Liens, Acts, Business Entities

Question 1

What is the purpose of filing a lien under the Construction Lien Act?

Answer 1

To secure payment on a property when contractors, subs, laborers, or suppliers aren’t paid, even if the owner already paid the general contractor.

Question 2

What are the basic steps and documents required to file a lien?

Answer 2

1) Notice of Commencement, 2) Notice of Furnishing, 3) Proof of Notice of Furnishing, 4) Sworn Statement, 5) Waivers, 6) Claim of Lien, 7) Proof of Service of Claim of Lien.

Question 3

It must be submitted within 10 days if requested, posted at the job site, and notarized.

Answer 3

What must be done with the Notice of Commencement?

Question 4

It indicates partial payment has been made, but there are still outstanding payments.

Answer 4

What is a Partial Unconditional Waiver?

Question 5

It signifies that payment has been made in full, and no further liens will be filed.

Answer 5

What is a Full Unconditional Waiver?

Question 6

How long does a contractor have to file a claim of lien after completing work?

Answer 6

90 days from the last date of furnishing labor or materials.

Question 7

What are some specific requirements under Michigan’s building code?

Answer 7

Single building code since 1987, stair rise/run of 8.25/9, and smoke and carbon monoxide detector requirements based on construction year.

Question 8

Sales of goods or services over $25 to homeowners, allowing a 3-day cancellation period

Answer 8

What does the Home Solicitation Sales Act regulate?

Question 9

What are the advantages of a Sole Proprietorship?

Answer 9

Easy to establish, minimal government regulations, and owner has control over profit usage.

Question 10

What is the main tax difference between a Corporation and an S Corporation?

Answer 10

Corporations pay corporate taxes, whereas S Corporations are taxed like partnerships (income taxed at individual level).

Question 11

What are the working hour restrictions for 14 and 15-year-olds?

Answer 11

They cannot work more than 48 hours a week, 6 days a week, or between 9 pm and 7 am.

Question 12

What is the minimum number of employees for the ADA to apply to an employer?

Answer 12

15 employees, with requirements for reasonable accommodations.

Question 13

How long must employers retain I-9 forms?

Answer 13

At least 3 years after hire date or 1 year after employment ends, whichever is later.

Question 14

Construction Lien Act Basics

Answer 14

Lien Purpose: Allows property liens when unpaid for work, even if the owner paid the GC but the subcontractor wasn’t paid.

Eligibility: Liens apply to licensed GCs, subcontractors, laborers, and suppliers on both residential and commercial properties.

Contract Requirement: Written contract is mandatory for lien eligibility.

Question 15

Filed within 10 days of request.

Identifies GC, subs, and job location.

Must be posted on-site near the permit.

Answer 15

Notice of Commencement:

Question 16

Contractors: file within 20 days of providing services.

Laborers: file within 30 days of wages due.

Answer 16

Notice of Furnishing

Question 17

Notify all parties within 15 days of filing lien claim

Answer 17

Proof of Service

Question 18

What type of homes only need foundation inspections if pre-inspected.

Answer 18

Manufactured homes

Question 19

Business Registration Steps

Answer 19

Verify name availability.
Obtain EIN.
File Articles of Incorporation or LLC documents.
Obtain builder’s license if necessary.
Open business bank account.

Question 20

Lien & Legal Procedures

Answer 20

Initial Lien Documents: Notice of Commencement, Notice of Furnishing, and Proof of Furnishing.

Waivers: Used to indicate partial or full payment received.

Filing Deadlines:
Submit lien statement within 90 days of job completion.
Notify owner of lien within 15 days by certified mail.
Discharge of Lien: File ASAP after payment.

Question 21

Used on high-end jobs to cover the time needed to put together a comprehensive bid.

Answer 21

Pre-Construction Agreement

Question 22

According to the sample contract on page 27, when is the full payment of a change order due?

Answer 22

upon agreement and signing of the change order

Question 23

What should a quality contract contain?

Answer 23

name and location of the project
drawings and specifications identified as “Project Number”
insurance requirements for owner and contractor

Question 24

To protect yourself from potentially costly changes, what should you include in any contract to build a new house?

Answer 24

“per project number, last revised on,” then list specific page numbers and revision dates.

Question 25

What is an architect or designer’s verbal direction to change something?

Answer 25

a modification

Question 26

Ownership of drawings must be _____.

Answer 26

defined

Question 27

Who is responsible for corrections to completed work according to the subcontract? Ie something completed somehow got damaged…

Answer 27

The subcontractor is responsible for the correction.
Whoever installed it protects it.

Question 28

When can the builder substitute materials?

Answer 28

only with the permission of the owner

Question 29

The cost of moving equipment on and off the job site is called _____.

Answer 29

mobilization costs

Question 30

Whatever contract you decide to use should be reviewed by ______.

Answer 30

an attorney

Question 31

Who is responsible for collecting and maintaining safety data sheets on the job site?

Answer 31

the general contractor

Question 32

Any code-related penalties that are caused for the general contractor are the responsibility of _____.

Answer 32

the subcontractor

Question 33

Which of the following is NOT a responsibility of the subcontractor?

Answer 33

Provides for toolbox safety talks.

Question 34

What are the three methods for alternative dispute resolution?

Answer 34

mediation, arbitration, facilitation

Question 35

Which alternative dispute resolution method is the award settlement binding, and there is no appeal process?

Answer 35

arbitration

Question 36

When is substantial completion of work obtained?

Answer 36

when the owner can take possesion and use the structure for its intended purpose