As Michigan businesses sift through the meaning and applications of Governor Gretchen Whitmer’s Executive Order 2020-21 (COVID-19), one question circulating in the construction industry is whether contractors and material providers can continue to process lien filings under Michigan’s Construction Lien Act (CLA). The current economy and payment issues that may arise from the executive order only heightens the necessity of filing a timely claim.
Meeting Filing Deadlines Without the Ability to File In Person
The Michigan Supreme Court has weighed in state court operations with Administrative Order 2020-5, March 18, 2020, which suspends many civil court proceedings during the shutdown. While the Supreme Court’s order indicates an intent to mandate alternative methods to in-person filings of court records in the register of deeds, nothing in the order addresses extensions of CLA deadlines.
As it stands today, county register of deeds offices across the state continue to operate at some level. Because of the executive order, however, in-person service is not available at those offices, and documents must now be delivered online or via the mail. This process may hinder the ability to meet filing deadlines, which is particularly true for lien claims that must be filed within 90 days from the last date of furnishing material or labor.
The actual language in the statute is that the lien must be “recorded” within 90 days. This has been held as a fixed deadline not subject to the CLA’s substantial compliance provisions; lien rights are lost if the filing deadline is not met. Ordinarily, this is not an issue as a claimant can go to the register’s office an obtain a copy of the recorded documents on the date they are filed. But the elimination of in-person services at every county register of deeds eliminates the filer’s certainty as to the exact date when a lien is recorded.
Guidance From a Past Case
The COVID-19 crisis has given rise to unique circumstances we have never faced before, raising questions about filing rules and legal procedures. A Michigan Supreme Court decision from 2003, however, touches on the lien recording issue and may provide some guidance on the current situation.
In Central Ceiling & Partitions Inc. v Department of Corrections, multiple claimants delivered liens to the Wayne County Register of Deeds, none of which were recorded until nearly thirty days after the date they were received. The party defending the liens argued that lien claimants had to comply with the strict 90-day deadline, and therefore the liens were invalid. The Michigan Supreme Court – agreeing with the trial court and the Michigan Court Appeals – held that a register of deeds office is required to maintain accurate records of when it receives documents. As such, the claimants’ liens were effective upon acceptance by the Wayne County Register of Deeds.
So What Should a Lien Claimant Do Now?
Obtaining lien priority and ensuring timely filing is of paramount importance during the COVID 19 crisis and in the months to follow. Given the current circumstances, we recommend that lien claimants move forward with filing their liens and record the necessary paperwork with the local county register of deeds using certified mail or, if possible, electronic filing that provides the time and date of the register’s receipt.
We Remain Available to Assist
If you have questions about preparing and filing a lien or other business issues resulting from the COVID-19 coronavirus emergency, the attorneys at Kreis Enderle remain available to help. We are working remotely during the crisis and can conference with you by telephone or video.