What is the statutory interest rate for unpaid construction liens in Michigan?
Correct Answer
D) 10% per annum
Michigan Construction Lien Act provides for interest at 10% per annum on unpaid lien amounts from the date the lien becomes due.
Why This Is the Correct Answer
The Michigan Construction Lien Act establishes a statutory interest rate of 10% per annum on unpaid lien amounts, accruing from the date the lien amount becomes due. This provides a meaningful financial incentive for prompt payment and compensates the lienholder for the cost of delayed payment.
Why the Other Options Are Wrong
Option A: 6% per annum
6% per annum is the general Michigan statutory interest rate for many civil judgments and contracts, but it is not the specific rate established by the Construction Lien Act for unpaid lien amounts. The lien act uses the higher rate of 10%.
Option B: 12% per annum
12% per annum exceeds the Michigan Construction Lien Act's statutory rate. This figure is sometimes seen in other financial contexts (credit card rates, certain contract penalties) but is not the lien interest rate under Michigan law.
Option C: 8% per annum
8% per annum is not the rate specified in the Michigan Construction Lien Act. This is another plausible-sounding distractor that falls between the common Michigan statutory judgment rate (6%) and the correct lien rate (10%).
Memory Technique
Remember '10% for liens' using the phrase: 'A DIME for every dollar you owe on a lien.' A dime is 10 cents = 10%. The Construction Lien Act rewards claimants with a full dime per dollar per year — higher than the general 6-cent (6%) judgment rate.
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A contractor's employee is injured on a job site in Michigan. The contractor's workers' compensation insurance has a $500 deductible per claim. The total medical costs are $12,500 and lost wages are $3,200. What is the contractor's out-of-pocket cost for this claim?