayco cites Durant Construction, Inc.”

Dlf Trucking Inc v. Bach (2005) michctapp “However, because § 203 of the CLA prevents plaintiffs lien from attaching to the property at issue, 5 it is irrelevant whether such a lien would generally have priority over the mortgage if it had properly attached, see MCL 570.1119, and the trial court therefore erred in…”

Durant Construction, Inc v. Gourley (1983) michctapp “” Under MCL 570.1119; MSA 26.316(119), a construction lien, which takes effect when the first actual physical improvement occurs, has priority over a mortgage instrument recorded subsequent to the commencement of the construction work.”

Michigan Pipe & Valve-Lansing, Inc. v. Hebeler Enterprises, Inc. (2011) michctapp · cites it 3× “The trial court held that the drilling of the well on February 8, 2005, was an actual physical improvement to the property and, therefore, pursuant to MCL 570.1119, the liens filed by MPV and GRI had priority over Firstbank’s mortgage.”

C.D. Barnes Associates, Inc. v. Grand Haven Hideaway Ltd. Partnership (2005) miwd “L.A. §§ 570.1101-1305. Under the CLA, a construction lien is effective upon the “first actual physical improvement” and has priority over a mortgage that is recorded after the commencement of the construction work.”

Show all 18 citing cases →

— Mich. Comp. Laws § 570.1119(1) — 1 case

Horton v. Verhelle (1998) michctapp

— Mich. Comp. Laws § 570.1119(2) — 1 case

Ruggeri Electrical Contracting Co. v. City of Algonac (1992) michctapp

— Mich. Comp. Laws § 570.1119(3) — 11 cases

C D Barnes Associates Inc. v. Star Heaven, LLC (2013) michctapp “232, provide that a construction lien for work performed on a condominium unit or for an improvement furnished to a condominium unit attaches only to the condominium unit on which the work was performed or for which the improvement was furnished.”

M D Marinich, Inc v. Michigan National Bank (1992) michctapp “The trial court conducted an evidentiary hearing and held that plaintiffs construction lien related back to the first actual physical improvement made on the project in January 1985, which gave plaintiff priority under MCL 570.1119(3); MSA 26.316(119)(3) over defendant’s…”

Estate of Darryl Houston Price v. Lori Jean Kosmalski (2012) mich “40 (real estate taxes), and MCL 570.1119(3) (construction liens). However, there is no statutory exception for receivership expenses.”

Jeddo Drywall, Inc. v. Cambridge Investment Group Inc. (2011) michctapp “The trial court entered default judgments against several defendants, and Jeddo and Stock filed motions for summaty disposition against AmTrust, arguing that their construction liens had priority over the mortgage held by AmTrust.”

Sears, Roebuck & Co. v. Hamlin (In Re Hamlin) (1983) mieb “§ 570.1119(3). Thus, by virtue of section 362(b)(3) and section 546(b), Sears, Roebuck was not stayed from perfecting its inchoate lien subsequent to the debtors’ commencement of the bankruptcy proceeding.”

— Mich. Comp. Laws § 570.1119(4) — 4 cases

Stocker v. Tri-Mount/Bay Harbor Building Co. (2005) michctapp “MCL 570.1119(4) provides that a mortgage “recorded before the first actual physical improvement to real property shall have priority over a construction lien arising under this act.”

Pageant Homes Inc v. William E Bradley (2012) mich

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