A Michigan contractor completes a $45,000 kitchen renovation project. The homeowner pays $35,000 but refuses to pay the remaining $10,000. Under Michigan's Construction Lien Act 497, what is the maximum lien amount the contractor can file?
Correct Answer
C) $10,000
Under Michigan's Construction Lien Act 497, a contractor can only lien for the unpaid amount of work performed, which is $10,000 in this case.
Why This Is the Correct Answer
Under Michigan's Construction Lien Act (PA 497 of 1980), a claimant may only lien for the unpaid amount actually owed for labor and materials provided. Because the homeowner already paid $35,000 of the $45,000 contract, only $10,000 remains unpaid. A lien cannot exceed the amount legitimately owed, so $10,000 is the maximum lien.
Why the Other Options Are Wrong
Option A: $45,000
$45,000 is the total contract value, not the unpaid balance. A lien covers only the unpaid portion of work performed — filing a lien for the full contract amount when partial payment has already been made would be an improper over-lien.
Option B: $55,000 including interest and costs
$55,000 is incorrect. Michigan lien law does not allow a claimant to add interest and costs to the lien amount at the time of filing; those may be sought in litigation but are not part of the lien itself.
Option D: $35,000
$35,000 is the amount already paid, not the amount owed. This is a common trap — candidates sometimes reverse the paid and unpaid figures.
Memory Technique
Lien = What They Still Owe You. Visualize a receipt: $45k job, $35k paid, $10k gap — that gap IS the lien. You can only 'lean on' them for what they owe, not for what they already paid.
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