Homeowner Construction Lien Recovery Fund

On August 23, 2010, Governor Granholm signed into law Public Act 147 of 2010 which repealed provisions of the Construction Lien Act regarding the Homeowner Construction Lien Recovery Fund (Fund), which eliminated the Fund.  The Fund was originally established by Part 2 of Public Act 497 of 1980, for the purpose of protecting a homeowner from paying twice for a construction project, should their contractor fail to pay the suppliers, subcontractors and laborers.  The Fund has been insolvent since October 2009 and immediately ceased operations.

Included in the package of bills signed by the Governor to eliminate the Fund were Public Acts 148, 149, 150 and 151 of 2010, which amended the Electrical Administrative Act, the Forbes Mechanical Contractors Act, the State Plumbing Act and the Occupational Code, respectively, to eliminate the requirements for licensed electrical, mechanical, and plumbing contractors, residential builders and maintenance & alteration contractors to pay membership fees into the now eliminated Fund. The repealed provisions also eliminate the requirement for memberships of suppliers, subcontractors and laborers.  Additionally, the felony penalty for submitting false information to obtain payment from the Fund was eliminated by Public Act 152 of 2010.  

Even though the Fund has been eliminated, homeowners will retain protection from construction liens attaching to their property for home improvement or construction when they have already paid the contractors or builder under the Construction Lien Act, by filing an affidavit and providing evidence of the payment with the circuit court.