What are liquidated damages in a Michigan construction contract?

Liquidated damages are a contractually agreed-upon dollar amount, typically assessed on a daily basis, that a contractor owes the owner if the project is not substantially complete by a specified deadline. They are not a penalty; they are supposed to represent the parties’ best estimate, at the time of signing, of what a delay would actually cost the owner. Michigan courts may likely enforce them when they meet that standard.

Key Takeaways

• Liquidated damages clauses have been seen, and can be enforceable, in Michigan construction contracts.
• Michigan courts will not enforce an LD clause that functions as a penalty rather than a genuine pre-estimate of damages.
• The dollar amount, the deadline, and the definition of “substantial completion” all matter enormously.
• Contractors have specific defenses available, including owner-caused delays, concurrent delays, and waiver.
• You can negotiate LD clauses before signing. Many contractors do not try.

Why This Matters for Michigan Contractors

Michigan construction projects often run on tight margins. On a $2 million project with a 10% projected profit, the entire margin is $200,000. A liquidated-damages clause of $3,000 per day would consume that projected profit in about 67 days. On larger commercial projects, daily liquidated-damages rates of $5,000, $10,000, or more can appear, depending on the project and the owner’s estimated cost of delay

What makes this worse is that delays on construction projects are almost never entirely one party’s fault. Owners change orders. Design professionals issue late drawings. Material deliveries slip. Subcontractors fall behind. When delay happens, the owner looks to the LD clause first. Whether you can fight back depends entirely on what your contract says and what you documented along the way.

What Michigan Courts Require Before Enforcing an LD Clause

Michigan courts apply a two-part test before enforcing a liquidated damages clause. The clause must satisfy both elements.

First: Damages Must Be Difficult to Estimate at the Time of Contracting

If the owner could easily calculate the precise financial harm a one-day delay would cause, the LD clause loses much of its justification. But on most commercial projects, construction delays produce losses that are genuinely hard to pin down precisely: lost rental income, carrying costs, business interruption, financing costs, reputational harm. Michigan courts recognize this difficulty and generally find it satisfied on most commercial construction projects.

Second: The Amount Must Be a Reasonable Pre-Estimate of Actual Damages, Not a Penalty

This is where LD clauses get challenged. If the agreed daily amount bears no reasonable relationship to the actual losses the owner could expect from a delay, a Michigan court may refuse to enforce it as a penalty clause. The key word is “reasonable.” Courts look at what the parties knew or should have known at the time they signed, not what actually happened.

Are liquidated damages clauses enforceable in Michigan?

Yes, liquidated damages clauses are enforceable in Michigan if two conditions are met: (1) actual damages from a breach were difficult to estimate when the contract was signed, and (2) the agreed amount represents a reasonable pre-estimate of those damages rather than a punishment. A clause that functions as a penalty, bearing no reasonable relationship to anticipated harm, may be unenforceable.

The Clauses That Create the Most Risk

Not all LD clauses are created equal. These are the contract provisions that create the most exposure for Michigan contractors.

Vague or Missing Milestone Definitions

If the contract says LDs run until “completion” but never defines what completion means, you have a problem. Does completion mean substantial completion? Final completion? Certificate of occupancy? Each definition produces a different outcome. A contract that is silent on this point may give the owner the ability to run LDs for weeks after the project is functionally done.

No-Excuse Provisions

Some contracts include language that purports to hold the contractor liable for LDs regardless of the cause of delay, including owner-caused delays. Michigan courts do not look favorably on provisions that eliminate all contractor defenses, but the language still creates a fight you would rather not have.

Missing Float Allocation Language

On a project with a CPM schedule, float is a resource that belongs to someone. If the contract does not address who owns schedule float, the owner may claim it. That means any delay eats into the contractor’s schedule buffer before it even becomes an excusable delay event.

Asymmetric Provisions

Watch for contracts that impose LDs on the contractor for late completion but give the owner no corresponding obligation for late design deliverables, slow RFI responses, or restricted site access. Asymmetry in a contract can run against the contractor.

What is the difference between liquidated damages and a penalty in Michigan?

In Michigan, a liquidated damages clause is a binding agreement on a pre-estimated amount of harm. A penalty clause imposes an amount designed to punish or coerce, without regard to actual loss. Michigan courts will enforce the former and may refuse to enforce the latter. The distinction turns on whether the agreed amount was a reasonable estimate of anticipated damages at the time of contracting, not on what it is called in the contract.

Defenses Available to Michigan Contractors

If an owner asserts a liquidated damages claim, these are your most important defenses:

Owner-Caused Delay

If the owner contributed to the delay through late approvals, slow responses to RFIs, design changes, or restricted site access, you have grounds to seek a time extension and to argue that the LD clock should not run for owner-caused periods. This defense requires documentation. A paper trail of unanswered RFIs, change order requests, and schedule notices can be your best evidence.

Concurrent Delay

Where both parties contribute to a delay at the same time, Michigan courts may not award LDs to the owner for the concurrent period. The theory is that the owner cannot prove its own conduct was not responsible for the overrun. Establishing concurrent delay requires a detailed schedule analysis.

Waiver and Course of Conduct

If the owner knew about the contractor’s delayed schedule, accepted progress payments without objection, and never formally invoked the LD clause during the project, the owner may have waived the right to enforce it. Courts look at the parties’ conduct throughout the project, not just the language in the contract.

Penalty Clause Challenge

If the daily LD rate is grossly disproportionate to any harm the owner could reasonably have anticipated, challenge it. The burden is on the party seeking to avoid enforcement, but a clause set at an absurdly high amount gives you a legitimate argument.

Can a Michigan contractor fight a liquidated damages claim?

Yes. Common defenses include owner-caused delay, concurrent delay, waiver, and a challenge to the clause as an unenforceable penalty. Prevailing on any of these defenses typically requires contemporaneous documentation: RFI logs, change order requests, schedule updates, written notices, and meeting minutes. Contractors who document delays as they happen are in a far stronger position than those who try to reconstruct the record after the dispute begins.

How to Negotiate Liquidated Damages Clauses Before You Sign

Many contractors accept LD clauses without negotiating them. That is a mistake. Here is what you should address before you sign.

Ask for a cap.

Many sophisticated contractors negotiate a cap on total LD exposure, often expressed as a percentage of the contract price. A cap of 5% or 10% of the contract price significantly limits your worst-case outcome.

Define substantial completion clearly.

The contract should specify exactly what events constitute substantial completion and when the LD clock stops. Tie it to a specific, objective milestone, not a judgment call by the owner or architect.

Add an owner delay credit.

If the owner can assess LDs for contractor delays, the contractor should have the right to a time extension and, ideally, a day-for-day credit against LDs for any period of delay attributable to the owner.

Push for mutual delay provisions.

If the owner demands bonus or penalty provisions, make them mutual. If you finish early, you get a bonus. If the owner causes delay, the LD clock stops.

Identify excusable delay events explicitly.

Force majeure, supply chain disruptions, labor shortages, and government-ordered work stoppages should all be listed as events that extend the contract time without triggering LDs.

How should a Michigan contractor negotiate a liquidated damages clause?

Before signing, a contractor should seek a cap on total LD exposure (typically 5 to 10 percent of the contract price), a clear definition of substantial completion, explicit excusable delay provisions, and a day-for-day credit for owner-caused delays. At minimum, the contractor should understand the maximum financial exposure the clause creates before accepting the project at the proposed margin.

Contractor Takeaway: The Bottom Line

Liquidated damages clauses are not going away. They can often be found in many commercial construction projects in Michigan and are especially common on public projects in Wayne County, Oakland County, Macomb County, and Washtenaw County, where owners often want a defined daily remedy for delay. The question is not whether you will encounter them. It is whether you are prepared.

Three things give you the best protection. First, read and negotiate the clause before you sign. Know your maximum exposure going in. Second, document every delay event, every RFI, every change, and every notice as it happens. Third, if an owner asserts an LD claim that does not match the facts, get a Michigan construction attorney involved early. The sooner you engage counsel, the more options you have.

Frequently Asked Questions

Before you sign your next construction contract, make sure you understand your maximum LD exposure. A contract review now costs far less than a damages dispute later. Contact Szura & Delonis, PLC to schedule a consultation.

This article is provided for general educational and informational purposes only. It does not constitute legal advice and does not create an attorney-client relationship between the reader and Szura & Delonis, PLC. Michigan construction law involves complex statutory requirements and fact-specific analysis. Do not rely on this content as legal advice for your specific situation. If you have a time-sensitive construction law matter, consult a qualified Michigan construction attorney immediately.

About the Author

Richard M. Delonis is a Michigan construction, business, and real estate attorney at Szura & Delonis, PLC (Southfield/Metro Detroit). He advises construction managers, general contractors, subcontractors, and property owners on lien rights, collections strategy, contract disputes, and project-risk issues.

The good news is that Michigan law provides substantial protection for condominium board members who govern responsibly. The centerpiece of that protection is the Business Judgment Rule, codified in the Michigan Nonprofit Corporation Act, MCL 450.2541, which governs every incorporated Michigan condominium association. Understanding how that rule works, what it requires from board members to activate its protection, and where its limits lie is essential knowledge for a Michigan board member.

For condominium associations across Michigan, the governing documents that run the community do not age gracefully on their own. Serving on a Michigan condominium association’s board of directors is a genuine act of community service. Board members in Troy, Bloomfield Hills, Novi, Southfield, Dearborn, and condominium communities throughout Oakland County, Macomb County, and Wayne County volunteer their time, navigate difficult personalities, manage complex financial decisions, and absorb the stress of governance for no compensation. What many of them may not fully understand, until a co-owner files a lawsuit, is that volunteer service does not automatically confer immunity from personal liability.

The good news is that Michigan law provides substantial protection for condominium board members who govern responsibly. The centerpiece of that protection is the Business Judgment Rule, codified in the Michigan Nonprofit Corporation Act, MCL 450.2541, which governs every incorporated Michigan condominium association. Understanding how that rule works, what it requires from board members to activate its protection, and where its limits lie is essential knowledge for a Michigan board member.

Why Michigan Condo Board Members Worry About Personal Liability — and Why That Worry Is Warranted

The liability anxiety that board members experience is not unfounded. Michigan condominium associations are frequently the targets of co-owner litigation — challenges to enforcement decisions, disputes over assessment levies, claims of selective enforcement, allegations of fiduciary breach, and challenges to the board’s authority to act. Because the association is a Michigan nonprofit corporation and its board members are its decision-makers, individual directors can find themselves named personally in lawsuits that arise from governance decisions they made in good faith under genuine time pressure.

The stakes extend beyond money. A lawsuit, even a meritless one, consumes board time, strains community relationships, and can deter future volunteers from serving. In Southeast Michigan’s densely developed condominium markets, where associations in communities like Bloomfield Township, Livonia, and Grosse Pointe regularly confront contentious enforcement and collection situations, this is not a theoretical risk.

The Legal Foundation: MCL 450.2541 and the Michigan Nonprofit Corporation Act

The Three-Part Standard of Care Every Director Must Meet

MCL 450.2541 provides the governing standard of care for Michigan condominium and HOA board members, requiring each director to act in good faith, with the care of an ordinarily prudent person in a like position, and in a manner reasonably believed to be in the best interests of the corporation. These three elements work together. A decision can be wrong, even costly, and still be protected if the director who made it acted in good faith, exercised reasonable care in reaching it, and genuinely believed it served the association’s interests. Michigan courts will refrain from substituting their judgment for a board’s reasonable judgment, and that judicial restraint is the practical meaning of the Business Judgment Rule in the condominium context.

The Business Judgment Rule as a Defense

The Business Judgment Rule is codified in MCL 450.2541(2), which provides that in discharging their duties, a director or officer is entitled to rely on information, opinions, reports, or statements prepared or presented by: one or more directors, officers, or employees of the corporation whom the director reasonably believes to be reliable and competent; legal counsel, public accountants, engineers, or other persons as to matters the director reasonably believes are within their professional or expert competence; or a committee of the board of which the director is not a member, if the director reasonably believes the committee merits confidence.

The practical consequence of this provision is significant: a board that engages counsel, reviews a professional’s report, and then acts on that professional guidance has a powerful statutory defense against a claim that it breached its duty of care. The rule does not guarantee the decision was correct. It protects the process by which the decision was made.

The Reliance Doctrine: Why Consulting Counsel Matters More Than You Think

A board of directors that relies on the opinion of counsel will likely have the protections of the Business Judgment Rule and be deemed to have acted in good faith and in the best interests of the association. In contrast, a board that arbitrarily makes decisions without the opinion of legal counsel subjects itself to potential liability. This is not merely theoretical. In enforcement disputes, assessment challenges, and governance controversies litigated in the Oakland County Circuit Court and Wayne County Circuit Court, the presence or absence of documented legal consultation can be outcome-determinative on the liability question.

Under MCL 450.2541(3), a director is not entitled to rely on information if they have knowledge concerning the matter that makes such reliance unwarranted. This qualification is critical: the reliance protection is not a blank check. A board member who consults counsel but then proceeds in a manner directly contrary to that advice, or who relies on obviously inadequate information, cannot invoke the protection of the rule.

MCL 450.2209: The Articles of Incorporation Liability Shield

Eliminating Personal Liability Through the Articles of Incorporation

The Business Judgment Rule is a defense — it must be raised in litigation and proven through the facts. MCL 450.2209 offers something more structural: a provision in the association’s Articles of Incorporation that can eliminate personal monetary liability for board members before any lawsuit is ever filed.

MCL 450.2209 permits the articles of incorporation to contain a provision that eliminates a director’s liability for monetary damages unless the director received a financial benefit they were not entitled to, intentionally inflicted harm on the corporation or its members, declared an improper distribution, committed an intentional criminal act, or was liable for attorney’s fees as a result of a bad-faith derivative action. The 2015 amendments to the Michigan Nonprofit Corporation Act expanded the permissible exculpation language that may be included in a nonprofit corporation’s articles of incorporation, including by removing the former gross-negligence carveout from the director-liability provision in MCL 450.2209(1)(c). 

The Five Exceptions That Cannot Be Eliminated

Even the strongest articles of incorporation provision cannot eliminate liability for: receiving an unauthorized financial benefit; intentionally inflicting harm on the corporation or its members; declaring an improper distribution; committing an intentional criminal act; or being found liable for attorney fees in a bad-faith derivative action. These five exceptions represent the floor of accountability that Michigan law preserves regardless of what the governing documents say. Notably, they require intentional or clearly wrongful conduct. Ordinary governance mistakes, even poor ones, are not in this category.

Association Assumption of Liability: MCL 450.2209(1)(e)

MCL 450.2209(1)(e) provides that a condominium association may assume liability for all acts or omissions of a volunteer director, volunteer officer, or other volunteer, provided the volunteer was acting within the scope of their authority, their conduct did not amount to gross negligence or willful and wanton misconduct, and their conduct was not an intentional tort. This provision allows the association, rather than the individual board member, to bear the financial consequences of covered governance decisions. It is one of the most powerful liability tools available to Michigan condominium associations, and it requires an express provision in the Articles of Incorporation to be effective.

Why Volunteer Status Is Critical to These Protections

The protections available under MCL 450.2209(1)(c) and (e) extend only to volunteer directors and officers — those who do not receive anything of more than nominal value for serving. Michigan associations considering any form of board member compensation must understand that even modest compensation may cost a director their eligibility for these statutory protections. This is a governance decision that warrants consultation with Michigan condominium counsel before implementation.

What the Business Judgment Rule Protects — and What It Does Not

Decisions the Rule Shields

The Business Judgment Rule provides meaningful protection for a wide range of ordinary governance decisions: selecting contractors and vendors; approving budgets and assessments; setting enforcement priorities; interpreting ambiguous bylaw provisions; and managing common element repairs. In each of these areas, courts applying Michigan law have been reluctant to second-guess board decisions made through a defensible process.

Where the Rule Breaks Down: Ultra Vires Acts and Bad Faith

Michigan courts have held that acts of directors that are ultra vires (beyond the power of the corporation) may subject a director to liability, as they may not be in good faith, reasonably prudent, and in the best interests of the corporation. Courts can apply this principle to condominium and HOA directors and potentially hold them liable for failing to comply with the plain language of their governing documents, as such actions are beyond the power of the nonprofit corporation. This is a critical limitation: a board that acts outside the authority granted by the Master Deed, Bylaws, or Michigan Condominium Act cannot invoke the Business Judgment Rule to cover that action. The rule presupposes that the board is exercising legitimate authority.

The Rule Does Not Protect Boards That Ignore Their Own Documents

This is the most practically important limitation for Southeast Michigan boards to internalize. A board that imposes a fine without a hearing, records a lien on fines that its Bylaws do not authorize treating as assessments or amends its governing documents through a board vote alone rather than a co-owner vote under MCL 559.190(2) is not exercising business judgment. It is exceeding its authority. The Business Judgment Rule does not apply to ultra vires acts, regardless of the board’s good intentions.

Practical Governance: How Michigan Boards Earn Business Judgment Rule Protection on Every Decision

Document Your Deliberations

The Business Judgment Rule protects process, and process must be demonstrable. Board meeting minutes should reflect that contested or significant decisions were discussed, that relevant information was reviewed, and that the board considered the association’s interests. Sparse minutes, or no minutes at all, are a litigation disadvantage that the Business Judgment Rule will be hard pressed to overcome.

Consult the Right Experts

Act Within the Scope of Your Authority

Before the board takes any significant action, the threshold question is always: does our authority to take this action exist in the governing documents or Michigan law? If the answer is not clearly yes, seek legal guidance before acting. An ultra vires action is not protected by the Business Judgment Rule and may expose individual board members to personal liability regardless of what the Articles of Incorporation say.

Avoid Conflicts of Interest

A board member with a personal financial interest in a board decision should be recused from that vote, and the recusal should be documented in the minutes. Interested-party transactions are scrutinized in litigation, and the failure to recuse — particularly in a smaller association where board membership is limited — is a fact pattern that undermines the good-faith element of the Business Judgment Rule analysis.

Enforce Consistently

Selective enforcement is a common basis for co-owner claims against Michigan condominium boards. A board that enforces a rule against one co-owner but ignores the same violation by another opens itself to claims of discriminatory enforcement, breach of fiduciary duty, and potential Fair Housing Act issues. Documented, consistent enforcement is both a governance best practice and a liability protection strategy.

Directors & Officers Insurance: The Layer of Protection the Statute Does Not Provide

The statutory protections under the Michigan Nonprofit Corporation Act address the outcome of a lawsuit — whether a board member is personally liable for a judgment. D&O insurance addresses the process — who pays for the lawyers while the lawsuit is pending. Both are necessary. A board member who wins a lawsuit after two years of litigation has still experienced two years of litigation. Adequate D&O coverage, reviewed annually with the association’s insurance professional, is the practical complement to the legal protections the statute provides.

Best Practices for Southeast Michigan Boards 

Review your association’s Articles of Incorporation against the current MCL 450.2209 framework, particularly if the Articles predate the 2015 amendments to the Michigan Nonprofit Corporation Act. If your Articles do not contain current liability limitation and association assumption of liability provisions, a straightforward amendment can provide substantially expanded protection for every board member who serves your association going forward. Ensure your D&O coverage is adequate and current. Document every significant board decision with minutes that reflect the deliberative process. Consult Michigan condominium counsel before significant enforcement actions, assessment levies, or governance decisions where the board’s authority is anything less than clear. And enforce your governing documents consistently; the Business Judgment Rule’s good-faith requirement and the practical risk of selective enforcement claims both point toward the same governance discipline.

Frequently Asked Questions

Can a Michigan condo board member be personally sued for a governance decision?

Yes. Co-owners can and do name individual board members personally in lawsuits challenging governance decisions. The Business Judgment Rule under MCL 450.2541 and liability limitation provisions under MCL 450.2209 provide important defenses, but those defenses must be properly activated through good-faith process, documented deliberation, and Articles of Incorporation that contain the applicable liability protection provisions. Board members who act in good faith, within their authority, and with appropriate professional guidance are well-protected. Those who act arbitrarily, in bad faith, or beyond the scope of their authority are not.

What is the difference between the Business Judgment Rule and Directors and Officers insurance?

The Business Judgment Rule under MCL 450.2541 is a legal defense that, if successfully raised, protects board members from being held liable for governance decisions made in good faith and with reasonable care. D&O insurance is a financial product that pays the cost of defending a lawsuit, such as attorney fees, settlement amounts, and judgments,  regardless of whether the Business Judgment Rule ultimately applies. Every Michigan condo board needs both: the rule protects the outcome; the insurance protects the board’s finances during the process.

Does the Business Judgment Rule protect a board that made a bad financial decision?

Generally, yes — if the process was sound. A costly contractor selection, a miscalculated budget, or an ineffective repair strategy does not by itself create personal liability for board members who made the decision in good faith, gathered reasonable information, and genuinely believed the decision served the association’s interests. Michigan courts do not require boards to be right. They require boards to be reasonable. The rule breaks down when decisions are made in bad faith, without adequate information, outside the board’s authority, or in the face of clear conflicts of interest.

Do Michigan condo board members need to update their Articles of Incorporation to get liability protection?

Likely yes, if the Articles predate the 2015 amendments to the Michigan Nonprofit Corporation Act. Those amendments to MCL 450.2209 significantly expanded the scope of available liability protection. Associations whose Articles of Incorporation were filed before January 2015 may not reflect these expanded protections. A review by Michigan condominium counsel is the appropriate starting point.

What actions by a condo board member are NOT protected by the Business Judgment Rule?

The Business Judgment Rule does not protect conduct that is ultra vires, meaning that it is beyond the board’s legal authority under the governing documents or Michigan law. It also does not protect decisions made in bad faith, with clear conflicts of interest, or in deliberate disregard of professional advice. Separately, the liability limitation provisions of MCL 450.2209 expressly cannot eliminate liability for: receiving an unauthorized financial benefit; intentionally inflicting harm on the corporation or its members; declaring an improper distribution; committing an intentional criminal act; or being found liable for attorney fees in a bad-faith derivative action.

Disclaimer: This article is intended for general educational purposes only and does not constitute legal advice. The information provided does not create an attorney-client relationship. Michigan condominium board members, property managers, and associations with specific legal questions should consult qualified Michigan condominium and HOA counsel regarding their particular circumstances.

About the Author

Richard M. Delonis is a Michigan condominium and HOA lawyer at Szura & Delonis, PLC in Southfield (Metro Detroit). He advises association boards and community association managers on governance, rule enforcement, assessment collections, document amendments, and risk management, with a practical focus on helping boards reduce disputes and run defensible, well-documented processes.

The result is predictable: when payment falls through, the contractor discovers that the waiver they signed wiped out the very rights that would have forced payment.

Lien waivers are not mere formalities. Under Michigan’s Construction Lien Act (MCL 570.1101 et seq.), a signed lien waiver can permanently eliminate your right to file a construction lien, one of the most powerful payment tools available to Michigan contractors. Getting the waiver language right is not optional.

This guide explains what Michigan lien waivers actually release, the difference between conditional and unconditional waivers, how to read the forms GCs hand you at payment time, and what to do when you are pressured to sign something that does not protect you.

For immediate assistance reviewing a lien waiver or protecting your construction payment rights in Michigan, contact the Michigan construction attorneys at Szura & Delonis, PLC. We represent contractors, subcontractors, and suppliers throughout Oakland, Wayne, Macomb, Washtenaw, and Livingston Counties.

What Is a Lien Waiver Under Michigan Law?

A lien waiver is a written document in which a contractor, subcontractor, or supplier gives up — in whole or in part — their right to file a construction lien against the project property in exchange for payment or in anticipation of payment. Michigan’s Construction Lien Act (MCL 570.1115) governs how lien rights can be waived, modified, or released.

Lien waivers typically flow through the payment chain: an owner pays a general contractor and requires a lien waiver covering the full project or the current payment application. The GC, in turn, collects lien waivers from every subcontractor and supplier before passing payment downstream. Title companies and lenders also demand lien waivers at closing to confirm the property can transfer with a clean title.

The practical result is that lien waivers are ubiquitous on Michigan construction projects — and the pressure to sign them quickly, without review, is constant.

What a Lien Waiver Does — and Does Not — Release

This is the single most misunderstood aspect of lien waivers in Michigan construction. Many contractors believe that signing a lien waiver means they have given up all rights to pursue payment. That is not correct — unless the waiver language says so specifically.

A lien waiver releases your right to file a construction lien against the specific property. It does not automatically release: your breach of contract claim against the GC or owner, your quantum meruit claim for the reasonable value of work performed, your bond claim rights on public projects under Michigan’s Little Miller Act, your rights under the Michigan Builders Trust Fund Act (MCL 570.151 et seq.), or your right to sue for payment in court or arbitration.

However, many GC-drafted lien waivers may contain language that goes far beyond releasing lien rights. Phrases like “releases all claims,” “waives all rights against the owner and contractor,” or “discharges all claims arising out of the project” can release your breach of contract claim, your change order claims, and your retainage rights along with your lien rights.

⚠ Critical Warning: Always read the full text of every lien waiver before signing. A lien waiver that releases “all claims” or “all rights” is fundamentally different from one that releases only lien rights. The title “Lien Waiver” does not limit what the document actually releases — the operative language does. If you are unsure what you are giving up, do not sign until an attorney reviews the form.

The Four Types of Michigan Construction Lien Waivers

Michigan construction practice uses four categories of lien waivers. Understanding which one you are signing, and when each is appropriate, is essential to protecting your payment rights.

1. Conditional Partial Lien Waiver

A conditional partial waiver releases lien rights for a specific payment — and only upon actual receipt of that payment. If the payment is not made (for example, the check bounces or the wire transfer is reversed), the conditional waiver is void and your lien rights remain intact. The waiver covers only the portion of the contract value specified, not the full contract, retainage, or future work.

This is the safest type of lien waiver to sign during an ongoing project. Use it for progress payments covering work billed through a specific date or payment application.

2. Unconditional Partial Lien Waiver

An unconditional partial waiver releases lien rights for a specific payment amount, regardless of whether payment is actually received. Once signed, it is effective immediately, and Michigan courts have enforced unconditional waivers even when the contractor never received the money.

Never sign an unconditional partial lien waiver before the corresponding payment has cleared. Never sign it in exchange for a promise of payment that has not yet been fulfilled.

3. Conditional Final Lien Waiver

A conditional final waiver releases all remaining lien rights for the entire project, but conditioned on receipt of the specified final payment. Once the final payment is received, all lien rights are released permanently. This is the appropriate document to use at project completion when receiving final payment.

4. Unconditional Final Lien Waiver

An unconditional final waiver releases all lien rights for the entire project immediately upon signing; regardless of payment. Signing an unconditional final waiver without receiving full final payment, including retainage, may eliminate every lien remedy you have.

Unconditional final waivers should be signed only after full final payment , including all retainage, has been confirmed received in cleared funds.

Side-by-Side Comparison: Conditional vs. Unconditional Waivers

Michigan’s Construction Lien Act: The Statutory Framework for Waivers

Michigan’s Construction Lien Act (MCL 570.1101 et seq.) establishes the framework within which lien rights can be waived. The key provisions every contractor must understand are outlined below.

MCL 570.1115 — Waiver of Lien Rights

MCL 570.1115 governs the waiver and modification of lien rights under the Construction Lien Act. The statute permits lien rights to be waived by written instrument, but the waiver must be clear and express. Courts applying this provision have distinguished between waivers that clearly and unambiguously release lien rights and language that is ambiguous as to what was intended to be released. Ambiguity in a lien waiver is generally construed against the party seeking to enforce the waiver.

MCL 570.1110 — Sworn Statements and Their Relationship to Lien Waivers

Michigan’s Construction Lien Act requires a contractor or subcontractor to provide a sworn statement in specified circumstances. The sworn statement allows the owner to verify which subcontractors are owed money and to protect themselves from paying the GC while subcontractors remain unpaid.

The sworn statement mechanism interacts critically with lien waivers: when an owner pays the GC and collects lien waivers from subcontractors based on the sworn statement, those subcontractors’ lien rights as against the owner are implicated.

MCL 570.1110(7) — Owner’s Duty to Withhold Upon Receipt of Notice

After a sworn statement is provided, the owner or lessee may withhold, and upon written demand from the contractor shall withhold, from amounts due or to become due for work already performed an amount sufficient to pay sums due to subcontractors, suppliers, or laborers shown by the sworn statement or due to lien claimants who have provided a notice of furnishing. From the amount withheld, the owner or lessee may directly pay those claimants. Because the statutory framework is fact-sensitive, contractors should evaluate the sworn statement, any notice of furnishing, and the payment chain before signing a waiver that may affect available remedies.

Practical Note — The Sworn Statement Leverage Point: Before signing any lien waiver, confirm whether the GC has submitted a sworn statement to the owner listing you as a subcontractor owed payment. If the owner has received the sworn statement and disbursed funds to the GC without ensuring your payment, the owner may have independent liability. Do not sign a lien waiver that releases the owner before evaluating this issue.

Partial vs. Final Lien Waivers: What Each Covers on a Michigan Project

On a typical Michigan commercial construction project with monthly payment applications, lien waivers flow in two streams: progress payment waivers that accumulate through the project, and a final lien waiver at project completion. Understanding exactly what period and what dollar amount each waiver covers is critical to ensuring you are not releasing more than you intend.

Progress Payment Waivers: Protecting Retainage and Future Work

Every progress payment waiver you sign should include three specific protections:

1. Billing period identification. The waiver should cover only the specific payment application or billing period, identified by date. “Work performed through October 31, 2025” is proper. “All work performed on the project to date” may be broader than you intend if it encompasses disputed change orders or work performed after the stated date.
2. Retainage exclusion. The waiver should expressly exclude retainage. Retainage is earned. It is money you are owed but not yet being paid. Releasing lien rights for retainage in a progress payment waiver is a common and costly mistake. The waiver should state: “Excepting retainage in the amount of $[X] not yet due and payable.”
3. Conditionality. The waiver should be conditional. “This waiver is conditioned upon and effective only upon receipt of payment in the amount of $[X]” is the essential protective language.

A progress payment waiver that lacks these three elements: billing period specification, retainage exclusion, and conditionality, is a document that should not be signed without modification or attorney review.

Final Lien Waivers: When You Sign One and What It Covers

A final lien waiver releases all remaining lien rights for the entire project. On a Michigan construction project, a final lien waiver should not be signed until three conditions are confirmed:

1. Full final payment has been received — all invoices paid in cleared funds.
2. All retainage has been released and received.
3. All disputed change orders have been resolved, paid, or expressly carved out of the waiver.

If any of these three conditions are not met, the final waiver should be conditional, not unconditional, and should expressly identify any outstanding amounts or disputed items that are excluded from the waiver.

Example Scenario: A Pontiac-based framing subcontractor completes a large Oakland County apartment complex. At final closeout, the GC presents an unconditional final lien waiver along with a check for the final payment. The subcontractor has $18,000 in disputed change orders that have not been paid or formally denied. The subcontractor signs the unconditional final waiver before confirming the check has cleared and without carving out the change order dispute. The check is returned for insufficient funds three days later. The subcontractor’s lien rights, which would have secured recovery of both the final payment and the change orders, may be gone. The remaining remedies are a breach of contract claim and a potential Builders Trust Fund Act complaint, both more expensive and uncertain than lien foreclosure would have been.

The Bounced Check Problem: What Happens to Your Lien Waiver?

One of the most persistent misconceptions in Michigan construction is that a bounced check automatically voids a lien waiver. The answer depends entirely on whether the waiver was conditional or unconditional.

If you signed a conditional lien waiver: “effective only upon receipt of payment in the amount of $[X]”, a bounced check means the condition was never satisfied. The waiver never became effective. Your lien rights remain intact, subject to the 90-day filing deadline from last furnishing under MCL 570.1111.

If you signed an unconditional lien waiver, a bounced check may not restore your lien rights. The waiver may be deemed by a court to have been effective the moment you signed it. Whether you can pursue fraud, misrepresentation, or failure of consideration arguments to set aside the waiver is a fact-specific legal question that requires immediate attorney consultation, and the outcome is far less certain than a conditional waiver would have been.

⚠ The Bounced Check Scenario — Do This Immediately: If you signed a lien waiver and the corresponding payment has not cleared: (1) immediately calculate your 90-day lien deadline from your last furnishing date; (2) determine whether your waiver was conditional or unconditional; (3) if conditional, prepare to file your lien immediately and do not wait for the payment dispute to resolve; and (4) contact a Michigan construction attorney the same day. The window between a bounced check and an expired lien deadline closes fast.

GC-Drafted Lien Waiver Forms: The Language to Watch For

Some general contractors in Michigan may present their own lien waiver forms, not the neutral statutory forms, designed to maximize the scope of the release they obtain from subcontractors. Being able to identify problematic language before you sign is a core business skill for any Michigan contractor.

Language That Expands the Release Beyond Lien Rights

The following phrases, when present in a lien waiver, may release rights well beyond your lien claim. Each one deserves careful scrutiny before signing:

• “Releases all claims, demands, and causes of action” — may release your breach of contract claim, change order claims, and delay claims.
• “Waives all rights against the owner, general contractor, and their sureties” — potentially releases your bond claim on a public project.
• “Full and final settlement of all amounts due or to become due” — may release future invoices for work not yet billed.
• “Arising out of or related to the project” — a broad scope that could capture disputes not yet known at signing.
• “Including claims for extras, changes, and additional work” — directly releases unpaid change orders.

None of these phrases necessarily makes the waiver invalid. But each one expands the scope of what you are giving up. Before signing a form that contains any of this language, either add a handwritten carve-out for specific disputed amounts or excluded claims, or request that the GC use a form that limits the release to lien rights only.

How to Add a Carve-Out for Disputed Amounts

A carve-out is a handwritten or typed exception added to the waiver form before signing. A proper carve-out identifies the specific excluded amount and the basis for exclusion. The following is sample language that can be adapted for use:

“Notwithstanding the foregoing, this waiver expressly excludes and does not release: (a) retainage in the amount of $[X] not yet due and payable; (b) Change Order Request No. [X] dated [date] in the amount of $[X], which is currently disputed; and (c) any claims arising from events occurring after [date].”

Have the GC’s project manager initial the carve-out before you sign. Keep a copy. If the GC flatly refuses to allow a carve-out for a legitimate disputed amount, that refusal may itself be a significant warning sign that the waiver is being used to defeat a valid claim rather than simply administer a payment.

The Timing Trap: Never Sign an Unconditional Waiver Before Funds Clear

The most common way Michigan contractors lose lien rights is by signing an unconditional lien waiver in the same transaction as receiving a check, but before confirming the check has cleared. This sequence is standard GC practice: hand the sub the check and the unconditional waiver at the same time and create pressure to sign both before leaving the room.

The correct practice: accept the check, sign a conditional lien waiver stating it is effective only upon receipt of cleared funds, and wait for the check to clear before releasing any unconditional waiver. A GC who refuses to accept a conditional waiver and insists on an unconditional waiver before funds clear should be treated as a possible payment risk.

Lien Waivers and Retainage: How to Protect Earned Retainage Throughout the Project

Retainage is the percentage of each progress payment (typically 5 to 10 percent on Michigan commercial projects) that the owner or GC holds back until substantial completion. On a $500,000 subcontract, retainage of 10 percent means $50,000 of earned money is withheld throughout the project. That money is owed to you. It must be protected in every lien waiver you sign.

The standard approach is straightforward: every progress payment waiver should contain an express exclusion for outstanding retainage. When the project reaches substantial completion and retainage is released, collect retainage payment, confirm funds have cleared, then sign a conditional partial lien waiver covering the retainage amount specifically.

Never include retainage in the release amount of a progress payment lien waiver. Never sign a final lien waiver while retainage remains outstanding, unless the final lien waiver is specifically conditioned on receipt of retainage as part of the final payment amount.

Retainage + Lien Rights — The Clock Keeps Running: Your 90-day lien deadline under MCL 570.1111 runs from your last day of furnishing labor or materials. Not from the date retainage is supposed to be released. Do not let a retainage dispute push you past your lien deadline. If retainage is not released within a reasonable period after substantial completion, file a construction lien for the retainage amount and pursue payment through lien foreclosure. Waiting for the retainage release process to play out is not a reason to miss the lien deadline.

Lien Waivers and Bond Claims: Does Signing a Waiver Kill Your Bond Claim?

On public construction projects in Michigan (state, county, school, and municipal work) the property itself cannot be liened. Payment protection comes instead from payment bonds required under Michigan’s Little Miller Act (MCL Act 213 of 1963). On private projects, GCs and owners sometimes also require payment and performance bonds.

Does signing a lien waiver eliminate your bond claim rights? The answer depends entirely on the waiver language. A lien waiver that releases only “lien rights” under the Michigan Construction Lien Act does not release a bond claim, because a bond claim is a separate legal remedy against the surety, but not a right against the real property.

A lien waiver that releases “all claims against the owner, contractor, and their sureties” may release your bond claim. A waiver covering “all rights under the project” may be interpreted to include bond rights. On any public project or bonded private project, have a construction attorney review the lien waiver language before signing. The combination of releasing lien rights (which did not exist anyway on a public project) and bond rights (your only real remedy) through a single broadly drafted document is a trap that can cost a subcontractor on a Michigan public project.

Signed Under Pressure: Can You Challenge a Lien Waiver in Michigan?

Michigan contractors report being told: “Sign the waiver or we won’t process your payment” — or more aggressively, “Sign or you are off this job.” Does economic pressure constitute duress sufficient to void a lien waiver in Michigan?

Legal duress, the kind that can void a contract under Michigan law, requires more than hard bargaining or economic pressure. Michigan courts have held that the threat must be wrongful or unlawful and must leave the party with no reasonable alternative. A GC conditioning payment on a lien waiver, while unfair, may not meet the threshold for legal duress sufficient to void the waiver in court.

The practical implication: do not sign an improper lien waiver intending to challenge it later on duress grounds. The better approach is to protect yourself before signing. Add carve-outs, use conditional language, and refuse to sign unconditional waivers for amounts not yet received. After-the-fact challenges to signed lien waivers are expensive and very uncertain.

AIA Forms and Lien Waivers on Michigan Projects

On projects using AIA contract documents, lien-waiver practice usually arises through the payment-application and closeout provisions rather than through a standalone statutory form. AIA G702 and G703 are payment-application forms; they are not themselves lien waivers. Under AIA A201-2017, progress-payment applications may be supported by data the Owner or Architect require, including releases and waivers of liens from subcontractors and suppliers, and § 9.10.2 expressly provides that final payment and any remaining retainage do not become due until the contractor provides specified closeout materials and, if required by the owner, receipts, releases, and waivers of liens, claims, security interests, or encumbrances.

Michigan contractors working on AIA projects should review any lien waiver exhibit or addendum at the time of contract execution, not at the first payment application. Negotiating waiver language before the project starts is easier than fighting over it during a live payment dispute.

What to Do When You Are Presented With a Lien Waiver Form You Should Not Sign

The practical scenario: you are at the GC’s office to pick up a check. The project manager hands you an unconditional final lien waiver that releases all claims, includes retainage not yet paid, and waives bond rights, or any variation of that situation. The following protocol applies:

1. Do not sign under time pressure. “I need to review this with my attorney” is a complete and appropriate response. A reasonable GC will likely allow 24–48 hours for review. A GC who refuses is creating a pressure situation that itself may warrant immediate legal consultation.
2. Identify what you are being asked to release: lien rights only, or all claims? What billing period? Does it include retainage? Does it release bond claims?
3. Identify what you are receiving in exchange: a specific check amount, a wire transfer, or a promise of future payment?
4. If the payment is by check, sign only a conditional waiver — effective upon receipt of cleared funds — and note the check number on the waiver.
5. Add a handwritten carve-out for any outstanding retainage, disputed change orders, or unresolved claims before signing.
6. Keep a signed copy of every waiver you sign, including your handwritten modifications. Do not allow only the GC to retain a copy.
7. If the GC insists on an unconditional waiver or refuses your carve-out, call a Michigan construction attorney before proceeding. This is the scenario where legal advice is cheapest: before you sign, not after.

Common Michigan Contractor Lien Waiver Mistakes — and How to Avoid Them

After years of representing contractors in lien enforcement and payment disputes throughout Metro Detroit, the following lien waiver mistakes are not unusual:

• Signing an unconditional partial lien waiver in exchange for a check before the check clears. The most common and most preventable mistake.
• Signing a final lien waiver while retainage remains outstanding. Retainage is your money. Never release it before you have it.
• Signing a lien waiver form that releases “all claims” without reading the scope of the release. The title says “Lien Waiver.” The language may release your change order claims, delay claims, and everything else.
• Failing to carve out disputed change orders from progress payment waivers. Once signed without a carve-out, the argument that the waiver did not cover the disputed change order becomes much harder to make.
• Not keeping copies of signed waivers. When a payment dispute arises, the GC’s copy of what you signed may look different from what you remember signing.
• Signing a lien waiver on a public project without realizing it includes a release of bond claim rights — the only real payment remedy on a public job.
• Waiting until after the lien deadline to consult an attorney about a signed waiver. If the waiver was conditional and the condition was never met, you may still have lien rights, but only if you act before the 90-day clock expires.

Frequently Asked Questions About Michigan Construction Lien Waivers

What is the difference between a conditional and unconditional lien waiver in Michigan?

A conditional lien waiver is effective only upon actual receipt of the payment specified. If payment is not received, the waiver is void and lien rights are intact. An unconditional lien waiver is effective immediately upon signing, regardless of whether payment is received. Always use conditional waivers on Michigan construction projects unless payment has already been confirmed in cleared funds.

Can a GC in Michigan require me to sign a lien waiver before paying me?

A GC may ask for a lien waiver as part of the payment process, but Michigan law does not permit an advance contractual waiver of construction lien rights as part of the underlying improvement contract before work is performed. The safer practice is to use a conditional waiver tied to actual payment, rather than an unconditional waiver signed before funds are received.

Does a lien waiver in Michigan release my right to sue for breach of contract?

It depends on the waiver language. A waiver that releases only “lien rights” under the Construction Lien Act does not release your breach of contract claim. A waiver that releases “all claims” or “all rights against the contractor and owner arising out of the project” may release breach of contract claims. Read the operative language carefully — not just the title.

Can I add carve-outs to a lien waiver form a GC gives me?

Yes. A lien waiver is a contract. You may propose modifications before signing. Add a handwritten carve-out for retainage, disputed change orders, or any other amounts not included in the payment you are receiving. Have the GC’s representative initial your carve-out and keep a copy of the signed, modified form.

What happens if I sign a lien waiver and the check bounces?

If you signed a conditional lien waiver, the bounced check means the condition was never satisfied and the waiver is void. Your lien rights remain intact. If you signed an unconditional lien waiver, the bounced check does not automatically restore your lien rights, and you should consult a Michigan construction attorney immediately while your lien deadline is still open.

Does a lien waiver release my rights under Michigan’s Builders Trust Fund Act?

A standard lien waiver that releases only lien rights under the Construction Lien Act should not release your Builders Trust Fund Act rights under MCL 570.151. However, a broadly drafted waiver releasing “all claims arising out of the project” could potentially be interpreted to include trust fund claims. On any significant payment dispute, have an attorney review the waiver before signing.

Can I include unpaid retainage in a Michigan construction lien even after signing progress payment waivers?

Yes — provided your progress payment waivers expressly excluded retainage, which they should have. If you properly carved retainage out of each progress payment waiver, your lien rights for retainage remain intact. File the lien for the retainage amount within 90 days of your last furnishing under MCL 570.1111.

I signed a lien waiver on a public project and still have not been paid. What are my options?

On a public project, the real property cannot be liened, so the lien waiver may have released rights you did not have anyway. The critical question is whether the waiver also released your bond claim rights under Michigan’s Little Miller Act (MCL Act 213 of 1963). If the waiver language is limited to “lien rights,” your bond claim may still be viable, subject to its own strict notice and filing deadlines. Consult a Michigan construction attorney immediately if you are unpaid on a public project.

How long do I have to file a lien in Michigan if I realize my lien waiver was improper?

The 90-day lien deadline under MCL 570.1111 runs from your last furnishing regardless of any waiver dispute. If your waiver was conditional and the condition was not met, you must file within 90 days of last furnishing. Do not wait for the payment dispute to resolve before filing. The lien deadline does not pause during negotiations or payment disputes.

What should a proper Michigan lien waiver form include?

A proper Michigan construction lien waiver should include: (1) the claimant’s name and address; (2) the project name and address; (3) the specific payment amount being released; (4) the billing period or date through which the waiver applies; (5) an express conditionality provision for conditional waivers; (6) an express exclusion of retainage not yet paid; (7) a carve-out for any disputed claims or change orders; and (8) the date and signature of the claimant.

Protect Your Lien Rights Before You Sign — Contact Szura & Delonis, PLC

A lien waiver is one of the most consequential documents a Michigan contractor signs on any project. Sign the wrong form, at the wrong time, without the right carve-outs, and months of work, material costs, and retainage can disappear permanently, with no lien deadline to save you.

At Szura & Delonis, PLC, our Michigan construction law attorneys help contractors, subcontractors, and suppliers throughout Oakland, Wayne, Macomb, Washtenaw, and Livingston Counties understand what they are signing before they sign it, and protect their payment rights through lien enforcement when payment is withheld.

If you have questions about a lien waiver you have been asked to sign, need to review your payment documentation before a project closeout, or are facing a payment dispute involving a prior lien waiver, call us at (248) 716-3600 or contact us online. We respond quickly because construction payment disputes do not wait.

This article is provided for general educational and informational purposes only. It does not constitute legal advice and does not create an attorney-client relationship between the reader and Szura & Delonis, PLC. Michigan construction law involves complex statutory requirements and fact-specific analysis. Do not rely on this content as legal advice for your specific situation. If you have a time-sensitive construction law matter, consult a qualified Michigan construction attorney immediately.

About the Author

Richard M. Delonis is a Michigan construction, business, and real estate attorney at Szura & Delonis, PLC (Southfield/Metro Detroit). He advises construction managers, general contractors, subcontractors, and property owners on lien rights, collections strategy, contract disputes, and project-risk issues.

The result is that a significant number of Michigan condominium communities in Oakland County and Wayne County are operating under governing documents that are legally outdated, internally inconsistent, or simply inadequate for the association’s current needs. For those Boards that recognize this problem and want to act responsibly, this will guide you through the legal process.

Why Michigan Condominium Bylaw Amendments Fail — and What the Law Actually Requires

How do you legally amend Michigan condominium bylaws? Amending Michigan condominium bylaws requires a two-thirds affirmative vote of all co-owners entitled to vote under MCL 559.190(2). The amendment must be preceded by at least 10 days’ written notice to co-owners, followed by recording of the executed amendment with the county Register of Deeds and delivery of a copy to every co-owner. In certain circumstances, first mortgagee approval is also required under MCL 559.190a.

The most common reason bylaw amendment efforts fail in Michigan is also the most preventable: boards either underestimate the legal complexity of the process or attempt to shortcut it. A board vote alone cannot amend material condominium bylaws — full stop. The Michigan Condominium Act, MCL 559.101 et seq., is unambiguous on this point, and Michigan courts willy enforce the statutory requirements regardless of the association’s good intentions or the practical urgency of the amendment.

Understanding the Document Hierarchy: What You’re Actually Amending

Before initiating any amendment process, boards must clearly identify which document they intend to amend. Each tier of the governing document hierarchy carries its own amendment procedure, legal authority, and practical difficulty.

Articles of Incorporation

The association’s Articles of Incorporation are filed with the Michigan Department of Licensing and Regulatory Affairs (LARA) and governed by the Michigan Non-Profit Corporation Act, MCL 450.2101 et seq. Amendments to the Articles require co-owner action pursuant to MCL 450.2611 and must be filed with LARA to become effective. Boards operating under older Articles, particularly those containing anti-lawsuit provisions or voting restrictions that create operational problems, should work with Michigan condominium counsel to update this foundational document as part of any comprehensive document overhaul.

Master Deed

The Master Deed is the primary recorded instrument establishing the condominium project. In metro Detroit, it is recorded with the Oakland County Register of Deeds, Macomb County Register of Deeds, or Wayne County Register of Deeds, as applicable, and its amendment requires the same co-owner approval process applicable to Bylaws under MCL 559.190(2). Amendments to the Master Deed that involve physical characteristics of the project carry additional requirements under MCL 559.190(7).

Condominium Bylaws

The Bylaws govern the day-to-day administration of the association, addressing everything from board elections and assessment authority to enforcement procedures and co-owner rights. Under MCL 559.153, bylaws governing administration of a condominium project must be recorded, and any amendments must likewise be recorded with the Register of Deeds pursuant to MCL 559.191(a). The Bylaws are the focus of most Michigan condominium amendment efforts, and can often be the subject of most amendment disputes.

Rules and Regulations: The Board’s Domain

Unlike the Bylaws, Rules and Regulations are typically amended by a majority vote of the Board of Directors alone — no co-owner vote required — unless the Master Deed or Bylaws specify otherwise. This is a meaningful distinction: boards that want to address specific operational issues quickly may be able to do so through the Rules without a full bylaw amendment campaign. However, Rules cannot exceed the authority granted by the recorded documents and cannot impose greater restrictions than the Bylaws themselves authorize.

The Legal Framework: MCL 559.190 and the Material vs. Non-Material Distinction

Can a Michigan condo board amend the bylaws without a co-owner vote? A Michigan condominium board may amend governing documents without a co-owner vote only if the amendment does not materially alter or change the rights of co-owners or mortgagees, and only if the condominium documents contain a specific reservation of that amendment authority. Under MCL 559.190(1), non-material amendments, such as technical corrections or minor administrative updates, may proceed by board action alone where the reservation exists. Any amendment that materially affects co-owner rights requires the full 2/3 co-owner vote under MCL 559.190(2).

Non-Material Amendments: Board Authority with Proper Reservation

MCL 559.190(1) provides that condominium documents may be amended without co-owner or mortgagee consent if the amendment does not materially alter or change the rights of a co-owner or mortgagee, provided the documents contain a reservation of the right to amend for that purpose. In practice, this non-material amendment authority is narrow and boards should approach it conservatively. Michigan courts will examine materiality disputes carefully, and a board that mischaracterizes a material amendment as non-material to avoid the co-owner vote faces serious legal exposure — including the invalidation of the purported amendment.

Material Amendments: The 2/3 Co-Owner Vote Requirement

Most condominium document amendments require an affirmative vote of two-thirds of co-owners entitled to vote as of the date of the notice calling for the vote, not merely two-thirds of those present at the meeting. This is a critical and frequently misunderstood distinction. For purposes of MCL 559.190, the affirmative vote of two-thirds of co-owners means two-thirds of all co-owners entitled to vote as of the record date for the vote. An association with 100 units needs 67 affirmative votes — not 67% of the 40 co-owners who showed up to the annual meeting.

Equally important: any condominium document provision that requires more than a two-thirds co-owner vote to amend the Master Deed, Bylaws, or Condominium Subdivision Plan is void and superseded by MCL 559.190(2). Boards operating under older documents that purport to require 75% or 80% co-owner approval for amendments are not legally bound by that higher threshold, because the statute controls. This is a provision that Michigan condominium counsel can identify and address as part of a document audit.

The One Amendment That Requires 100% Consent

MCL 559.190(4) requires unanimous co-owner and mortgagee approval to change or eliminate the percentage of value assigned to each unit for purposes other than voting. For practical purposes, this is an amendment that Michigan associations infrequently attempt, because unanimous consent across an entire condominium community is an extraordinarily high bar. Boards considering any reallocation of common expense obligations or percentage-of-value structures should consult Michigan condominium counsel before proceeding.

When Mortgagee Approval Is Also Required: MCL 559.190a’s Seven Triggers

When does a Michigan condo bylaw amendment require mortgagee approval? Under MCL 559.190a(9), first mortgagee approval is required for seven categories of amendments: termination of the condominium project; changes to unit percentage-of-value formulas; reallocation of maintenance responsibilities from the association to individual co-owners; changes affecting insurance requirements; amendments to special declarant rights; restriction or expansion of leasing rights; and amendments requiring each affected mortgagee’s consent under MCL 559.190(4). Outside these seven categories, first mortgagee approval is generally not required for Michigan condominium bylaw amendments.

Associations will most often encounter the mortgagee approval requirement when shifting maintenance responsibilities from the association to co-owners, or when modifying leasing restrictions. When mortgagee approval is required, after two-thirds of co-owners approve the amendment, the association must mail ballots to the mortgagees, who have 90 days to respond. A mortgagee’s failure to respond is counted as approval under the statute.

In practice, this means the mortgagee approval process is manageable for most associations — the 90-day waiting period is the primary burden. The association does not need two-thirds of mortgagees to affirmatively vote yes; it merely needs to avoid two-thirds voting no within the 90-day window. Associations must maintain copies of all notices, proofs of mailing, and returned ballots for two years following the control date under MCL 559.190a(8).

Step-by-Step: The Legally Compliant Amendment Process in Michigan

Step 1 — Determine What You’re Amending and Why

Begin with a clear audit of the existing documents against the association’s current operational needs and any applicable legal requirements. What specific provisions are inadequate? What legal standard — the Condominium Act, the Fair Housing Act, or the Michigan Non-Profit Corporation Act — requires the change? Is the amendment to the Bylaws, the Master Deed, or both? Can the issue be addressed through a Rules and Regulations amendment instead? These threshold questions shape the entire process.

Step 2 — Engage Michigan Condominium Counsel to Draft the Amendment

This step is not optional for any material amendment. A poorly drafted amendment, one that is internally inconsistent with existing provisions, technically defective, or that inadvertently affects co-owner rights beyond the board’s intent, can create more problems than it solves. Counsel will also identify whether the proposed amendment triggers any of the seven MCL 559.190a mortgagee approval requirements.

Step 3 — Provide Proper Notice to Co-Owners

Co-owners must be notified of proposed amendments not less than 10 days before the amendment is recorded. Your Bylaws may require a longer notice period for the meeting at which the vote will be taken (commonly 10 to 21 days) and the meeting notice requirements under your documents and MCL 450.2404 apply alongside the statutory 10-day pre-recording notice. The notice should include the proposed amendment text, the date and location of the vote, and a clear explanation of the co-owner approval threshold required.

Step 4 — Hold the Vote and Achieve the Required Threshold

The co-owner vote should be conducted at a properly noticed meeting of the association. Votes taken outside of a properly convened meeting, such as through a petition circulated among co-owners, may be invalid unless the Articles of Incorporation expressly authorize action by written consent under MCL 450.2407(1), and the specific requirements of that statute are fully satisfied. The board must document the vote carefully: the total number of co-owners entitled to vote, the number voting in favor, the number opposed or abstaining, and confirmation that the two-thirds threshold was achieved. If the vote is taken at a scheduled meeting, it is very likely that the solicitation of proxies from co-owners will be extremely important in order to achieve the two-thirds vote requirement.

Step 5 — Conduct the Mortgagee Ballot Process (If Required)

If the amendment falls within one of the seven MCL 559.190a categories, the association must identify all first mortgagees of record as of the control date (the date co-owners approved the amendment), mail ballots with the required statutory content within a reasonable period, and wait 90 days for mortgagee responses. Non-responses count as approvals. Maintain all proofs of mailing and returned ballots for the required two-year period.

Step 6 — Record the Amendment with the Register of Deeds

When does a Michigan condominium bylaw amendment become legally effective? A Michigan condominium bylaw amendment does not become legally effective upon co-owner vote — it becomes effective only when the executed amendment is recorded with the county Register of Deeds under MCL 559.191(a). For Southeast Michigan associations, this means recording with either the Oakland County Register of Deeds, Macomb County Register of Deeds, or the Wayne County Register of Deeds, as applicable. An amendment that has been voted upon but not recorded is not binding on co-owners and cannot be enforced by the association.

This recording requirement is not a formality: it is a legal prerequisite to enforceability. Boards that announce an amendment has “passed” and begin enforcing its provisions before recording are operating on legally infirm ground.

Step 7 — Deliver a Copy to Every Co-Owner

Once the amendment is recorded, MCL 559.191(b) requires that a copy of the recorded amendment be delivered to each co-owner in the condominium. Delivery by first-class mail to the address on file is standard practice, but the association may be able to e-mail a copy in certain circumstances. Retain proof of mailing. This distribution obligation is routinely overlooked by associations, particularly in larger communities, but it is a statutory requirement, not a courtesy.

Common Reasons Michigan Boards Pursue Bylaw Amendments

Significant revisions were made to the Michigan Condominium Act in 2001 and 2002, and associations whose governing documents have never been amended since that period could be operating under provisions that are out of compliance with current law. Additionally, condominium documents that predate 1988 may not comply with the Fair Housing Act as amended in that year, which extended federal non-discrimination protections to familial status. Other common amendment drivers include: adopting rental caps and short-term rental restrictions in response to the proliferation of Airbnb and VRBO activity; adding express attorney fee recovery provisions under MCL 559.206(b); reducing quorum thresholds to address chronic difficulty achieving a quorum at annual meetings; and expressly authorizing fines to be treated as assessments for lien purposes — an issue that, as the Michigan Court of Appeals has confirmed, cannot be assumed from silence in the governing documents.

Critical Pitfalls That Invalidate Michigan Condo Bylaw Amendments

What makes a Michigan condo bylaw amendment invalid? A Michigan condominium bylaw amendment is legally invalid if it was adopted by board vote alone without co-owner approval where a material amendment requires the 2/3 co-owner threshold under MCL 559.190(2); if it was voted upon outside a properly convened meeting without compliance with MCL 450.2407 or outside of the governing documents’ procedures for a vote without a meeting; if required mortgagee approval under MCL 559.190a was not obtained; or if the amendment was never recorded with the county Register of Deeds as required by MCL 559.191(a). Each of these defects may render the purported amendment unenforceable.

In Vidolich v Saline Northview Condominium Association, Mich. Ct. App. No. 334579 (Dec. 5, 2017), the Michigan Court of Appeals examined the limits of board authority to amend non-material provisions and confirmed that the materiality distinction under MCL 559.190 is applied. In Sawgrass Ridge Condominium Association v Alarie, Mich. Ct. App. No. 335144 (Jan. 9, 2018), the Court of Appeals dismissed a bylaw enforcement action entirely because the association had obtained co-owner ratification through a petition circulated outside a proper meeting — a procedure that failed to comply with the governing documents and MCL 450.2407. The enforcement action collapsed as a result. These cases are important reminders that procedural compliance is not merely about completing a checklist: it is the legal foundation upon which every subsequent enforcement action depends.

Best Practices for Southeast Michigan Boards and Property Managers

Conduct a governing document audit every five years, or immediately following any significant change in Michigan condominium law. Identify provisions that are legally outdated, internally inconsistent, or inadequate for your community’s current needs before an enforcement dispute exposes the gap. When you do amend, it may be best to do it comprehensively, because a piecemeal amendment that fixes one problem while leaving related provisions unreformed may create a new interpretive conflict. And engage Michigan condominium counsel at the outset, not after the vote is taken. The cost of proper legal guidance for a bylaw amendment project may be a fraction of the cost of defending an enforcement action that fails because the underlying amendment was procedurally defective.

Frequently Asked Questions About Condo Document Amendments

Your Governing Documents Are Only as Strong as the Process Behind Them.

A bylaw amendment that was voted on but never properly recorded is not an amendment, it is a potential liability. A provision your board has been enforcing for years may be legally unenforceable if the amendment that created it skipped a step. For condominium associations and property managers throughout Oakland County, Macomb County and Wayne County, the gap between what boards think their documents say and what Michigan courts will actually enforce is where disputes (and legal fees) are born.

Our Condominium & HOA Law Practice works with Southeast Michigan condominium associations and professional property managers to audit governing documents, draft and shepherd bylaw amendments through the full process, and ensure that every amendment your community adopts is legally sound from the co-owner vote through the Register of Deeds recording.

If your association is operating under documents that are outdated, internally inconsistent, or simply no longer adequate for your community’s needs — the time to act is before a dispute forces the issue.

About the Author

Richard M. Delonis is a Michigan condominium and HOA lawyer at Szura & Delonis, PLC in Southfield (Metro Detroit). He advises association boards and community association managers on governance, rule enforcement, assessment collections, document amendments, and risk management, with a practical focus on helping boards reduce disputes and run defensible, well-documented processes.

Disclaimer: This article provides general Michigan-oriented information for condominium association and HOA boards and is not legal advice. Associations should consult experienced legal counsel about their specific documents, facts, and options.

Super Lawyers® is a rating service that recognizes outstanding attorneys who have attained a high degree of peer recognition and professional achievement. Selection is based on a combination of independent research, peer nominations, and peer evaluations, and is limited to a small percentage of lawyers in each state.

Louis’s inclusion on the 2026 Michigan Super Lawyers® list reflects his ongoing commitment to representing physicians, group practices, and other healthcare providers in complex regulatory, licensure, and business disputes. Over the course of his career, he has focused on helping healthcare professionals navigate the legal and compliance challenges that come with practicing in one of the most highly regulated industries.

At Szura & Delonis, Louis advises and represents healthcare clients in matters involving:

• Medical license investigations and proceedings
• Healthcare fraud and False Claims Act concerns
• Stark Law and anti-kickback compliance
• Contract and business disputes involving healthcare practices

We believe this acknowledgment underscores our firm’s commitment to delivering practical, focused counsel to providers across Michigan.

For more information about Louis Szura’s practice or to discuss a healthcare law or licensure matter, please contact Szura & Delonis, PLC.

Michigan community association attorneys and board members are discovering, often the hard way, that artificial intelligence tools like ChatGPT, Google Gemini, and Microsoft Copilot are rapidly infiltrating day-to-day association governance. From drafting violation notices to summarizing board meeting minutes, AI is already being used in community associations across Wayne County, Oakland County, Macomb County, and every corner of the state. The question is no longer whether your association will use AI. The question is whether it will use AI well — or whether the first time your board confronts the legal consequences will be in the middle of a lawsuit.

This article addresses what every Michigan condominium board member, HOA board member, and community association manager needs to understand about AI: what the law actually requires of you, where the specific risks lie, and, importantly, why your association needs a written AI policy before the next violation letter goes out the door.

The AI Revolution Is Already Inside Your Association

What is AI, and why should my Michigan HOA or condo board care? AI tools like ChatGPT and Google Gemini are large language models that generate text by predicting the next most likely word — they do not “know” facts or verify accuracy. Michigan community association boards must care because these tools are already being used for governance tasks, and the legal consequences of unguided AI use, including fiduciary duty breaches, privilege waiver, and selective enforcement claims, can expose boards to significant liability.

It would be convenient to treat AI as a future problem. It is not. According to a May 2025 industry survey, about 71% of respondents across the community-association industry reported currently using AI for association-related tasks. Among the tools in use: ChatGPT, Google Gemini, Microsoft Copilot embedded in Microsoft 365, and purpose-built platforms like STAN AI and Vantaca’s HOAi — a platform that claims to generate annual budgets in under two minutes.

The technology is not inherently dangerous. A Stanford University study found that general-purpose AI hallucinates, meaning it generates confident, plausible-sounding, factually incorrect information, on 58 to 82 percent of legal queries. Purpose-built legal AI tools still produce errors more than 17 percent of the time. A January 2025 MIT Press–published study found that LLMs often overstate their confidence and may report very high confidence even when their answers are incorrect. These are tools your board members are already using, often without any policy framework, without any training, and without any understanding of the legal consequences.

The Fiduciary Duty Problem Under MCL 450.2541

Does using AI violate a Michigan board member’s fiduciary duty? Using AI without verification and human oversight can arguably violate a board member’s fiduciary duty of care under MCL 450.2541. A director who blindly relies on AI output to make governance decisions , particularly enforcement actions or policy interpretations, may fail the “ordinarily prudent person” standard. AI does not qualify as a professional expert under MCL 450.2541(2)(b), so reliance on AI does not trigger the statutory protection that reliance on an attorney or CPA provides.

Michigan’s Nonprofit Corporation Act sets the legal standard for every board member of a condominium or HOA. Under MCL 450.2541(1), a director must discharge duties in good faith, with the care an ordinarily prudent person in a like position would exercise, and in a manner reasonably believed to be in the best interests of the corporation. This is the duty of care: and AI use implicates it directly.

MCL 450.2541(2)(b) permits directors to rely on the opinion of legal counsel, public accountants, engineers, or other persons the director reasonably believes to be within that person’s professional competence. ChatGPT is not a person. It is not licensed. It carries no malpractice insurance and cannot be cross-examined. Reliance on AI output does not qualify for the statutory protection that reliance on professional counsel provides.

The statute goes further. Under MCL 450.2541(3), a director is not entitled to rely on information if they have knowledge concerning the matter that makes such reliance unwarranted. Once a board member understands, as every board member reading this article now does, that AI generates incorrect legal and factual information at high rates, blind reliance on AI output is legally unwarranted. The business judgment rule, which insulates board decisions from judicial second-guessing when the board follows a reasonable process, protects process, but not outcomes. A board that substitutes ChatGPT for counsel and deliberation has a process problem.

The Business Judgment Rule Won’t Save You

Michigan courts have applied the business judgment rule to limit judicial review of association decisions to whether the board acted in good faith in furtherance of the association’s legitimate interests. The rule’s protection depends on process: did the board consult appropriate experts, review relevant information, and deliberate? A violation notice generated by an unverified AI prompt (citing a bylaw provision that does not exist) does not reflect a reasonable process. It reflects a process failure. That distinction matters enormously when a homeowner’s attorney is deposing your board president.

Attorney-Client Privilege: The Risk No One Sees Coming

Of all the AI risks facing Michigan community associations, the attorney-client privilege issue is the one that generates the most surprise, and the most damage. The scenario is familiar: a board president receives a detailed legal memorandum from the association’s attorney regarding a construction defect claim or a pending assessment dispute. The board president wants to share key points with the other directors before an executive session. So they paste the memo into ChatGPT and ask for a five-bullet summary.

The consequences may be severe and irreversible.

United States v. Heppner: The February 2026 Wake-Up Call

Can inputting attorney communications into AI waive attorney-client privilege? Yes. Under the reasoning of United States v. Heppner (S.D.N.Y. 2026), inputting privileged attorney-client communications into a consumer-tier AI tool may waive privilege over both the AI output and the underlying communication. Consumer AI platforms lack the confidentiality protections required to maintain privilege. Michigan community association boards should never input attorney communications into any AI tool without explicit guidance from association counsel and use of an enterprise-tier platform.

In United States v. Heppner, a federal court in New York held that a defendant’s communications with Anthropic’s Claude were protected by neither the attorney-client privilege nor the work-product doctrine where he used the public AI platform on his own initiative, and the court further stated that even if privileged information had been entered into Claude, privilege was waived by sharing it with Claude and Anthropic.

The holding’s practical implication for associations is stark. A board member who inputs privileged attorney communications into a consumer-tier AI tool (such as ChatGPT Free, Plus, or Pro; Gemini consumer; Copilot personal) may waive privilege not only over the AI-generated summary, but potentially over the underlying attorney communication itself.

At the same time, the law is not yet absolute in every setting. In Warner v. Gilbarco, Inc., the Eastern District of Michigan held that a litigant’s ChatGPT-assisted materials were protected work product, emphasized that ChatGPT and similar programs are “tools, not persons,” and held that work-product waiver requires disclosure to an adversary or in a manner likely to reach an adversary.

Discovery cases also show that AI prompts and outputs may become discoverable when a party affirmatively relies on them in litigation. In Tremblay v. OpenAI, Inc., the court required disclosure of the prompts, outputs, and account settings used for the positive testing results referred to in the complaint. In Concord Music Group, Inc. v. Anthropic PBC, the court found at least a limited waiver where the plaintiffs had relied on certain prompt-output pairs in their pleadings and filings, while rejecting an overbroad attempt to force production of every unrelied-upon prompt and output

The practical lesson for community associations is straightforward: do not assume that prompts entered into a public AI platform are privileged, and do not assume they are immune from discovery. If the communication originated with association counsel, it should not be pasted into ChatGPT, Claude, or any other public generative-AI tool without first obtaining the attorney’s advice and using an approved, secure workflow.

For boards, managers, and directors, the safest rule is simple: never feed privileged legal advice into a public AI tool and assume the privilege will survive.

Selective Enforcement: How AI Can Make a Bad Problem Worse

What is selective enforcement, and how does AI create selective enforcement risk? Selective enforcement occurs when a community association enforces rules against some owners but not others with identical violations — an often raised defense. AI can potentially create a selective enforcement risk by generating inconsistently worded notices across sessions, by processing only some owners’ complaints depending on who inputs information, and by producing enforcement patterns that may correlate with protected class characteristics under the Fair Housing Act without any intentional bias.

Selective enforcement — enforcing rules against some owners while ignoring identical violations by others — is a frequently raised defense in Michigan community association enforcement actions. Michigan courts have decided that even minor bylaw violations can be enforced, but that principle cuts both ways: if the association enforces against Owner A while ignoring the same violation by Owner B, the disparity becomes possible evidence of willful unfairness.

AI may amplify selective enforcement risk in ways boards often do not anticipate. If AI tools are used to process complaints about certain owners but not others, enforcement becomes biased by input selection. If AI generates differently-worded notices for identical violations in different sessions, the paper trail may appear to show disparate treatment. If AI-driven enforcement patterns correlate, even unintentionally, with protected class characteristics under the Fair Housing Act, the association could potentially face federal liability exposure. The fix requires standardized AI prompts for enforcement tasks and mandatory human review of every notice against the association’s enforcement log.

Why Your Association Needs a Written AI Policy

What should a Michigan community association AI policy include? A comprehensive Michigan community association AI policy should address five core areas: (1) board authorization by resolution specifying approved and prohibited uses; (2) data classification tiers identifying what information may and may not be input into AI tools; (3) mandatory human review and sign-off before any AI-generated content is distributed; (4) record retention protocols for AI prompts and outputs used in official documents; and (5) an annual review requirement as technology and law continue to evolve rapidly.

Governance without a framework is governance waiting for a crisis. It is highly likely that most Michigan community associations have not adopted any resolution or policy governing AI use. That gap creates several compounding problems: board members and managers are using AI tools without board authorization, potentially acting ultra vires; there is no standard for what data may be input; there is no human review requirement before AI-generated communications go out; and there is no audit trail to demonstrate the oversight that supports a business judgment defense.

Phase 1 — Board Authorization

The foundation of a responsible AI governance framework is a board resolution. The resolution should identify which AI tools or tiers are acceptable for association use, specify approved use cases (communication drafting, minutes summarization, FAQ development, vendor RFP templates), and explicitly prohibit others (legal interpretation, unsupervised enforcement escalation, processing of owner-identifiable data in consumer tools). Documenting this discussion in board meeting minutes creates the governance record that matters if decisions are later challenged.

Phase 2 — Data Classification and Tool Selection

Not all information is created equal. A sound AI policy classifies information into tiers. General announcements and non-sensitive administrative content may be used with consumer-tier AI tools. Owner names, addresses, and contact information should be used only with enterprise-tier tools. Assessment balances, delinquency records, accommodation requests, and personnel matters require enterprise protections and legal guidance. Attorney-client communications are categorically prohibited from input into any AI tool without explicit counsel direction.

The enterprise tier distinction is critical. Consumer tiers — ChatGPT Free, Plus, and Pro; Google Gemini consumer; Microsoft Copilot personal — use input data for model training by default (unless the user specifically opts out) and provide no contractual confidentiality protections. Enterprise tiers, such as ChatGPT Business or Enterprise, Google Workspace with Gemini, Microsoft 365 Copilot, do not use data for training, offer audit logging, SOC 2 compliance, and provide contractual protections that consumer tiers do not.

Phase 3 — Human Review Requirements

Every AI-generated document that touches association governance must be reviewed by a qualified human before distribution. For violation notices, this means verifying every bylaw citation against the actual governing documents, because the hallucination rate for AI legal citations is far too high to skip this step. For meeting minutes, the board secretary must attest to the accuracy of every motion, vote, and action item. For enforcement communications, the manager or board must confirm that the same violation is being treated the same way association-wide.

Phase 4 — Record Retention and Disclosure

Courts may now begin to treat AI prompts and outputs like emails, Slack messages, and server logs for discovery purposes. In the NYT v. OpenAI litigation (2025), the court ordered OpenAI to preserve certain consumer ChatGPT output logs that otherwise would have been deleted, and later ordered OpenAI to produce a de-identified 20 million-log sample of retained consumer ChatGPT logs; that production order was upheld in early 2026. Association records may include AI-generated content and the prompts that produced it. Associations may be well advised to maintain a clear record retention policy that distinguishes between AI working drafts and final approved documents, and that specifies how long AI-related records are retained.

Phase 5 — Annual Review

AI law is moving faster than almost any other area of technology regulation. The Heppner decision came down in February 2026 and purpose-built HOA AI platforms have launched within the last 18 months. A responsible AI policy requires annual review, or more frequent review when significant legal or technological changes occur. The board should consult association counsel at each review to confirm the policy remains legally sound.

Practical AI Uses That Are Safe (When Done Right)

Responsible AI adoption begins with understanding where the tool adds value without creating unacceptable risk. When used with appropriate human oversight, AI is well-suited to a range of community association tasks:

• Drafting first versions of seasonal owner communications, maintenance reminders, and common area notices
• Summarizing board meeting transcripts into structured minutes (subject to board secretary review and attestation)
• Creating FAQ documents from the association’s governing documents (subject to legal review before publication)
• Generating vendor RFP templates and bid comparison frameworks
• Drafting budget narrative explanations for owner distributions
• Standardizing the tone and format of violation notice templates (subject to bylaw citation verification)

Uses That Are Never Appropriate

Consult Qualified Michigan Counsel

AI governance in community associations sits at the intersection of Michigan corporate law (the Nonprofit Corporation Act), condominium law (the Michigan Condominium Act), privacy law (the Michigan Identity Theft Protection Act), federal fair housing law, federal debt collection law, attorney-client privilege doctrine, and rapidly evolving case law interpreting AI specifically. No technology checklist or generic AI policy template can account for your association’s specific governing documents, operational circumstances, and risk profile.

Michigan community association boards should consult with qualified legal counsel before adopting any AI use policy. Our firm has been actively drafting and implementing artificial intelligence policies for condominium associations and homeowners associations throughout Michigan. If you would like guidance on creating an AI policy tailored to your association’s governing documents and operational needs, or if you have questions about any of the legal issues discussed in this article, we welcome your inquiry. Contact us today to schedule a consultation.

Frequently Asked Questions

About the author

Richard M. Delonis is a Michigan condominium and HOA lawyer at Szura & Delonis, PLC in Southfield (Metro Detroit). He advises association boards and community association managers on governance, rule enforcement, assessment collections, document amendments, and risk management, with a practical focus on helping boards reduce disputes and run defensible, well-documented processes.

Disclaimer: This article provides general Michigan-oriented information for condominium association and HOA boards and is not legal advice. Associations should consult experienced legal counsel about their specific documents, facts, and options.

Enforcing community rules is one of the hardest parts of serving on a condominium or homeowners association board. Violations repeat. Residents push back. And somewhere in the background, there is always the question: are we doing this the right way?

That question matters more than most boards realize. An association that skips steps, applies rules inconsistently, or imposes fines without proper authority can end up on the losing end of a lawsuit, even when the underlying violation was real. Understanding the legal framework for rule enforcement in Michigan is not just good governance. It is how your board protects the community and itself.

Why Due Process Is Not Optional for Michigan Condo Boards

What is “due process” in the Michigan condo context? Due process in Michigan condominium enforcement means that before a board imposes a fine or penalty on a co-owner, it must provide adequate written notice of the alleged violation and a meaningful opportunity to be heard. This requirement is grounded in both the Michigan Condominium Act (MCL 559.101 et seq.) and the association’s own governing documents, and courts treat it as a non-waivable prerequisite to a valid fine.

The Constitutional and Statutory Foundations

The concept of procedural due process — notice and an opportunity to be heard — has its origins in constitutional law, but it extends into private associations through statute and contract. When a co-owner purchases a condominium unit in Michigan, they enter into a binding contractual relationship with the association, governed by the Master Deed, Bylaws, and Rules and Regulations. Those documents, in turn, operate within the framework established by the Michigan Condominium Act, MCL 559.101 et seq.

What “Due Process” Actually Means in the Condo Context

The Michigan Condominium Act does not merely permit boards to enforce rules and levy fines. It constrains how they must do so. An association that bypasses the statutory and contractual process does not merely risk losing in court. It risks a finding that its fines were void ab initio — as if they were never imposed at all.

Before a board can enforce any rule or levy any fine, it needs to know where its authority comes from.

For condominium associations, the Michigan Condominium Act authorizes associations to enforce their condominium documents and levy reasonable fines against co-owners who violate them. Homeowners associations operate under their declaration and bylaws, along with the Michigan Nonprofit Corporation Act, MCL 450.2101 et seq. In either case, the authority to impose fines must be expressly granted somewhere in the governing documents. If the power to fine is not in the declaration, bylaws, or rules and regulations, the association may not have the legal right to impose monetary penalties at all.

This is why it is important for boards to review their governing documents carefully before starting or overhauling an enforcement program. Knowing exactly what your documents authorize is the foundation of every enforcement action you take.

Even when a violation is clear, boards cannot simply send a fine and consider the matter closed. Michigan courts have recognized due process protections in the condo enforcement context, and most governing documents require a specific procedure before fines can be imposed.

A sound enforcement process generally follows these steps. First, the association sends the owner written notice describing the specific violation. Second, the owner receives a reasonable opportunity to cure the violation before fines begin to accrue. Third, if the owner requests a hearing, the board must provide one before imposing any monetary penalty. Fourth, fines may only be levied after those steps are completed.

Skipping the hearing requirement, failing to provide adequate written notice, or fining an owner before giving them a chance to correct the problem are common mistakes that can get a fine thrown out if the owner challenges it. Carefully following the procedure every time is not just courtesy. It is what makes the fine enforceable.

One practical tip: use a consistent written notice template for all violations. Standardized notices ensure that every owner receives the same information and that no required elements are accidentally omitted.

Step-by-Step: The Legally Compliant Fine and Hearing Process

Step 1 — Document the Violation Properly

Before any notice issues, the violation must be documented. This means dated, written records (ideally with photographs) identifying the specific rule or bylaw provision allegedly violated, the unit number and co-owner involved, and the identity of the person who observed the violation. Vague complaints or undocumented verbal reports are an inadequate foundation for enforcement and will be exploited in any subsequent dispute.

Step 2 — Issue a Written Notice of Violation

The co-owner must receive written notice of the alleged violation. Best practice (and many Bylaws expressly require) delivery by first-class mail to the address on file, with a copy retained by the association. The notice should identify the specific rule violated, the date and nature of the violation, and any opportunity to cure before formal proceedings are initiated.

Step 3 — Provide the Opportunity to Cure

Must a Michigan condo board give a co-owner a chance to fix a violation before imposing a fine? In most Michigan condominium communities, the governing documents require an opportunity to cure — a defined period during which the co-owner can correct the violation and avoid formal fines — before a hearing is convened. While MCL 559.206 does not always mandate a cure period by its own terms, failing to provide one when the Bylaws require it renders any subsequent fine procedurally defective and legally vulnerable.

Not every violation is curable (a completed unauthorized alteration may be beyond cure), but where cure is possible and your documents require it, the cure period is mandatory, not discretionary.

Step 4 — Issue the Notice of Hearing

If the violation is not cured, or cure is not applicable, the board must issue a formal Notice of Hearing. This notice must be provided within the timeframe your Bylaws specify — commonly 10 to 15 days in advance — and must include the date, time, and location of the hearing; the specific rule or provision at issue; the proposed fine or penalty; and a clear statement of the co-owner’s right to appear, present evidence, and be heard.

Step 5 — Conduct the Hearing

The hearing must be a genuine proceeding, not a rubber stamp. The co-owner must be given a meaningful opportunity to speak, present evidence, and respond to the association’s evidence. Many Bylaws allow the hearing to be conducted by the full board or a designated committee. Importantly, any board member with a personal conflict of interest in the matter should be recused from participating in the hearing decision.

Step 6 — Issue the Written Decision

Does a Michigan condo board have to issue a written decision after a fine hearing? Yes. Following a due process hearing, the board is required, both by sound governance practice and, in most cases, by the association’s governing documents, to issue a written decision stating the outcome and the fine imposed, if any. An oral announcement at the hearing is insufficient. The written decision creates the enforceable record and triggers the co-owner’s obligation to pay, and it is essential if the association later pursues lien or collection remedies under MCL 559.208.

Step 7 — Record the Fine and Pursue Collection if Necessary

Unpaid fines may be treatable as an assessment under Michigan law — but only if your governing documents expressly authorize it. This critical distinction is not a technicality; it is a threshold question that determines whether a condominium lien can lawfully be recorded and foreclosed at all. In Channel View E Condo Ass’n v. Ferguson, Mich. Ct. App. No. 351888 (Feb. 25, 2021), the Michigan Court of Appeals held that where the association’s Bylaws did not expressly provide that fines could be treated as assessments, the association lacked authority under its governing documents — and therefore under MCL 559.208 — to record a lien consisting solely of unpaid fines and pursue foreclosure. The court’s holding was unambiguous: fines are not automatically assessments, and the authority to treat them as such must be grounded in the express language of the Bylaws. Boards and property managers in Oakland County, Macomb County, and Wayne County should review their governing documents before recording any lien premised on unpaid fines. If your Bylaws are silent or ambiguous on this point, the lien is legally vulnerable and the foreclosure action may fail entirely. This is precisely the kind of document review that Michigan condominium counsel should conduct before enforcement escalates to the lien stage.

Common Due Process Mistakes

Skipping the Hearing Entirely

The most dangerous mistake Michigan boards make is treating the hearing as optional, particularly for “small” fines or repeat violations. There is no de minimis exception in MCL 559.206. Every fine requires the process, every time.

Defective or Untimely Notice

A notice that fails to identify the specific rule violated, provide adequate advance time, or reach the co-owner at their address of record is a defective notice. Courts in Oakland County and Wayne County have not hesitated to find that procedurally defective fines cannot be enforced.

Conflicts of Interest on the Hearing Panel

When the board member who initiated the complaint also sits in judgment of the hearing, the process is structurally compromised. This is particularly acute in smaller associations where board membership is limited. Consider designating an independent hearing committee in your Bylaws for exactly this reason.

Imposing Fines Not Authorized by Your Documents

A board has no inherent authority to impose a fine that is not authorized by, and in an amount not permitted by, the governing documents. Boards operating under older Bylaws that lack a fine schedule should work with Michigan condominium counsel to adopt a properly noticed and approved fine schedule before attempting enforcement.

Failure to Provide a Written Decision

Verbal decisions issued at the hearing, without a follow-up written determination, are inadequate. The written decision is the legal predicate for collection. Without it, the fine exists in procedural limbo.

Fines vs. Suspension of Privileges: Understanding the Distinction

Can a Michigan condo board suspend a co-owner’s privileges — like pool or clubhouse access — without a hearing? Generally, no. The suspension of co-owner privileges is a penalty functionally equivalent to a fine, and most Michigan courts and governing documents treat it as requiring the same notice-and-hearing process. Boards that summarily suspend privileges without due process face the same legal exposure as those that impose fines without a hearing, including potential claims for breach of the governing documents.

Boards should also be careful not to conflate fines with the suspension of common element access as a collection tool. While some association documents authorize suspension of certain amenities for non-payment of assessments, that authority is document-specific and does not eliminate the due process obligation for underlying violations.

How Oakland County and Wayne County Courts Have Treated Condo Due Process Disputes

Michigan courts will require strict adherence to association governing documents in enforcement proceedings. The Michigan Court of Appeals has reinforced that condominium co-owners are entitled to enforce the procedural protections in their governing documents, and that boards which deviate from those procedures, even in good faith, do so at legal peril.

Cases litigated in the Oakland County Circuit Court (Sixth Judicial Circuit) and the Wayne County Circuit Court (Third Judicial Circuit) reflect a judiciary that is well-acquainted with condominium enforcement disputes and unsympathetic to procedural shortcuts. Southeast Michigan’s dense concentration of condominium communities, with major developments throughout Bloomfield Township, Troy, Novi, Southfield, Dearborn, and the Grosse Pointe communities, means these courts develop considerable familiarity with association governance issues.

Boards and property managers operating in these markets should treat procedural compliance not as a formality, but as the foundation of every enforcement action.

Best Practices for Southeast Michigan Boards and Property Managers

Document everything, always. Maintain a violation log with dates, photographs, and correspondence. Issue all notices in writing and retain proof of delivery. Recuse conflicted board members consistently and document recusals in meeting minutes. Review your fine schedule annually to ensure it is properly authorized and current. And engage Michigan condominium counsel before your enforcement situation becomes a lawsuit.

Consistency Is Not Optional

Selective enforcement is one of the most powerful defenses an owner can raise in Michigan courts. If the board has ignored similar violations by other residents, or has applied the rules strictly to some owners while overlooking the same behavior by others, a court may find the enforcement action to be arbitrary or discriminatory.

Consistency does not mean perfection. Boards are not expected to catch every violation the moment it occurs. But it does mean applying the same standards, the same process, and the same consequences to every owner, regardless of who they are or how they feel about the board.

Good documentation is essential. Keep records of violation notices sent, hearings held, fines imposed, and any follow-up actions taken. If an owner ever challenges an enforcement decision, those records are what allow the board to show that the process was fair and even-handed. Without documentation, it becomes difficult to defend against a selective enforcement claim, even when the board acted in good faith.

A violation log, maintained in writing and reviewed at board meetings, is a simple and effective tool for tracking enforcement activity across the community.

Frequently Asked Questions About Condo Rules and Fines

Disclaimer: This article provides general Michigan-oriented information for condominium association boards and is not legal advice. Associations should consult experienced legal counsel about their specific documents, facts, and options.

Don’t Let a Procedural Misstep Undo Your Enforcement Action.

Our Condominium & HOA Law Practice is built around the needs of Michigan condominium associations, HOA boards, and professional property managers. From Oakland County to Wayne County, Macomb County, and across Metro Detroit, we help community associations govern with confidence — and enforce with legal precision.

If this article raised questions about your association’s procedures, your governing documents, or your enforcement authority, we would welcome the opportunity to discuss them.

Whether you need a governing document review, a fine and hearing procedure audit, or experienced counsel when enforcement turns adversarial — we are ready to help.

About the author

Richard M. Delonis is a Michigan condominium and HOA lawyer at Szura & Delonis, PLC in Southfield (Metro Detroit). He advises association boards and community association managers on governance, rule enforcement, assessment collections, document amendments, and risk management, with a practical focus on helping boards reduce disputes and run defensible, well-documented processes.

Understanding how Michigan law treats change orders, what notice is required before you perform extra work, and what remedies exist when a GC or owner refuses to pay is essential knowledge for every contractor, subcontractor, and supplier working in Metro Detroit and throughout Michigan.

This guide covers Michigan change order law in practical terms, including what happens when there is no signed change order and your legal options when verbal directives go unpaid.

For immediate assistance with a Michigan construction change order dispute, contact the Michigan construction attorneys at Szura & Delonis, PLC. We represent contractors, subcontractors, and suppliers throughout Oakland, Wayne, Macomb, and Washtenaw Counties.

What Is a Construction Change Order in Michigan?

Direct Answer: A constructive change order arises when an owner, GC, or design professional causes a contractor to perform work outside the original contract scope — without issuing a formal change order. Common examples include defective design requiring corrective work, owner-directed acceleration, changed site conditions, and over-inspection that exceeds contract requirements. The contractor is entitled to additional compensation even without a signed change order.

A change order is a written agreement that modifies the scope, price, or schedule of a construction contract. It documents that both parties have agreed to work that is different from — or additional to — the original contract scope.

Michigan construction contracts typically provide a defined change order process: the owner or GC issues a directive, the contractor prices the change, and both parties sign the change order before work begins. Simple in theory. In practice, construction moves faster than paperwork, and work gets done on verbal directives, site superintendent instructions, and implied approvals — all before anyone thinks about a written change order.

That gap between how change orders are supposed to work and how they actually work in the field is where disputes are born.

Formal Change Orders vs. Constructive Changes

A formal change order is a written modification signed by both parties. A constructive change is different: it arises when a contractor is required to perform extra or changed work without a formal change order being issued — typically because of owner conduct, design errors, changed conditions, or directives from the architect or project manager.

Constructive changes may be compensable under Michigan law even without a signed change order. The contractor must still prove the change occurred and what it cost — but the absence of a written change order does not necessarily automatically end the claim.

The Legal Difference Between a Change Order and Extra Work

Extra work refers to work that is genuinely outside the original contract scope. Changed work is work within the scope that must be done differently than specified. Both can give rise to additional compensation claims in Michigan. Courts look to the contract documents — drawings, specifications, scope of work definitions — to determine whether challenged work was truly ‘extra’ or was already included in the original contract price.

Are Verbal Change Orders Enforceable in Michigan?

Direct Answer: Yes, Michigan courts will sometimes enforce verbal change orders despite written-notice requirements in the contract, particularly when the evidence shows that the owner or GC directed the work, accepted the benefit of the work, and the contractor can prove the directive through contemporaneous documentation. Written change orders are always better, but oral directives supported by solid documentation are not automatically unenforceable.

This is the question every subcontractor with an outstanding extra work invoice wants answered. The honest answer: it depends on the facts, the contract language, and the evidence you have.

Michigan courts apply general contract law principles to change order disputes. Where a written change order requirement exists in the contract, courts will look first at whether the requirement was a strict condition precedent to any recovery, or whether it was something the parties agreed to do but whose breach does not automatically eliminate the claim.

When Michigan Courts Have Enforced Oral Directives

Michigan appellate courts have, in appropriate circumstances, enforced oral change orders despite written-notice provisions in the contract when the evidence established that: (1) the GC or owner clearly directed the extra work; (2) the contractor reasonably relied on the directive; (3) the owner or GC accepted the benefit of the completed work; and (4) enforcing the written requirement would result in unjust enrichment.

EXAMPLE SCENARIO: A Livonia mechanical subcontractor receives a verbal directive from the site superintendent to relocate $40,000 worth of ductwork because the architect’s drawings contained a coordination error. The GC later denies authorization and refuses to issue a change order. The subcontractor has emails from the superintendent confirming the relocation, daily logs showing when the work was performed and by whose direction, and photos of the pre-existing conflict and completed relocation. With this documentation, the subcontractor has a strong claim to recover, either through a constructive change order claim or quantum meruit, even without a signed change order.

Waiver of Written Change Order Requirements in Michigan

Michigan contract law recognizes that a party can waive a written notice or change order requirement through conduct. Waiver requires proof that the party entitled to written change orders accepted verbal directives and paid for them — or accepted the work without objection — such that enforcing the written requirement would be inequitable. Courts will require clear and convincing evidence to demonstrate the waiver of a written change order, and the presence of restrictive clauses in the contract, such as anti-waiver provisions, may increase the evidentiary burden to establish waiver.

A GC who has paid three prior verbal change orders without requiring written documentation has a difficult argument that the fourth identical directive required a written change order. Courts look at the parties’ course of dealing — how they actually behaved on this project — not just what the contract says in the abstract.

Why Relying on Verbal Directives Is Always Dangerous

Even if you can ultimately win a verbal change order claim, the litigation is far more expensive, uncertain, and time-consuming than it would have been with a signed written change order. The default rule is that verbal change orders are not enforceable. You are fighting against the contract language every step of the way. Winning requires strong contemporaneous documentation on your side. Start from a position of strength: get it in writing before you start the work.

Written Notice Requirements: What Your Contract Probably Says

Most Michigan construction contracts, including AIA A201-2017, standard subcontract forms used by major GCs in Metro Detroit, and custom owner-drafted agreements — include provisions requiring written notice as a condition of recovering for change order work. These provisions can vary significantly in their language and legal effect.
 

Condition Precedent vs. Covenant — The Critical Distinction

If the written notice requirement is a ‘condition precedent,’ failure to serve it on time eliminates the claim entirely, and the contractor’s right to recover never materializes. Courts strictly enforce conditions precedent when the language is unambiguous.

If the requirement is a ‘covenant’ — a promise to provide notice, breach of which entitles the other party to damages — the analysis is different. The contractor has breached the contract by failing to give notice, but the claim for extra work itself may survive. The other party may be required to show actual prejudice from the lack of notice to reduce or eliminate the contractor’s recovery.

This distinction is frequently litigated in construction disputes. Contract language like ‘as a condition precedent to any recovery’ signals strict enforcement. Language like ‘contractor shall give written notice’ without that qualifier may be interpreted as a covenant. Every contract requires individual analysis.

AIA A201 Change Order Procedures in Michigan

AIA A201-2017, the most widely used general conditions document on Michigan commercial projects, provides a detailed change order and claim procedure. Under AIA A201:

• The Owner may direct changes to the Work through Change Orders (Article 7).
• A Claim — including for additional compensation for changed work — must be made within 21 days of the occurrence of the event giving rise to the claim.
• Construction Change Directives allow owners to direct change work before agreement on price.
• Contractors who fail to submit a timely Claim may waive the right to additional compensation.

Michigan contractors and subcontractors working under AIA contracts should assume the 21-day notice requirement will be enforced. Give notice early, in writing, even if you are not certain a claim will develop. You can always withdraw a claim; you cannot revive one that expired because you waited too long.

Subcontract Flow-Down Provisions and Notice Requirements

Many GC subcontracts flow down the notice requirements from the prime contract — meaning a subcontractor may be bound by AIA A201’s 21-day notice requirement even if the subcontract does not explicitly state a deadline. Read your subcontract carefully for flow-down language and always give notice upstream consistent with the prime contract timeline.
 

Constructive Change Orders: Getting Paid Without a Signed Change Order

Direct Answer: A constructive change order arises when an owner, GC, or design professional causes a contractor to perform work outside the original contract scope — without issuing a formal change order. Common examples include defective design requiring corrective work, owner-directed acceleration, changed site conditions, and over-inspection that exceeds contract requirements. The contractor is entitled to additional compensation even without a signed change order.

What Makes a Change Order ‘Constructive’ in Michigan?

A constructive change arises when the contractor is required to do more than the original contract requires, but without the formal change order process. The contractor is entitled to compensation as if a formal change order had been issued. Common constructive change triggers on Michigan construction projects can include:

• Defective or conflicting design documents requiring corrective work beyond the original scope
• Owner-furnished materials or equipment that are defective or late, requiring contractor workarounds
• Differing site conditions — concealed conditions materially different from those the contract represented
• Owner-directed acceleration of the schedule without additional compensation
• Rejection of conforming work by the owner or architect without legitimate basis
• Excessive or unreasonable inspection requirements that exceed contract specifications

Cardinal Change: When the Scope Change Is So Large the Contract Is Abandoned

A cardinal change occurs when the cumulative scope modifications are so significant that the project being constructed is fundamentally different from what was bargained for. At that point, the contractor may be entitled to abandon the original contract and pursue recovery in quantum meruit for the full reasonable value of all work performed — not just the specific changes.

Cardinal change is a high threshold and requires careful analysis of the total deviation from the original scope. It is more commonly argued on large commercial and public projects than residential work. If you believe you are facing a cardinal change situation, consult a Michigan construction attorney before making any decisions about contract abandonment. The doctrine of cardinal change is well-established in federal courts, but Michigan courts have not adopted it. Instead, Michigan courts rely on the terms of the contract and statutory provisions governing modifications to address disputes over significant changes in construction projects.

How to Document Extra Work to Maximize Recovery

Whether you end up negotiating a change order, filing a lien, or litigating, your recovery depends almost entirely on your documentation. The contractor with organized, contemporaneous records wins. The contractor relying on memory loses.

The Real-Time Documentation Checklist

When a verbal change order or extra work directive is given, immediately create a record:

1. Send a same-day email to the GC’s project manager or superintendent confirming the directive: ‘Per your direction at the site meeting this morning, we will proceed with [specific work]. Please confirm this is authorized as additional work beyond the original scope.’
2. Record the directive in your daily field report, identifying who gave the instruction, what was directed, the date, and the time.
3. Photograph pre-existing conditions before beginning extra work, and the completed extra work.
4. Segregate labor and material costs for the extra work the moment it begins — do not commingle with base contract costs.
5. Submit a formal written change order request with pricing as soon as the scope is defined. Even if not signed, a submitted and unrejected change order request establishes the claim.
6. Track all communications — texts, voicemails, emails — about the extra work in a single project file.

Pricing Change Order Work: T&M vs. Lump Sum vs. Unit Price

How you price a change order affects how easily it is approved and how well-protected you are if the price is disputed. Time-and-material (T&M) pricing is straightforward but requires rigorous contemporaneous cost records. Lump sum pricing is cleaner and faster to approve but requires careful scope definition. Unit price changes work best for measurable, repetitive work. Whatever method you use, document your cost basis in real time. Reconstructing costs from memory months later is unreliable and less persuasive in litigation.

RFIs as Change Order Triggers — How to Use Them Strategically

A Request for Information (RFI) is one of the most underused tools in change order documentation. When a drawing conflict, design gap, or ambiguous specification requires clarification, submit an RFI immediately. The architect’s or engineer’s response to an RFI — directing a specific approach, confirming a method, or defining work beyond the original specification — is powerful evidence that changed or additional work was required and directed. Date-stamp everything. An RFI log that shows a directive, followed by additional cost, followed by an unpaid invoice can be a strong change order claim.

When the GC Refuses to Sign — Your Legal Remedies in Michigan

When a GC refuses to sign a change order for work you have already completed, you have several legal options. The right strategy depends on the documentation available, the contract language, the dollar amount, and the current status of the project relationship. Szura & Delonis, PLC provides Michigan construction law representation for contractors, subcontractors, and suppliers across Oakland, Wayne, Macomb, and Washtenaw Counties. Our attorneys evaluate extra work claims, analyze contract notice provisions, and pursue or defend change order disputes through negotiation, lien enforcement, and litigation.

Breach of Contract Claims for Authorized Change Work

If a change order was signed and the GC simply refuses to pay, you have a straightforward breach of contract claim. The signed change order is the contract; non-payment is the breach. File your Michigan construction lien for the unpaid change order amount within 90 days of last furnishing and pursue the breach of contract claim simultaneously.

Quantum Meruit: Recovery Without a Signed Change Order

Where no formal change order was signed, quantum meruit provides an equitable alternative. To recover in quantum meruit in Michigan, you must show: (1) you provided labor, materials, or services to the project; (2) the other party accepted the benefit; and (3) allowing non-payment would be unjust. Recovery is measured by the reasonable value of the work — not necessarily the contract rate. Quantum meruit can be pursued alongside breach of contract as an alternative theory.

Including Extra Work in a Michigan Construction Lien

Under Michigan’s Construction Lien Act (MCL 570.1101 et seq.), your lien covers all labor and materials furnished under your contract, including authorized extra work. Do not reduce your lien amount because a change order is disputed. File for the full amount claimed and let the foreclosure proceeding resolve the pricing dispute. Missing the 90-day deadline from last furnishing is not recoverable — the lien right is gone permanently.

Builders Trust Fund Act Implications

If the GC received payment from the owner that included amounts for your extra work and failed to pay those funds to you, the GC may have violated Michigan’s Builders Trust Fund Act (MCL 570.151 et seq.). Fund diversion is a felony under Michigan law and creates parallel civil liability. This is a powerful additional lever, but it requires proof that the GC received construction funds earmarked for the relevant work and diverted them.

Michigan County and Court Context for Change Order Disputes

In Metro Detroit, construction change order litigation is handled in the circuit court of the county where the project is located. Oakland County 6th Circuit Court in Pontiac, Wayne County 3rd Circuit Court in Detroit, and Macomb County 16th Circuit Court in Mt. Clemens all have active construction law dockets. Szura & Delonis, PLC has litigation experience in all three courts.

If your construction contract contains an arbitration clause (common in AIA-based agreements and many major GC subcontracts) change order disputes will typically be decided by an AAA arbitrator under the Construction Industry Arbitration Rules rather than a judge. Both forums require the same documentation quality; arbitration is not more forgiving of poor recordkeeping than court.

Common Change Order Mistakes Michigan Contractors Make

After years of representing contractors in Metro Detroit and throughout Michigan, the most damaging change order mistakes we see are consistent:

• Performing extra work without any written confirmation of the directive and then being surprised when the GC denies it.
• Waiting until the end of the project to submit all change orders at once — by then, memories have faded, the GC has left the job, and the lien deadline may have passed.
• Including change order amounts in broad, unconditional lien waivers signed during the project without carving out the disputed amounts.
• Signing a subcontract with a pay-if-paid clause and then relying on the GC to fight the change order battle with the owner.
• Failing to segregate extra work costs from base contract costs in real time, making reconstruction of the change order claim nearly impossible.
• Consulting an attorney after the 90-day lien deadline has already passed.

Frequently Asked Questions About Michigan Construction Change Orders

Change order disputes move quickly. By the time a GC or owner formally refuses to pay for extra work, the lien deadline clock is already running, and the evidence supporting your claim is getting colder every day.

At Szura & Delonis, PLC, our Michigan construction law attorneys represent contractors, subcontractors, and suppliers in change order disputes, lien enforcement, and construction litigation throughout Oakland County, Wayne County, Macomb County, and Washtenaw County. We analyze contract notice requirements, evaluate extra work documentation, and pursue full recovery through negotiation, lien foreclosure, and litigation in Michigan circuit courts and AAA arbitration.

Call us at (248) 716-3600 or contact us online. We respond quickly to time-sensitive construction matters — because your lien clock does not wait.

This article is provided for general educational and informational purposes only. It does not constitute legal advice and does not create an attorney-client relationship between the reader and Szura & Delonis, PLC. Michigan construction law involves complex statutory deadlines, procedural requirements, and fact-specific analysis. Do not rely on this content as legal advice for your specific situation. Prior results do not guarantee similar outcomes.

About the Author

Richard M. Delonis is a Michigan construction, business, and real estate attorney at Szura & Delonis, PLC (Southfield/Metro Detroit). He advises construction managers, general contractors, subcontractors, and property owners on lien rights, collections strategy, contract disputes, and project-risk issues.

Example: You just signed a $350,000 subcontract for a commercial build in Oakland County. The owner stops paying after month two. You walk off the job to protect your cash flow. Next thing you know, you’re being sued for breach of contract—and the pay-if-paid clause may mean that you can’t collect a dime until the general contractor gets paid by the bankrupt owner.

Key Takeaways

• Pay-if-paid clauses are enforceable in Michigan—you may not get paid if the owner doesn’t pay the GC, even if you did great work.
• No-damages-for-delay provisions are valid unless the delay was unforeseeable, caused by bad faith, or involved active interference
• Michigan law prohibits indemnifying someone for their sole negligence on construction projects (MCL 691.991), but broader indemnity still exists
• Contracts without written change order requirements expose you to disputes over extra work and unpaid change orders
• Missing suspension-of-work clauses mean walking off a non-paying job can make YOU the breaching party
• Metro Detroit projects across Wayne, Oakland, Macomb, and Washtenaw Counties see these contract disputes frequently

Scenario: The $180,000 Lesson

Mike runs an HVAC company in Southfield, Michigan. He landed a big subcontract for a medical office building in Troy. The contract looked standard—40 pages of dense language he’d seen before. He signed it.

Four months in, the owner stopped paying the general contractor. The GC stopped paying Mike. Mike had $180,000 outstanding—enough to cover his materials, labor, and make payroll for six weeks.

Mike walked off the job. He figured he’d file a construction lien and collect. But when his attorney reviewed the contract, they found three troublesome clauses:

1. Pay-if-paid provision: Mike only gets paid “if and when” the GC receives payment from the owner
2. No-damages-for-delay: Mike can’t claim damages for project delays, even owner-caused ones
3. No suspension-of-work right: The contract gave Mike no right to stop work for non-payment

The result? Mike was found liable for abandoning the project. The owner had gone bankrupt, so the GC never got paid—which meant under the pay-if-paid clause, Mike had no ability to collect payment either. He lost $180,000 and faced a counterclaim for the cost of hiring replacement contractors.

Mike’s mistake wasn’t the work he did. It was the contract he signed.

Clause #1: Pay-If-Paid Provisions

Short answer: Michigan courts enforce pay-if-paid clauses that clearly make the general contractor’s receipt of payment from the owner a “condition precedent” to paying subcontractors. If the owner doesn’t pay the GC—even if the owner goes bankrupt—the subcontractor may get nothing.

How This Clause Works

A pay-if-paid clause can shift all payment risk from the general contractor to you. The contract language typically reads something like:

“Contractor shall pay Subcontractor only if and when Contractor receives payment from Owner for Subcontractor’s work. Receipt of payment by Contractor is a condition precedent to Contractor’s obligation to pay Subcontractor.”

This isn’t just a timing delay—it’s a complete condition. If the owner doesn’t pay (bankruptcy, cash flow problems, disputes), you don’t get paid.

Michigan’s Legal Standard

The Michigan Supreme Court established the rule in Berkel & Co. Contractors v. Christman Co., 210 Mich. App. 416 (1995). For a pay-if-paid clause to work in Michigan, it must:

• Use clear, unambiguous language
• Explicitly state that payment is a “condition precedent”
• Not just suggest payment will be delayed for a “reasonable time”

Michigan courts will enforce these clauses as written. The court in Berkel specifically rejected the argument that the clause merely delayed payment to a “reasonable time” because the contract contained no such limiting language.

Recent Limitation

One important exception: In Macomb Mechanical, Inc. v. LaSalle Group, Inc. (unpublished, 2015), a Michigan Court of Appeals held that pay-if-paid clauses only apply to work covered by the original subcontract. Extra work performed under unsigned change orders might not fall under the pay-if-paid provision.

What This Means for You

Best practice: Before signing any subcontract in Wayne, Oakland, Macomb, or Washtenaw Counties (or anywhere in Michigan), search for these phrases:

• “condition precedent”
• “only if Contractor receives payment”
• “if and when payment is received”
• “payment contingent upon”

If you see these terms, you’re looking at a pay-if-paid clause.

Common mistake: Contractors assume they’ll “just file a lien” if they don’t get paid. But a pay-if-paid clause can limit your lien rights to whatever the owner still owes the GC—which might be zero.

Clause #2: No-Damages-For-Delay Provisions

Short answer: No-damages-for-delay clauses are enforceable in Michigan, preventing contractors from claiming damages when project delays—even owner-caused delays—impact your schedule and budget. However, four exceptions can void these clauses: unforeseeable delays, abandonment of contract, bad faith, or active interference by the other party.

The Basic Clause

A typical no-damages-for-delay provision reads:

“Contractor’s sole remedy for any delay shall be an extension of time to complete the Work. Contractor waives any claim for delay damages, including but not limited to extended overhead, labor inefficiency, and lost productivity.”

Translation: The owner can delay your work for months, costing you tens of thousands in extended overhead and lost opportunities—and you have zero recourse except more time to finish.

When These Clauses Get Voided

Michigan courts recognize four exceptions where no-damages-for-delay clauses won’t protect owners:

• Delays not contemplated by the parties at contract signing
• Abandonment of the contract by the delaying party
• Bad faith on the part of the contracting authority
• Active interference by the other contracting party

Example

A mechanical contractor in Dearborn (Wayne County) was delayed six months when the owner failed to obtain permits and utilities connections. The contract had a no-damages clause. So the court will likely find that the owner’s failure was “active interference”—they affirmatively prevented the contractor from working. The clause won’t apply, and the contractor will recover $140,000 in extended overhead.

What This Means for You

Best practice: You can’t always strike these clauses, especially on public projects. But you can protect yourself:

• Document everything: Every delay, every communication, every impact
• Send delay notices in writing: Follow contract notice requirements
• Identify the cause: Was it truly unforeseeable? Did it involve bad faith?
• Calculate actual costs: Track daily overhead, labor inefficiency, lost opportunities

If the delay falls under one of the four exceptions, you may have a claim despite the clause.

Common mistake: Accepting verbal time extensions without documenting the cost impact. Always submit a change order for time AND money when delays occur.

Clause #3: Indemnification Provisions

Short answer: Michigan law prohibits contractors from being forced to indemnify others for the other party’s sole negligence (MCL 691.991), but broader “intermediate form” indemnification that includes joint negligence remains enforceable. These clauses can make you liable for accidents and claims you didn’t cause, potentially exceeding your insurance coverage.

What Michigan Law Says

MCL 691.991 states that any provision requiring a contractor to indemnify another party for damages arising out of bodily injury to persons or damage to property “caused by or resulting from the sole negligence” of that other party is against public policy and is “void and unenforceable” in Michigan construction contracts.

BUT —and this is critical— the law doesn’t prohibit intermediate indemnification. You can still be required to indemnify an owner for claims where you’re only 10% at fault and they’re 90% at fault.

Here’s an example of such a “intermediate indemnification” clause:

“Contractor shall indemnify Owner for all claims arising from Contractor’s work, except those caused by Owner’s sole negligence.”

Here’s a better clause for contractors:

“Contractor shall indemnify Owner only for claims arising from Contractor’s own negligence, errors, or omissions.”

The Insurance Problem

Commercial general liability (CGL) policies may exclude coverage for contractual liability beyond what you’d face under common law. If your construction contract requires broad or intermediate indemnity, you might be self-insuring claims without realizing it.

What This Means for You

Best practice:

• Read the indemnity clause carefully: Look for phrases like “arising out of,” “relating to,” or “in connection with” Contractor’s work—these are broad triggers
• Negotiate for proportional liability: Try to add: “but only to the extent caused by Contractor’s negligence”
• Involve your insurance agent: Have them review indemnity requirements before you sign
• Request additional insured status: If you’re indemnifying the owner, they should be listed as additional insureds on your policy

Common mistake: Assuming your insurance “covers everything.” Policies may specifically exclude broad contractual indemnity, leaving your company potentially liable.

Clause #4: Change Order Procedures

Short answer: Contracts requiring written change orders before performing extra work are enforced in Michigan. Verbal approvals don’t satisfy these requirements, and emails, and text messages may not either. If you perform changed work without proper written authorization, you may work for free, even if the owner requested it.

Why Change Orders Matter

Construction projects in metro Detroit rarely go exactly as planned. Conditions change. Owners request upgrades. Design errors emerge. The question isn’t whether you’ll have change orders. It’s whether you’ll get paid for them.

A well-drafted change order clause should specify:

• Who has authority to approve changes
• How changes must be documented
• Timeline for submitting change order requests
• Pricing methodology (time and materials, lump sum, unit prices)
• Impact on project schedule

The Written Requirement

Many contracts include anti-waiver provisions like:

“No change to this Contract shall be valid unless in a written change order signed by Owner’s authorized representative. Contractor’s acceptance of oral directives or unsigned change orders constitutes a waiver of any claim for additional compensation.”

This language is enforceable. Contractors who perform extra work without complying with written change order requirements likely will be told that they can’t recover payment.

The Exception: Waiver by Conduct

Some Michigan courts have found that owners can waive written change order requirements through their conduct—for example, by repeatedly accepting and paying for verbal change orders throughout the project. But this is risky to rely on.

What This Means for You

Best practice:

1. Stop work when changes are requested: Don’t perform any changed work until you have written authorization
2. Submit change order requests immediately: Document the change, your price, and schedule impact within 24-48 hours
3. Follow the contract procedure exactly: If it requires a specific form or signature, get it
4. Track changed work separately: Use different job codes, time sheets, and invoices for changed work
5. Send confirmation emails: Even if you get verbal approval, confirm it in writing

Common mistake: Performing extra work to “keep the project moving” and assuming you’ll “work it out later.” That almost always ends badly for the contractor.

Clause #5: Suspension of Work Rights

Short answer: Michigan construction contracts that don’t include explicit suspension-of-work rights can trap contractors in non-paying projects. Walking off a job without contractual authority to suspend work, even when you’re not being paid, can possibly constitute “abandonment,” making you the breaching party and exposing you to damages claims.

The Problem

When payments stop coming, contractors face a difficult choice:

• Keep working and “hope” to get payment at some point
• Walk off and get sued for abandonment

Without a suspension-of-work clause, you have no good option.

What a Good Suspension Clause Looks Like

“If Contractor does not receive payment of undisputed amounts within ten (10) days of the due date, Contractor may, upon seven (7) days’ written notice to Owner, suspend performance of Work until such amounts are paid. Contractor shall not be liable for any delays or damages arising from such suspension, and the Contract Time shall be extended accordingly.”

This clause gives you:

• The right to stop work for non-payment
• A procedure to follow (notice requirement)
• Protection from liability for the work stoppage
• Time extension for the delay

What This Means for You

Best practice:

1. Add suspension language to your contracts: Make it a standard provision in every agreement
2. Follow the notice procedure exactly: If your contract has a suspension clause, comply with all notice requirements
3. Don’t walk off without authority: Even if you’re not getting paid, follow the suspension procedure
4. Secure the jobsite: When you suspend work, remove equipment safely and leave the site in a secure condition
5. Protect your lien rights: File preliminary notices and liens while you’re suspended, don’t wait

Common mistake: Thinking you have a “common law right” to stop work for non-payment. In construction, your contract primarily controls your rights, not general principles.

When to Call a Michigan Construction Lawyer

Contact an experienced construction attorney BEFORE signing a contract if you see:

1. Any pay-if-paid clause on a project where the owner’s or GC’s finances are questionable
2. Broad indemnification language that goes beyond your negligence
3. No change order procedure or vague procedures that don’t specify who can approve changes
4. No suspension-of-work rights and payment terms longer than 30 days
5. Out-of-state venue or arbitration clauses requiring you to litigate elsewhere
6. Liquidated damages that seem disproportionate to actual likely damages
7. Unlimited consequential damages provisions making you liable for lost profits and business interruption

Call a construction attorney DURING a project if:

1. Payment stops and you’re considering walking off the job
2. Significant changes occur without written change orders
3. The owner demands work beyond the contract scope
4. You receive a notice of a mechanics lien from someone you hired
5. A third party is injured on your project
6. You’re asked to waive claims as a condition of payment
7. The project is significantly delayed and you’re facing liquidated damages

Time matters in construction disputes. The Construction Lien Act has strict deadlines, and taking action early can save your payment rights.

Frequently Asked Questions About Michigan Construction Contract Clauses

Protect Your Business: Two Options

These contract clauses can negatively impact profitable projects and put your business at risk. Don’t sign contracts with “dangerous” provisions without understanding what you’re agreeing to.

Option 1: Take action before you sign

Email or call to schedule a contract review. Bring your proposed contract, and we’ll identify the potential “landmines” in the contract and suggest specific language changes to protect your payment rights, limit your liability, and give you the tools you need to collect what you earn.

Option 2: Get help now if you’re already in trouble

If you’re facing non-payment, considering walking off a job, dealing with unsigned change orders, or being blamed for delays you didn’t cause, time matters. Michigan’s lien deadlines don’t wait, and the longer you wait to act, the fewer options you have.

Szura & Delonis, PLC
29777 Telegraph Road #2401
Southfield, MI 48034
(248) 716-3600
admin@szuradelonis.com

We represent contractors, subcontractors, suppliers, and construction managers throughout Oakland County, Wayne County, Macomb County, and Washtenaw County. We understand Michigan construction law, we’ve handled numerous payment disputes and contract claims, and we know how to protect contractors’ rights.

This article is provided for general educational and informational purposes only. It does not constitute legal advice and does not create an attorney-client relationship between the reader and Szura & Delonis, PLC. Michigan construction law involves complex statutory deadlines, procedural requirements, and fact-specific analysis. Do not rely on this content as legal advice for your specific situation. Prior results do not guarantee similar outcomes.

About the Author

Richard M. Delonis is a Michigan construction, business, and real estate attorney at Szura & Delonis, PLC (Southfield/Metro Detroit). He advises construction managers, general contractors, subcontractors, and property owners on lien rights, collections strategy, contract disputes, and project-risk issues.

For Michigan HOA boards, the Homeowner Energy Policy Act (HEPA) represents one of the most significant regulatory changes in years. The law invalidates blanket bans on solar panels, requires associations to adopt detailed written policies, and creates new application and approval procedures that boards must follow precisely.

This comprehensive guide explains what the law requires, what your board can and cannot do, and the specific steps you should take now to ensure compliance and protect your community.

What Is the Homeowner Energy Policy Act?

The Homeowner Energy Policy Act (Public Act 68 of 2024) was signed by Governor Whitmer on July 8, 2024, and became effective April 1, 2025. The Act limits homeowner associations’ authority to prohibit or restrict members from installing energy-saving improvements on their properties.

The law applies to two categories of installations: (1) solar energy systems, which are subject to detailed regulations, and (2) other energy-saving improvements, which associations generally cannot prohibit at all.

Energy-Saving Improvements That Cannot Be Prohibited

Under MCL 559.305, any HOA provision that prohibits—or requires association approval for—the following improvements is invalid and unenforceable:

• Clotheslines
• Air source and ground source heat pumps
• Insulation upgrades
• Rain barrels
• Reflective roofing
• Energy-efficient appliances
• Solar water heaters
• Electric vehicle charging equipment
• Energy-efficient windows

This means your existing deed restrictions, bylaws, or architectural guidelines that prohibit these items are now void as a matter of Michigan public policy—regardless of what your governing documents say.

Solar Energy Systems: What HOAs Can Still Regulate

While HEPA prohibits outright bans on solar panels, the law does preserve certain regulatory authority for associations. HOA boards can still review solar panel applications and enforce reasonable aesthetic standards—but those standards must meet specific statutory requirements.

Grounds for Denying a Solar Panel Application

Under MCL 559.309, an HOA may deny a solar energy system application only if one or more of the following conditions apply:

Court Finding of Legal Violation: A court has found that the installation violates a law.

Non-Conformance with Approved Application: The installed system does not substantially conform with the application that was approved.

Roof Installation Standards: For roof-mounted systems, the association may deny if: the system extends more than 6 inches above or beyond the roof; the system does not conform to the roof slope with a top edge parallel to the roof line; or the frame, brackets, or visible conduit/wiring are not silver, bronze, or black tone (colors commonly available in the marketplace).

Ground Installation Standards: For ground-mounted systems in a fenced yard or patio, the association may deny if the system is taller than the fence line.

Critical Limitations on HOA Authority

The Act imposes strict limits on what standards an HOA can enforce. Any policy standards that reduce estimated annual energy production by more than 10% or increase installation costs by more than $1,000 are prohibited. Additionally, HOAs cannot:

• Prohibit solar panels from being installed on any roof face
• Require a specific technology (such as solar shingles instead of traditional panels)
• Inquire into a member’s energy usage
• Impose conditions that impair system operation or void industry standard warranties
• Require post-installation reporting
• Charge higher application fees than for other property modification requests
• Deny applications based on who owns the system or the financing method chosen

The Mandatory Solar Energy Policy: Requirements and Deadline

Under MCL 559.309(1), every Michigan homeowner association must adopt a written solar energy policy statement within one year of the Act’s effective date. The deadline is April 1, 2026.

Required Policy Provisions

The policy must include specific statements required by statute, including affirmations that the association will not engage in any of the prohibited conduct listed above, that adjacent owner approval is not required for solar installations, and that members may resubmit denied applications for reevaluation under the new law.

The policy must also clearly state the grounds on which an application may be denied and the application requirements members must follow.

Distribution Requirements

Once adopted, the association must provide a copy of the policy to all members within 30 days, make it available upon request, and post it on the association’s website if one exists.

Application and Approval Procedures

Under MCL 559.311, members who wish to install a solar energy system must submit a written application containing: the member’s name; the street address where the system will be installed; the name and contact information of the installer; an image showing the proposed layout; and a description of the system.

The association must approve or deny the application within 30 days after the policy is adopted. For applications submitted before the policy is adopted, the association has 120 days to respond.

Importantly, if the association fails to adopt a policy by the deadline or fails to respond to an application within the required timeframe, the member may proceed with installation and the association cannot impose fines or penalties.

Does the Act Apply to Condominium Associations?

One significant issue with HEPA is that the legislature did not define “homeowner association.” This has created uncertainty about whether the Act applies to condominium associations governed by the Michigan Condominium Act (MCL 559.101 et seq.).

The Michigan legal community is divided on this question. Some attorneys argue that because the legislature knows how to distinguish between HOAs and condominium associations in other statutes—and chose not to include condominium associations in HEPA—the Act should not apply to condos. Others contend that condominium associations should voluntarily comply to avoid potential liability until courts provide clarity.

Regardless of this uncertainty, the Act clearly does not apply to shared roofs (roofs serving more than one unit) or common areas. This means most traditional high-rise or attached condominium projects with shared roofs would not be subject to the solar panel provisions even if courts determine the Act applies to condominiums generally.

Enforcement and Penalties

HEPA includes meaningful enforcement mechanisms. Under MCL 559.315, if an association violates the Act, a member may bring a civil action for damages. A prevailing member may recover reasonable attorney fees and costs—making non-compliance a potentially expensive proposition for associations.

Additionally, any provision in an HOA policy that conflicts with the Act is automatically void and unenforceable.

Action Steps for HOA Boards

To ensure compliance and protect your association, boards should take the following steps before the April 1, 2026 deadline:

1. Review Existing Governing Documents: Identify any provisions that prohibit or restrict energy-saving improvements or solar panels. These provisions are now unenforceable and should be addressed in future amendments.

2. Adopt a Compliant Solar Energy Policy: Work with legal counsel to draft a policy that includes all required statutory provisions and stays within the bounds of what the Act permits.

3. Update Application Procedures: Ensure your architectural review or modification application process can accommodate solar panel requests within the 30-day response window.

4. Distribute the Policy: Provide copies to all members within 30 days of adoption and post it on your website.

5. Train Board Members and Managers: Ensure everyone involved in reviewing applications understands the new requirements and limitations.

Michigan’s Homeowner Energy Policy Act requires careful attention to statutory requirements and deadlines. We regularly advise Michigan HOA and condominium boards on compliance with state law, including drafting compliant solar energy policies, reviewing and amending governing documents, and counseling boards on application review procedures.

If your board needs assistance preparing for the April 1, 2026 deadline, or if you have questions about how HEPA affects your community, contact our office at (248) 716-3600 to schedule a consultation.

Frequently Asked Questions About the Michigan Homeowner Energy Policy Act

Disclaimer: This article provides general information about Michigan’s Homeowner Energy Policy Act and does not constitute legal advice. The application of law to specific circumstances requires individual analysis. Contact a qualified attorney for advice regarding your association’s particular situation.

About the Author

Richard M. Delonis is a Michigan condominium and HOA lawyer at Szura & Delonis, PLC in Southfield (Metro Detroit). He advises association boards and community association managers on governance, rule enforcement, assessment collections, document amendments, and risk management, with a practical focus on helping boards reduce disputes and run defensible, well-documented processes.

Key Takeaways

Michigan condo associations face higher premises-liability exposure for injuries on common elements—especially winter slip-and-falls.

• Co-owners using common elements can be treated as invitees when the association has possession/control under the governing documents—meaning the association owes reasonable care to protect them from dangerous conditions.
• “Open and obvious” is no longer a quick exit on duty; it is now evaluated under breach and comparative fault, so more cases can survive early dismissal.
• The best defense is boring consistency: documented inspections, disciplined repairs, tight vendor contracts, and an insurance program built for real-world claims.

If your condominium association controls the common elements, Michigan law increasingly treats common-area injury claims like standard premises-liability cases. Boards should assume more claims will be filed, fewer will be dismissed early, and defense costs will rise.  It is important for associations to have a consistent, documented maintenance and safety program.

What Changed in Michigan (and Why Boards Should Care)

1) Co-Owners Can Sue Associations for Common-Element Injuries

In Janini v London Townhouses Condominium Association (2024), the Michigan Supreme Court held that a condominium co-owner is an invitee when entering the common elements, and the condominium association owes a duty to exercise reasonable care to protect co-owners from dangerous conditions on the land. The Court also overruled prior appellate authority that had limited these claims.

2) The “Open and Obvious” Defense Is Weaker

In Kandil-Elsayed v F & E Oil, Inc. (consolidated with Pinsky v Kroger Co of Michigan), the Michigan Supreme Court shifted how “open and obvious” is used in premises-liability cases. Open-and-obvious conditions still matter, but the analysis generally belongs under breach and comparative fault rather than eliminating duty at the threshold. Practically, that can mean more cases survive early motion practice, increasing defense costs and settlement pressure.

The Board Playbook: 10 Practical Moves to Reduce Claims and Control Insurance Costs

Step 1: Map Your High-Claim Zones

Boards reduce risk faster when they identify where people actually get hurt.

• Sidewalks and trip edges (heaving, gaps, settled slabs)
• Stairs and handrails
• Parking lots (potholes, drainage, lighting)
• Entry mats and thresholds
• Clubhouse / pool / gym wet areas
• Mailboxes and dumpster routes (high-foot-traffic in winter)

Recommendation: Create a one-page “Risk Map” and have management update it 2x annually.

Step 2: Adopt a Written Common-Area Safety & Inspection Protocol

Consistency is defensibility. Inspection logs matter when claims are filed months later.

• Non-winter months: weekly walk-through checklist (common walkways, lighting, stairs)
• Winter months: increased frequency plus post-storm documentation
• Same-day work orders for hazards, with target completion dates

Common board mistake: “We inspect when someone complains.” Plaintiff’s lawyers will frame that as a lack of reasonable care.

Step 3: Tighten the Snow & Ice Plan

A written snow-and-ice plan plus vendor logs can cut claim frequency and claim severity.

• Trigger thresholds (inches, ice conditions, freeze-thaw events)
• Response times (e.g., within X hours after snowfall ends)
• Priority routes (main entries, mailboxes, dumpster routes, accessible paths)
• Materials (pre-treat policy, salt type, storage)
• Vendor documentation: time-stamped service logs and photos when feasible

Recommendation: Require vendors to deliver service logs automatically after each weather event.

Step 4: Fix Trip Hazards Like You Fix Leaks (Fast + Documented)

Trip hazards are easy to photograph and easy to argue were known—so boards should either repair them or document the plan and interim controls.

Rule of thumb: If you would warn a guest about it, you should probably repair it or mitigate it (and document what you did).

Step 5: Build an Incident Response Kit

Fast, factual documentation protects the association and helps the insurer defend the claim.

• Photograph the area promptly (lighting, weather, condition)
• Preserve video
• Identify witnesses
• Create an incident report (facts only—no blame or admissions)
• Notify the carrier promptly according to policy notice requirements

Common mistake: Casual emails like “we’ve known that sidewalk is bad for years.” That will likely become Exhibit A in a lawsuit.

Step 6: Hold a Once-a-Year Insurance Reality Check Meeting

Boards should treat insurance as an important financial shield and review the Association policy with a knowledgeable insurance agent to confirm risks and coverage.

• General liability limits and whether umbrella/excess is adequate
• Deductibles/SIR and budget impact
• Defense costs: inside vs. outside limits (varies by policy)
• Medical payments coverage (small but helpful for early resolution)
• Claim reporting and who communicates with the carrier

Step 7: Upgrade Vendor Contracts

If your contracts and endorsements are weak, the association can end up paying what the vendor should cover.

• Strong indemnity provisions
• Additional insured endorsement for the association (not just a certificate)
• Clear scope and performance standards (especially winter service)
• Proof of insurance plus endorsements on renewal

Common mistake: Accepting a certificate without the endorsement that actually grants additional insured status.

Step 8: Document Decisions Without Documenting Drama

Minutes should record decisions and action steps, not arguments, accusations, or speculation about fault.

Step 9: Align Budgets and Reserves With Safety Reality

Chronic walkway settlement, drainage, and lighting issues should be planned budget items—with interim controls documented until repairs are completed.

Step 10: Do a 30-Day “Safety Reset”

A 30-day reset creates real improvement quickly and demonstrates reasonable care.

• Approve an inspection checklist and schedule (winter vs. non-winter)
• Require winter vendor logs and response standards in writing
• Identify the top 10 trip hazards and schedule fixes (or document interim mitigation)
• Verify additional insured endorsements for key vendors
• Hold a 45-minute annual insurance review call (limits, deductibles, reporting)

Board Checklist

Maintenance & Documentation

• [ ] Risk map created and updated quarterly
• [ ] Inspection schedule adopted (winter vs non-winter)
• [ ] Work-order system tracks date reported → date fixed
• [ ] Photo log for recurring problem areas

Snow & Ice

• [ ] Trigger thresholds and response times in writing
• [ ] Priority routes defined
• [ ] Vendor provides time-stamped logs + post-event summary
• [ ] Pre-treat policy decided and documented

Insurance & Vendors

• [ ] GL limits reviewed; umbrella evaluated
• [ ] Claim reporting protocol documented
• [ ] Vendor contracts updated (indemnity + additional insured + scope)
• [ ] Endorsements collected for additional insured status

Frequently Asked Questions

When to Call Legal Counsel

• Multiple slip/trip incidents in the last 12-24 months
• Vendor pushback on additional insured endorsements or indemnity terms
• Known hazards delayed by budget timing without interim mitigation
• A claim letter arrives and the association lacks a clean paper trail
• Board disagreement on snow-and-ice standards, inspection frequency, or enforcement

Next Step

If your board wants a practical, defensible risk program, consider an Insurance + Maintenance Risk Review: a focused review of your governing documents, inspection practices, snow-and-ice plan, vendor contracts, and insurance structure—with a prioritized “fix list” that your manager can implement.

This article provides general Michigan-oriented information for condominium association boards and is not legal advice. Associations should consult experienced legal counsel about their specific documents, facts, and risk-management options.

About the Author

Richard M. Delonis is a Michigan condominium and HOA lawyer at Szura & Delonis, PLC in Southfield (Metro Detroit). He advises association boards and community association managers on governance, rule enforcement, assessment collections, document amendments, and risk management, with a practical focus on helping boards reduce disputes and run defensible, well-documented processes.

Key Takeaways

• Michigan liens are powerful only when the notices and dates are right.
• Most subs/suppliers should serve a Notice of Furnishing early (often within 20 days of first furnishing) to fully protect lien rights.
• A Claim of Lien generally must be recorded within 90 days of last furnishing – waiting is how lien rights quietly die.
• Mistakes with sworn statements, waivers, licensing, residential rules, and “last work” dates are common lien-killers – this is where a Michigan construction lawyer can prevent expensive, irreversible errors.

Table: The Deadlines That Matter

The Real-World Problem: Cash Flow and “Slow Pay” on Michigan Jobs

If you build in Michigan long enough, you’ve lived this:

• Work is done.
• Punch list is mostly wrapped.
• The owner or GC is “reviewing paperwork” or “waiting on the lender.”
• Weeks turn into months – and your cash flow takes the hit.

On tight-margin jobs in Metro Detroit and across Michigan, one unpaid project can threaten payroll, bonding capacity, and your ability to bid the next job.

Michigan’s Construction Lien Act (MCL 570.1101 et seq.) is designed to prevent exactly that scenario. But the statute expects a very specific paper trail – and courts can be unforgiving when that trail is wrong.

Step 1: Lock In Project Info and Deadlines on Day One

Short answer: You cannot protect lien rights without accurate project info and a deadline calendar from the moment you start.

What to gather (your “Lien Rights Intake Sheet”)

• Notice of Commencement (if recorded/provided) and all listed contact info
• Exact legal name of the owner/lessee and the owner’s “designee”
• Correct property legal description (not just a street address)
• Your contract, scope, change orders, and extras/credits documentation
• First furnishing date (when you first delivered labor/materials)
• A running log of “last furnishing” activity (see Step 4)

Residential caution: For residential work, confirm licensing and written-contract requirements early. Residential rules can be a trap door if you treat them like commercial work.

Why this matters

Everything that follows depends on:

• Correct owner/designee information
• Correct legal description
• Accurate first/last furnishing dates

Registers of Deeds generally record documents that are properly formatted – they do not police whether your lien is legally valid. So you can record something that looks fine and still lose in court later.

Pro tip: Make “Lien Rights Intake Sheet” completion a non-negotiable part of job setup – just like insurance certificates and W-9s.

Step 2: Serve a Michigan Notice of Furnishing if You’re Not the Owner’s Contractor

Short answer: In Michigan, most subcontractors and suppliers who do not contract directly with the owner/lessee should serve a Notice of Furnishing early (often within 20 days of first furnishing) to fully protect lien rights. General contractors with a direct owner contract are often treated differently.

Who typically needs it?

• Usually needs NOF: subs and suppliers without a direct contract with the owner/lessee
• Often exempt: prime contractor in direct contract with the owner/lessee (verify on your project facts)

The NOF is typically served on the owner’s designee and parties identified in the Notice of Commencement.

What if it’s late?

Late notice does not always mean “no lien,” but it can shrink what your lien can reach – especially if the owner already paid the GC before receiving your NOF (often relying on sworn statements and waivers). In practice, late NOF often means you’re fighting over leftovers instead of the full balance.

Practical company rule: No mobilization on a new job until (1) Notice of Commencement info is in hand, and (2) the NOF is scheduled or sent (if required).

(If your team started work and you are not sure whether the NOF clock is running – or already ran – a short lien “triage call” can confirm your deadlines and the safest next move before you lose leverage.)

Step 3: Use Sworn Statements and Lien Waivers the Right Way

Short answer: Michigan’s lien framework expects sworn statements and lien waivers to support proper payments. If these documents are wrong or inconsistent, payment disputes escalate fast – and your lien enforcement strategy can get tangled.

What a sworn statement does

A sworn statement generally identifies subcontractors/suppliers and amounts paid/owed so owners and lenders can make informed payments and avoid double-paying.

Why it matters to your lien strategy

Depending on the project and the role you are in, failing to provide a required sworn statement can limit your ability to enforce lien rights until you cure the issue.

Also: an intentionally false sworn statement can create serious civil exposure and may trigger criminal risk in extreme cases.

Best practices that prevent problems

• Use a form that tracks the statutory expectations (or close to it).
• Make sure accounting and field teams agree on who is actually on the job, what has/has not been paid, and what changed via change orders/extras.
• Pair every draw with the right waivers: conditional waivers for payments not yet cleared; unconditional waivers only for funds actually received.

Pro tip: Sworn statements are not just compliance – they are a business tool that reduces “mystery” and helps payments move.

Step 4: Record Your Claim of Lien Within 90 Days of Last Furnishing

Short answer: To preserve lien rights, you generally must record a Claim of Lien in the county Register of Deeds within 90 days after your last furnishing of labor/materials for that improvement. Courts tend to treat the deadline as strict.

The biggest trap: “Last furnishing” arguments

This is where many otherwise-valid liens die – because the claimant assumed a minor return trip extended the deadline.

“Last furnishing” usually counts when:

• It is substantial work within the original scope, or an approved change order
• It is necessary completion work clearly contemplated by the contract
• It is work that meaningfully advances the improvement (not a courtesy visit)

“Last furnishing” usually does not count when:

• Minor punch-list touch-ups that are trivial
• Warranty calls that are separate from contract completion
• Work performed mainly to extend lien time (courts dislike this)

What the Claim of Lien should contain (high level)

• Lien claimant identity
• Owner/lessee identity
• Legal description
• First and last furnishing dates
• Contract amount, amount paid, and balance claimed
• Verification by oath (commonly notarized)

Pro tip: Do not cut it close. If the “last furnishing” date is arguable, record earlier and let counsel help you position the facts.

Step 5: Serve the Recorded Lien and Calendar the One-Year Enforcement Deadline

Short answer: After recording, you generally must serve a copy of the recorded lien within a short statutory window (often 15 days) and file suit to enforce the lien within one year of recording – or the lien can expire.

Service: do it cleanly, document it

Service requirements matter most when a lender, title company, or later purchaser is involved. Follow the statutory method(s), keep proof, and do not improvise. (Certified mail and personal service are common methods, but follow the Act.)

Enforcement: the one-year clock is separate from the 90-day clock

Recording protects your lien on paper. Enforcing it (if necessary) usually means filing a lien foreclosure action in circuit court within one year of recording. Many cases settle before a forced-sale scenario, but the deadline itself is often non-negotiable.

Pro tip: When you record, immediately calendar the service deadline, the one-year lawsuit deadline, and interim check-ins at 30/60/90/180 days to evaluate negotiation, mediation, or filing.

Strategic Pro Tips Michigan Contractors Should Know

1) Watch the residential traps

Residential projects can add extra requirements (licensing, written contract terms, and statutory compliance issues). If you are required to be licensed and are not, it can seriously limit lien and even contract remedies. Do not guess – verify.

2) Condo and multi-building projects can multiply your deadline risk

On phased projects, condos, or multiple buildings, “improvement” timing can get complex – sometimes requiring separate tracking by unit/building/phase. Treat these as landmines and bring in counsel early.

3) Use a Notice of Intent to Lien as a pressure valve

Michigan does not always require a Notice of Intent to Lien, but it can be a smart business move:

• Signals seriousness
• Gives a final off-ramp
• Often gets lender/title attention before you record

4) Align liens with an overall collections strategy

A lien is not your only lever. Depending on the job, you may also consider:

• Contract claims
• Bond claims (public work and bonded private projects)
• Joint checks/direct pay agreements
• Negotiated waiver strategy

Frequently Asked Questions About Michigan Construction Liens

What’s the Next Step?

If you’re a Michigan contractor, subcontractor, or developer and you’re seeing “slow pay,” do not wait until day 89 to get serious.

If you want a practical, fast answer: schedule a lien strategy / deadline triage review so you can confirm:

• Whether a Notice of Furnishing is/was required
• Your defensible first/last furnishing dates
• Whether your sworn statements/waivers help or hurt
• Whether a lien, NOI, bond claim, or contract action is the smartest next lever

About the Author

Richard M. Delonis is a Michigan construction, business, and real estate attorney at Szura & Delonis, PLC (Southfield/Metro Detroit). He advises construction managers, general contractors, subcontractors, developers, and property owners on lien rights, collections strategy, contract disputes, and project-risk issues.

Disclaimer: This article discusses Michigan construction lien concepts in general terms and is not legal advice for your specific project. Deadlines and requirements can change based on project type, notices, contract facts, and “last furnishing” disputes – get Michigan counsel involved if the clock is running.

Key Takeaways

• Collections works best when the board follows one written policy—every time.
• Your biggest risk isn’t “being tough”—it’s being inconsistent or sloppy with documentation.
• A predictable escalation path (notice → demand → lien/next step) reduces drama and increases recovery.
• Boards should separate business decisions (budgets/reserves) from personal conflict with owners.
• The fastest way to reduce disputes is to publish the policy and stick to it.

Board-Level Reality Check

Most boards don’t “choose” to become debt collectors. You’re volunteers trying to keep the community running, then a handful of owners stop paying, and suddenly your reserve study, roof replacement, and landscaping contract are all under pressure. The worst part: if your process isn’t consistent, the association can end up spending more in legal fees arguing about how it collected than about what is owed.

Step 1: Adopt a Written Collections Policy the Board Can Defend

A written policy is your “seatbelt”.  It keeps the board consistent, fair, and harder to attack.

A board collections policy should clearly state:

• When assessments are due and when an account is considered delinquent
• What happens at day 15/30/45/60/90 (or your chosen timeline)
• Late fees, interest, and administrative charges (if authorized)
• When accounts are turned over to counsel/collections
• Whether payment plans are allowed and on what terms
• When the board will consider lien/enforcement options
• How disputes are handled (ledger questions vs. “I’m mad at the board”)

Board mistake to avoid: “We handle it case-by-case.” That sounds fair, but it often becomes inconsistent.  And inconsistency is what can get boards into trouble.

Implementation tip: Adopt the policy by resolution and keep it with your governance documents. Publish a short “owner-facing summary” so it doesn’t feel like a surprise.

Step 2: Fix the #1 Hidden Problem—Your Ledger and Paper Trail

If the ledger is messy, every collections step becomes slower, riskier, and more expensive.

Before you escalate anything, confirm:

• The owner’s correct legal name and mailing address on file
• The assessment schedule (and any approved increases/special assessments)
• What was billed, what was paid, and how payments were applied
• Whether credits, waivers, or adjustments exist (and who approved them)
• Whether the association followed its own notice requirements

Board mistake to avoid: Sending a “demand” when the ledger has obvious holes. It undermines credibility and invites disputes.

Treat your delinquency list like financial statements: review it monthly, not “whenever it gets bad.”

Step 3: Use a Simple Escalation Timeline (and Don’t Negotiate Against Yourself)

Collections works when the timeline is predictable and boring.

Here’s a board-friendly model (adjust to your documents and management practices):

• Day 1–15: Courtesy reminder / statement
• Day 30: First delinquency notice (clear amount + due date)
• Day 45–60: Final notice + intent to turn over to counsel/collections
• Day 60–90: Turnover + formal demand + board decision point on next leverage step
• 90+ days: Consider lien/enforcement track + payment plan standards

Board mistake to avoid: Re-starting the clock every time the owner calls angry. Your process should be stable even when emotions are not.

Step 4: Payment Plans

Payment plans can increase recovery, but only if they are written, consistent, and enforceable.

A good board payment plan typically includes:

• A signed agreement (not informal emails)
• Current assessments must stay current (autopay is ideal)
• A fixed monthly catch-up amount
• A clear default clause (missed payment = immediate escalation)
• No waiver of lien/enforcement rights unless the board affirmatively decides otherwise

Step 5: Know Your Leverage Options (and When Each Makes Sense)

Common collection methods:

• Formal demand letter (often the first “serious” step)
• Lien
• Lawsuit for money judgment/ foreclosure of the lien
• Foreclosure options (when permitted and economically sensible)
• Post-judgment tools (garnishment, etc., if a judgment is obtained)

How boards should decide:

• Amount owed (small balance vs. meaningful arrearage)
• Owner behavior (communicative + consistent vs. chronic avoidance)
• Equity and collectability (is there a realistic path to recovery?)
• Community impact (fairness to paying owners, deterrence, precedent)

Board mistake to avoid: Threatening the “nuclear option” too early, then backing down. If you escalate, do it thoughtfully, and be prepared to follow through.

Board Checklist

• Adopt a written collections policy (resolution + owner summary).
• Review delinquency report monthly (board visibility matters).
• Audit ledger accuracy before escalation.
• Standardize notices and keep proof of sending.
• Establish payment plan standards (autopay + default clause).
• Decide a clear “turnover threshold” (days delinquent and/or amount).
• Separate ledger disputes from governance disputes (two tracks).
• Track attorney/collection costs as you go.
• Document board decisions in minutes.
• Revisit policy annually based on results.

When to Call a Michigan Condo/HOA Lawyer

Call counsel when:

• Your delinquency rate is rising and you need a system, not one-off letters.
• An owner claims selective enforcement, discrimination, or “the board can’t do this.”
• The owner demands a hearing, threatens suit, or escalates publicly.
• The account is large enough that a lien/enforcement decision has real risk.
• You’re seeing repeated hardship claims with inconsistent documentation.
• You have a disputed ownership/tenant situation, probate, bankruptcy, or title confusion.

Frequently Asked Questions About Condo/HOA Collections

Contact Us

If delinquencies are threatening your budget or reserves, schedule a focused Michigan condo/HOA collections strategy review. We’ll review your documents, your current delinquency profile, and recommend a clear escalation track your board can follow consistently.

This article provides general Michigan-oriented information for association boards and is not legal advice. Associations should consult counsel about their specific documents, facts, and enforcement options.

About the Author

Richard M. Delonis is a Michigan condominium and HOA lawyer at Szura & Delonis, PLC in Southfield (Metro Detroit). He advises association boards and community association managers on governance, rule enforcement, assessment collections, document amendments, and risk management, with a practical focus on helping boards reduce disputes and run defensible, well-documented processes.

Your circumstances and your plans for the business may dictate which entity is best. For instance, a limited liability company may be the right choice if you will have several members in your company and you wish to have different voting rights for certain individuals. The flexibility of an LLC may be just what you need, and you will want to ensure that an Operating Agreement is prepared that correctly sets things up. You may also want a noncompetition provision included in the agreement, so that members of your company are not out assisting or otherwise associated with any competing businesses. If you anticipate that your product or service will eventually attract sophisticated investors, a C corporation may be a good idea. All of these considerations are things that an experienced business attorney can handle. You will have many other things on your plate to deal with, and trying to cut and paste some random form you found on the internet is simply not a good idea. Choosing between an S corporation, a C corporation, a LLC, a general partnership or a limited partnership should be a decision that is made only after consulting with a knowledgeable business lawyer and your tax advisor. And then a proper set of Bylaws, Operating Agreement, or Partnership Agreement should be prepared.

This is not the time to try to save a few bucks and attempt to go it alone and do it yourself– even if a TV commercial or internet ad makes it looks so easy. Attorneys who routinely help small business owners should be able to give you a reasonable flat fee to get the business properly formed, and the potential problems you avoid down the road will more than justify the investment.

About the Author

Richard Delonis is a Michigan business attorney with Szura & Delonis, PLC (Southfield / Metro Detroit). He helps entrepreneurs and small-business owners form and operate Michigan companies, draft and negotiate contracts, and resolve business disputes. He brings a practical, business-minded approach shaped by real operational leadership experience, and he advises clients throughout Michigan, including Oakland, Wayne, Macomb, and Washtenaw Counties.

Frequently Asked Questions: Starting a Small Business in Michigan

1) Do I really need a lawyer to start a small business?
Not always—but getting legal help early often prevents expensive problems later. A business attorney can help you choose the right entity, set up the right documents, and avoid “quick fixes” that don’t fit your goals. If you plan to add partners, raise money, or sign important contracts, early guidance matters.

2) What business entity should I form in Michigan (LLC, S-corp, C-corp, partnership)?
The “best” entity depends on your goals, taxes, ownership structure, and risk exposure. For example, many owners like LLCs for flexibility, while some businesses choose a corporation structure when planning for outside investors. It’s a decision you should make with your attorney and tax advisor.

3) If I form an LLC, do I really need an Operating Agreement?
Yes—especially if there’s more than one owner (member). An Operating Agreement sets rules for voting, profits, management authority, what happens if someone wants out, and how disputes get handled. It’s one of the most important “do it right the first time” documents.

4) What documents do corporations need (besides filing with the State)?
Corporations commonly need bylaws, initial resolutions, stock documents, and a clean record-keeping system (like meeting minutes and corporate books). These basics help protect the liability shield and make your business easier to run, finance, and sell later.

5) Can I use a template from the internet to form my business?
Templates can miss key terms, conflict with your goals, or fail to address real-world issues between owners. Many “cheap” forms create expensive messes later—especially when partners disagree, money is tight, or someone exits the business.

6) Should I include a noncompete or nonsolicitation clause between owners or key employees?
Sometimes—if it fits your business model and relationships. These clauses can help protect the business if a key person leaves and tries to compete or pull customers away. The details matter, and they should be drafted to match Michigan law and your specific situation.

7) When does a C-corporation make more sense for a startup?
If you expect to pursue outside investors, issue different classes of ownership, or build toward a larger scale structure, a C-corporation may be worth considering. The right choice depends on your growth plan, tax posture, and fundraising strategy.

8) How much does it cost to have a lawyer help start a business?
Many law firms offer flat-fee formation packages for common entity types, which can be a cost-effective way to get set up correctly. The price depends on complexity—like multiple owners, special voting rights, investor readiness, or custom contract needs.

9) What are the most common legal mistakes new business owners make?
Picking an entity without thinking through taxes and ownership, skipping the operating agreement/bylaws, using generic internet forms, failing to document owner roles and contributions, and signing contracts without understanding risk-shifting terms.

10) Where can I get help with Michigan business formation and contracts?
Visit our Business and Corporate Law page or contact our office to discuss your situation.

Disclaimer: This FAQ is for general information only and is not legal advice. Business formation choices depend on your goals, taxes, and specific facts.