What is a Lien in Michigan?
In Michigan, liens are orders put on a property to secure a debt. Creditors apply for liens to serve as security and enable the asset's repossession if the borrower does not repay the debt. They are typically enforced by judicial orders issued by Michigan courts.
Liens are enacted under two different conditions; by a voluntary agreement between debtor and creditor (consensual) or statutorily through a law (non-consensual liens).
Consensual liens occur when a debtor intends to ensure that the creditor receives security for the loan. The collateral guarantees a means for the creditor to get paid if the debtor defaults in payment. The loanee willingly makes these arrangements, mainly because most creditors seek security before giving out a loan.
Non-consensual liens are those brought about by Michigan state law. There are two main types; statutory liens and judgment liens. A creditor can recover a loan, reclaim debt, or retrieve payment for a service rendered in statutory liens with a statutory lien. Examples include but are not limited to a construction lien, property lien, and tax lien. On the other hand, judgment liens involve a judge's pronouncement when there is a dispute over a debt. The judge may then decide that the lender should hold a charge on the debtor's property.
Are Liens Public in Michigan?
According to the provisions of the Michigan Public Records Law, liens are public throughout the state. Liens become public records when they are filed with the county recorder’s office. This means that anyone can access information about a lien, including who holds it and how much money is owed on it. However, there are also “secret liens” which are required to be kept confidential by law.
Types of Lien in Michigan
In Michigan, creditors can place different liens on a debtor's real or personal property. Some include:
- Judgment liens
- Mechanics liens
- State tax lien
- Mortgage liens
- Michigan Employment Security Commission (MESC) liens. Also known as UIA liens
- Condominium association liens
- Construction liens
- Garage keeper liens
Liens filed in Michigan can be voluntary or involuntary. A voluntary lien (also called a consensual lien) arises from an agreement between two parties. This agreement is often to purchase a piece of property, like a home or car. One example of a voluntary lien is a mortgage lien.
On the other hand, an involuntary lien, otherwise referred to as a statutory lien, results from a state or federal law. As a result, any creditor who has this right given to them by law does not require a debtor's consent to attach a lien.
How Do I Check for Liens in Michigan?
To check for liens in Michigan, an individual may approach the public agency with custody of the record or conduct an online search via the agency's website.
The Friend of the Court (FOC) is one of the government agencies that a person can approach to check for liens in Michigan. The FOC helps dealers and other interested parties to check for liens on vehicles brought in for trade or sale in Michigan. Through the FOC Lien Search, dealers can check for active liens arising from a vehicle owner's failure to pay child support.
In addition, the Record Lookup Unit of the Michigan Secretary of State (SOS) can also provide information regarding liens on vehicles. Usually, the unit does this by conducting a lienholder search on the property. The Record Lookup Request form is available for download online, and each record verified costs $11.
Also, the Michigan SOS provides a Uniform Commercial Code (UCC) Online Service where interested persons can search for liens arising from commercial transactions (UCC liens) in Michigan. The agency's UCC FAQ page offers more information on obtaining such records.
Finally, people searching for records of liens attached to real property can visit or contact the Register of Deeds with jurisdiction over the county where the property lies. In some cases, a researcher can find a searchable database on the Register of Deeds' website to obtain a record remotely.
Free Lien Search in Michigan
Liens are public records in Michigan. Hence, individuals can not only obtain these records from the custodial government agencies, but they can also search for and examine records without paying a fee.
Residents of Michigan can visit the physical location of an agency to review lien records. At the office, the requester will have access to information such as the lienee and lienholder's names and addresses, the type of lien, the status of the lien, the filing date, and other details.
Also, it may be possible to search for liens remotely using databases provided on some agencies' websites.
What is a Property Lien in Michigan?
A property lien is a type of statutory lien. It is filed whenever a creditor seeks to secure a debt by charging the debtor's property. In Michigan, the properties covered by lien include lands, cars, boats, motorcycles, and certain other personal assets. The Construction lien is a type of property lien commonly used in Michigan. The construction lien can be in the form of a mechanics lien or a materialmen lien.
A defaulter cannot transfer or sell an asset under a property lien. The owner must pay off the debt to lift the lien off the property.
A point of caution in the case of a property lien is that a contractor must satisfy specific requirements before filing a property lien on a residential building. Such a contractor should have secured a license as a residential builder or a residential maintenance and alteration contractor. Any contractor who files for a property lien without such a license will not be able to process the application. At this point, the property owner can sue such a contractor for damages, and the contractor can be found guilty of a felony or a misdemeanor, depending on the circumstances.
The presence of a property lien on an asset does not necessarily mean the owner of such property immediately surrenders the property to the other party. The party holding the lien can only claim the property for sale after the agreed time to repay the debt has elapsed.
How Do You Know if a Property Has a Lien in Michigan?
In Michigan, a property owner may or may not know that a lien was attached to their property. Often, when someone does not know about a lien, it is usually because the lien is involuntary. Typically, a property owner will be informed of a voluntary lien and its consequences (e.g., foreclosure) if they default on the terms and conditions of an agreement.
In any case, property owners and other interested persons can determine if a property has a lien by contacting the appropriate state agency. Different government offices keep records of liens in Michigan. For example, the Register of Deeds maintains liens records filed against real property. Meanwhile, the Secretary of State keeps information on UCC and vehicle liens.
Property Lien Search by Address in Michigan.
A property lien is one category of information found in a Michigan property record. In Michigan, property records are considered public records that can be obtained from government agencies.
The appropriate agency to request a property lien search to check for liens on a property in Michigan is the Register of Deeds office headquartered where the property lies. However, the Registers of Deeds typically maintain name-based property records. This means a person can only conduct a property lien search by name, not a property's address, through these offices.
An individual who only has the address of a property can contact the local assessor's office or another relevant department (for example, the Bureau of Equalization if searching in Kent County) to perform a property search by address. This search allows the inquirer to obtain the names of possible property owners. These names can be used to search the Register of Deeds records to find liens on a property.
Additionally, property lien searches in Michigan can be performed through third-party sources.
Free Property Lien Search by Address
Individuals can conduct a free property lien search in Michigan using the land records databases (sometimes called "property search" sites) maintained by Registers of Deeds. For example, the free land records site provided by the Wayne County Register of Deeds. As mentioned earlier, these offices do not process requests for a property lien search by address. However, some third-party sites offer this option to requesters.
What is a Tax Lien in Michigan?
A tax lien is a non-consensual lien that grants the Michigan Department of Treasury access to a defaulter's assets. There is no need to appear before a judge to activate such a lien, and once filed, this tax lien applies to all properties owned by the debtor. A tax lien is not valid if the Department of Treasury:
- Did not assess the taxpayer for tax liability
- Did not send a final bill to the debtor
There must be evidence that the citizen did not complete the tax debt within 35 days or 90 days (as an individual) from the date of receiving the notice of the final assessment. Upon filing a tax lien, the state does not immediately take possession of the property. A tax lien remains on a property until the defaulter clears the tax arrears. Therefore, if the property is sold while still under tax lien, the proceeds are first used to repay the tax, and the debtor receives what is left.
Tax Lien Lookup in Michigan
Members of the public can perform a tax lien lookup in Michigan via the Register of Deeds offices to find tax liens attached to real property. Besides searching online land records databases maintained by these offices, an inquirer can also visit during working hours to look up tax liens.
What is a Mortgage Lien in Michigan?
A mortgage lien is securing a loan with the exact property the debtor is obtaining the loan for. When an individual seeks to purchase a property with the help of a loan from a creditor who requests security for the loan, it is common practice that the debtor secures the loan with that same property. Such a charge given to the creditor on that property is a mortgage lien. Should the debtor fail to meet the arrangement's terms, the creditor can take possession of the property.
According to the Michigan Compiled Laws, a mortgage lien takes priority over a construction lien. Whenever a construction lien is on a property that already has a mortgage lien, the mortgage lien is honored before the construction lien. The voluntary nature of a mortgage lien sets it apart from a property lien. The two parties get to select the lien's terms, which is not the case with property liens.
What is a Mechanics Lien in Michigan?
A mechanics lien is a legal tool to ensure payment of contractors, subcontractors, suppliers, or laborers who provide services to properties used as a security interest. Applicants must file a mechanics lien in Michigan alongside the Register of Deeds before the end of 60 days after performing the duty or supplying the materials. For residential properties, registered subcontractors and contractors are the only parties who can file for a mechanics lien.
A mechanics lien differs from a property lien in that a property lien permits the creditor to seize the property once the debtor does not pay up. In contrast, a mechanics lien is filed against a debtor's inability to pay for services rendered, giving the laborer or supplier access to the improved property.
What is a UCC Lien?
The Uniform Commercial Code is an act that oversees commercial transactions in relation to personal properties, contracts, bank deposits and collections, investment securities, negotiable instruments, and bulk transfers. UCC filing benefits the creditor. UCC application will reveal the borrower's financial statements (individual or organization) and tell whether there are other financial obligations on the asset the debtor used as collateral. That way, the creditor gets an assurance of security interest and can move to seize the collateral if the debtor goes bankrupt.
How to Conduct a UCC Lien Search
For persons interested in a UCC lien search in Michigan, the Michigan Secretary of State provides two search tools:
- The Uniform Commercial Code Online Service (the official UCC search tool, which requires a user ID and password to access), and
- The Free Debtor Name Quick Search (for unofficial UCC lien searches to determine debtor names and retrieve basic UCC lien information at no cost).
What is a Judgment Lien?
Michigan's judgment lien permits a creditor to claim a debtor's property, used as security to reimburse debts. The judgment lien applies to mortgage, real estate, or individual properties like jewelry, gems, antiques, or other valuables. Judgment liens are effective for five years and can be restored after the debtor settles the loan or through the sale of the property used as collateral.
Per Michigan Law Section 600.2805, a judgment lien does not account for legal description; all that is needed for the sake of identification is the debtor's last four social security numbers. Also, a debtor can not auction the collateral until the debt has been cleared and released.
What is a Federal Tax Lien
A federal tax lien is the government's statutory claim to a property owned by an individual or company that neglected to pay or evaded federal taxes. It ensures the payment of the tax debt.
Following the U.S. Code § 6321, the Internal Revenue Service (IRS) places a federal tax lien on a property when its owner does not pay the owed tax after being served with a notice. This lien can be placed on the debtor's properties or assets, which can be seized or sold to clear the debt. (Before the property is seized or sold, however, the owner would have been served several notices). The usual way to remove a federal tax lien is to pay one's debt completely.
What is a Lien Title?
A lien title shows who has a valid claim to a property because of a debt or outstanding financial obligation. The title serves as insurance to the creditor (the lienholder) to guarantee the satisfaction of the debt.
Where and How to Do a Title Search in Michigan
One place to perform a title search in Michigan is the Register of Deeds office in the county where the property is situated. Individuals can visit this office to search property title records (deeds) or check for a land records database on the agency's official website. Additional resources for conducting title searches in Michigan can be found on the state government's Michigan Land Records site.
Individuals can also contract third parties to conduct the title search for them. One example is a local title company.
Voluntary Lien vs. Involuntary Lien in Michigan?
A voluntary lien is a consensual claim or deed of trust agreement on a debtor's property used as collateral to guarantee debt payment. In comparison, an involuntary lien is an imposed order on a defaulter's properties to sort out debts. In an involuntary lien, the house owner can lose the legal rights to an asset due to non-payment of debts.
The significant difference between a voluntary lien and an involuntary lien is consent. In the former, the owner can choose to sign up for the claim, while in the latter, the court issues a judgment that becomes binding immediately. Third parties such as regulatory groups, Internal Revenue Service (IRS), mortgage lenders, a plaintiff in a lawsuit, or a credit card agency can file involuntary liens.
How Creditors Collect Payment Through a Lien
A lien is one way that creditors guarantee the fulfillment of financial obligations in Michigan. As a result, a creditor can seize the property subject to the lien, sell such property, and use the proceeds to settle the debt.
How Do I Get a Lien Removed in Michigan?
One way to remove a lien from a property in Michigan is by paying off the associated debt, including fees, interest, and other charges. Once the debt is paid, the creditor will file a release at the appropriate government agency. For example, to remove a mechanics or construction lien in Michigan, the claimant (the creditor) will file a discharge at the Register of Deeds office in the county where the property is situated.
The discharge document will contain information such as:
- The claimant's name
- Property owner's name
- Amount of the claim
- Book and page number
- The legal description of the property
- The common name of the property
Afterward, the document will be sent to the property owner, indicating the debt settlement.
Furthermore, a debtor may negotiate with their creditor to pay a lesser amount. The debtor may get the creditor to release the lien once the designated amount is paid as part of the negotiation.
Another way to remove a lien in Michigan is to wait for its statute of limitations to expire. However, this usually applies to involuntary liens, not voluntary liens.
How Long Does a Lien Stay on Your Property in Michigan?
Each type of lien in Michigan spends a specific length of time on a debtor's property. Generally, a voluntary lien, which ensues from the failure to fulfill a financial obligation, will remain on a property until the debt is repaid or the property foreclosed.
However, an involuntary lien has a limited time to stay attached to a property in Michigan. For example, a judgment lien is only effective for five years, while a tax lien is valid for six years.
How to Avoid a Lien in Michigan
Individuals must stay away from debts to avoid liens in Michigan. However, if one is already a debtor because of a loan or other reason, it is best to honor the financial agreement made with a lender to avoid filing a lien.