A Michigan contractor completes $85,000 worth of work on a residential project. The homeowner pays $60,000 but disputes the remaining $25,000. Under the Construction Lien Act, what is the maximum lien amount the contractor can file?
Correct Answer
B) $25,000
Under Michigan's Construction Lien Act 497, a contractor can only lien for the unpaid amount owed, which is $25,000 in this case.
Why This Is the Correct Answer
Under Michigan's Construction Lien Act (Act 497), a contractor may only file a lien for the amount that remains unpaid and owed. Since the homeowner paid $60,000 and disputes the remaining $25,000, the maximum lien amount is $25,000 — the unpaid balance.
Why the Other Options Are Wrong
Option A: $60,000
$60,000 represents the amount already paid, not the unpaid balance. A contractor cannot lien for money already received.
Option C: $110,000
$110,000 exceeds the total contract value and has no basis in the facts. A lien can never exceed the contract amount and certainly not the amount owed.
Option D: $85,000
$85,000 is the total contract value, but since $60,000 has been paid, the contractor can only lien for what remains unpaid ($25,000). Filing a lien for the full contract value when partial payment has been made is improper.
Memory Technique
Lien = What you're owed, not what was paid. Total contract ($85,000) minus payment received ($60,000) = unpaid balance ($25,000) = maximum lien. Think: 'Lien the gap — the gap between owed and paid.'
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