What is a Notice of Furnishing?
A Notice of Furnishing and Preliminary Notice are synonyms for each other. The term “Notice of Furnishing” is used in Michigan, Ohio, South Carolina and South Dakota while the term “Preliminary Notice” is used in all other states.
A Notice of Furnishing preserves the lien rights of the party that does not have a direct contract with the property owner. The purpose of a Notice of Furnishing is to inform the General Contractor and Property Owner that you have been hired to provide labor, services or material for this particular project.
In Michigan, failure to send a Notice of Furnishing does not defeat your lien rights, but it might limit them.
Who is required to send out a Notice of Furnishing in Michigan?
In Michigan, any party that does not have a direct contract with the property owner should send a Notice of Furnishing; including, subcontractors, laborers, material providers or suppliers.
A General/Prime Contractor will need to send a Notice of Furnishing only if the property Owner asks for one.
When am I required to send a Notice of Furnishing?
In Michigan, a Notice of Furnishing should be mailed 20 days from first day of furnishing labor and/or materials.
If you are just providing labor, then you have 30 days from first day of furnishing labor to send a copy of the Notice of Furnishing.
To avoid risking your Construction Lien rights, we recommend you require your project managers to have copies of the mailed Notice of Furnishing in every project file.
Who is the Notice of Furnishing sent out to?
Notice of Furnishing is sent to the property Owner and General/Prime Contractor.
How should I provide a Notice of Furnishing?
You can either hand deliver or mail a copy via certified mail. We recommend you Walways mail a copy of the Notice of Furnishing, even if you already hand delivered it. This will help eliminate any risk of it not being received or denial that it was.
Even though emailing is the most common and convenient method of business communication, emailing the Notice is not enough. You must deliver the Notice in-person or via certified mail to meet Michigan’s requirements.
Do I have to file a Notice of Furnishing?
You do not have to file or record a Notice of Furnishing with any government office (unlike a Notice of Commencement and Construction Lien).
What happens if I don't send a Notice of Furnishing in Michigan? or If I send it late?
Since Michigan requires a Notice of Furnishing, failing to provide one can have serious consequences.
Even though failing to provide a Notice of Furnishing does not eliminate your lien rights, it might, however, limit how much you can recover under the lien or it can prevent you from collecting at all.
Here’s an example:
A subcontractor provides services to a general contractor in Michigan but doesn’t file a Notice of Furnishing within 21 days of start date. When the subcontractor finishes the project, the general contractor refuses to pay. So, the subcontractor, in an effort to get paid for work done, first mails a Notice of Furnishing and then files a Construction Lien against the property.
Will the subcontractor recover any money this way?
Unfortunately for the subcontractor, since the Notice of Furnishing was sent AFTER the project was completed, the Lien can only be enforced against the value of work performed AFTER the Notice of Furnishing was sent. In this case, the subcontractor’s work was completed prior to the Notice of Furnishing being sent out, so the subcontractor will face challenges trying to enforce or perfect the lien.
Does this mean the subcontractor won’t get paid? Not necessarily. The subcontractor can still enforce the Construction Lien and collect the money owed if the subcontractor can prove two things: (1) that the property owner or lessee, paid the General Contractor for the subcontractor’s work; and (2) that the subcontractor had provided the General Contractor with a sworn statement or lien waivers. Neither of these are applicable in this situation and therefore, the subcontractor’s only remaining option is to consult an attorney.
What information should be included in a Notice of Furnishing?
The Notice of Furnishing should include the same information as the Notice of Commencement, including:
Your name and address
Name and address of the property owner
Project address
Name and address of the General Contractor or the party that hired you
A description of the type of work that you are providing to the project
The following statutory language, in all capital letters:
WARNING TO OWNER: THIS NOTICE IS REQUIRED BY THE MICHIGAN CONSTRUCTION LIEN ACT. IF YOU HAVE QUESTIONS ABOUT YOUR RIGHTS AND DUTIES UNDER THIS ACT, YOU SHOULD CONTACT AN ATTORNEY TO PROTECT YOU FROM THE POSSIBILITY OF PAYING TWICE FOR THE IMPROVEMENTS TO YOUR PROPERTY.
DISCLAIMER: This publication is for informational purposes only and does not contain legal advice. Individual circumstances vary widely and state laws are continually changing, so readers should not act on the information provided herein and should consult legal counsel for specific legal advice.
Copyright 2022 Need2Lien, LLC. All rights reserved.
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