A Michigan contractor completes a $45,000 kitchen renovation project. The homeowner fails to pay the final $8,500 invoice. Under Michigan's Construction Lien Act 497, what is the maximum lien amount the contractor can claim?
Correct Answer
C) $8,500
Under Michigan's Construction Lien Act 497, a contractor can only lien for the amount actually owed for work performed, which is $8,500 in this case.
Why This Is the Correct Answer
Michigan's Construction Lien Act (Act 497 of 1980) limits a lien to the amount actually owed for labor and materials furnished — not the total project value. Because the homeowner owes $8,500, that is the maximum lien amount the contractor can record. A lien is a security interest for unpaid amounts, not a penalty or a re-liening of already-paid work.
Why the Other Options Are Wrong
Option A: $53,500
$53,500 would represent the full contract price plus the unpaid amount, which is not how lien law works. You cannot lien for more than what is owed.
Option B: $36,500
$36,500 is the amount already paid ($45,000 − $8,500), which has no basis as a lien figure. Paid amounts are not lienable — only unpaid amounts are.
Option D: $45,000
$45,000 represents the total contract amount, but the contractor has already received $36,500 of that. Liening for the full contract value when a significant portion has been paid would constitute an improper lien and is prohibited.
Memory Technique
A construction lien is like a receipt for money still owed — you can only show the receipt for what hasn't been handed over yet. $8,500 unpaid = $8,500 lien, nothing more.
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