SENATE BILL No. 1371

 

 

September 9, 2004, Introduced by Senator BASHAM and referred to the Committee on Economic Development, Small Business and Regulatory Reform.

 

 

        

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                 A bill to amend 1980 PA 497, entitled                                             

                                                                                

    "Construction lien act,"                                                    

                                                                                

    by amending the title and sections 104, 106, 107, 114, 201, 202,            

                                                                                

    203, and 204 (MCL 570.1104, 570.1106, 570.1107, 570.1114,                   

                                                                                

    570.1201, 570.1202, 570.1203, and 570.1204), sections 104, 106,             

                                                                                

    107, 114, and 203 as amended by 1982 PA 17, section 201 as                  

                                                                                

    amended by 1984 PA 190, and section 202 as amended by 1981 PA               

                                                                                

    191, and by adding section 114a.                                            

                                                                                

                THE PEOPLE OF THE STATE OF MICHIGAN ENACT:                      

                                                                                

1                                 TITLE                                         

                                                                                

2                                                                                An act to establish, protect, and enforce by lien the rights                       

                                                                                

3   of persons performing labor or providing material or equipment              

                                                                                

4   for the improvement of real property; to provide for certain                

                                                                                

5   defenses with respect thereto; to establish  a  the homeowner               

                                                                                

6   construction lien recovery fund;  within the department of                  

                                                                                


                                                                                

1   licensing and regulation;  to provide for the powers and duties             

                                                                                

2   of certain state officers and agencies; to provide for the                  

                                                                                

3   assessments  assessment of certain occupations; to provide                 

                                                                                

4   remedies and prescribe penalties; and to repeal  certain  acts              

                                                                                

5   and parts of acts.                                                          

                                                                                

6       Sec. 104.  (1) "Court" means the circuit court in which an                  

                                                                                

7   action to enforce a construction lien through foreclosure is                

                                                                                

8   pending.                                                                    

                                                                                

9       (2) "Department" means the department of  licensing and                     

                                                                                

10  regulation  labor and economic growth.                                      

                                                                                

11      (3) "Designee" means the person named by an owner or lessee                 

                                                                                

12  to receive, on behalf of the owner or lessee, all notices or                

                                                                                

13  other instruments whose furnishing is required by this act.  The            

                                                                                

14  owner or lessee may name himself or herself as designee.  The               

                                                                                

15  owner or lessee may not name the contractor as designee.                    

                                                                                

16  However, a contractor who is providing only architectural or                

                                                                                

17  engineering services may be named as designee.                              

                                                                                

18      (4) "Fringe benefits and withholdings" means compensation                   

                                                                                

19  due an employee pursuant to a written contract or written policy            

                                                                                

20  for holiday, time off for sickness or injury, time off for                  

                                                                                

21  personal reasons or vacation, bonuses, authorized expenses                  

                                                                                

22  incurred during the course of employment, and any other                     

                                                                                

23  contributions made to or on behalf of an employee.                          

                                                                                

24      (5) "Fund" means the homeowner construction lien recovery                   

                                                                                

25  fund created  under part 2  in section 201.                                 

                                                                                

26      (6) "General contractor" means a contractor who contracts                   

                                                                                

27  with an owner or lessee to provide, directly or indirectly                  


                                                                                

1   through contracts with subcontractors, suppliers, or laborers,              

                                                                                

2   substantially all of the improvements to the property described             

                                                                                

3   in the notice of commencement.                                              

                                                                                

4       (7) "Improvement" means the result of labor or material                     

                                                                                

5   provided by a contractor, subcontractor, supplier, or laborer,              

                                                                                

6   including, but not limited to, surveying, engineering and                   

                                                                                

7   architectural planning, construction management, clearing,                  

                                                                                

8   demolishing, excavating, filling, building, erecting,                       

                                                                                

9   constructing, altering, repairing, ornamenting, landscaping,                

                                                                                

10  paving, leasing equipment, or installing or affixing a fixture or           

                                                                                

11  material, pursuant to a contract.                                           

                                                                                

12      (8) "Laborer" means an individual who, pursuant to a                        

                                                                                

13  contract with a contractor or subcontractor, provides an                    

                                                                                

14  improvement to real property through the individual's personal              

                                                                                

15  labor.                                                                      

                                                                                

16      Sec. 106.  (1) "Person" means an individual, corporation,                   

                                                                                

17  partnership, sole proprietorship, association, other legal                  

                                                                                

18  entity, or any combination thereof.                                         

                                                                                

19      (2) "Project" means the aggregate of improvements contracted                

                                                                                

20  for by the contracting owner.                                               

                                                                                

21      (3) "Residential structure" means an individual residential                 

                                                                                

22  condominium unit or a residential building containing not more              

                                                                                

23  than 2 residential units, the land on which it is or will be                

                                                                                

24  located, and all appurtenances,  thereto,  in which the owner or            

                                                                                

25  lessee contracting for the improvement is residing or will reside           

                                                                                

26  upon completion of the improvement.                                         

                                                                                

27      (4) "Subcontractor" means a person, other than a laborer or                 


                                                                                

1   supplier, who pursuant to a contract between himself or herself             

                                                                                

2   and a person other than the owner or lessee performs any part of            

                                                                                

3   a contractor's contract for an improvement.                                 

                                                                                

4       (5) "Supplier" means a person who, pursuant to a contract                   

                                                                                

5   with a contractor or a subcontractor, leases, rents, or in any              

                                                                                

6   other manner provides material or equipment  which  that is used            

                                                                                

7   in the improvement of real property.                                        

                                                                                

8       (6) "Wages" means all earnings of an employee whether                       

                                                                                

9   determined on the basis of time, task, piece, commission, or                

                                                                                

10  other method of calculation for labor or services except  those             

                                                                                

11  defined as  fringe benefits and withholdings.                               

                                                                                

12      Sec. 107.  (1) Each contractor, subcontractor, supplier, or                 

                                                                                

13  laborer who provides an improvement to real property  shall have            

                                                                                

14  has a construction lien upon the interest of the owner or lessee            

                                                                                

15  who contracted for the improvement to the real property, as                 

                                                                                

16  described in the notice of commencement  provided for by  given             

                                                                                

17  under section 108 or 108a, the interest of an owner who has                 

                                                                                

18  subordinated his or her interest to the mortgage for the                    

                                                                                

19  improvement of the real property, and the interest of an owner              

                                                                                

20  who has required the improvement.  A construction lien acquired             

                                                                                

21  pursuant to this act shall not exceed the amount of the lien                

                                                                                

22  claimant's contract less payments made on the contract.                     

                                                                                

23      (2) A construction lien under this act  shall attach                        

                                                                                

24  attaches to the entire interest of the owner or lessee who                  

                                                                                

25  contracted for the improvement, including any subsequently                  

                                                                                

26  acquired legal or equitable interest.                                       

                                                                                

27      (3) Each contractor, subcontractor, supplier, or laborer who                


                                                                                

1   provides an improvement to real property to which the person                

                                                                                

2   contracting for the improvement had no legal title  shall have              

                                                                                

3   has a construction lien upon the improvement for which the                  

                                                                                

4   contractor, subcontractor, supplier, or laborer provided labor,             

                                                                                

5   material, or equipment.  The forfeiture, surrender, or                      

                                                                                

6   termination of any title or interest held by  any  an owner or              

                                                                                

7   lessee who contracted for an improvement to the property,  or by            

                                                                                

8   any  an owner who subordinated his or her interest to the                   

                                                                                

9   mortgage for the improvement, or  by any  an owner who has                  

                                                                                

10  required the improvement  shall  does not defeat the lien of the            

                                                                                

11  contractor, subcontractor, supplier, or laborer upon the                    

                                                                                

12  improvement.                                                                

                                                                                

13      (4) If the rights of a person contracting for an improvement                

                                                                                

14  as a land contract vendee or a lessee are forfeited, surrendered,           

                                                                                

15  or otherwise terminated, any lien claimant who has provided a               

                                                                                

16  notice of furnishing or is excused from providing a notice of               

                                                                                

17  furnishing  pursuant to  under section 108, 108a, or 109 and who            

                                                                                

18  performs the covenants contained in the land contract or lease              

                                                                                

19  within 30 days after receiving actual notice of the forfeiture,             

                                                                                

20  surrender, or termination  shall be  is subrogated to the rights            

                                                                                

21  of the contracting vendee or lessee as those rights existed                 

                                                                                

22  immediately before the forfeiture, surrender, or termination.               

                                                                                

23      (5) For purposes of this act, if the real property is owned                 

                                                                                

24  or leased by more than 1 person, there is a rebuttable                      

                                                                                

25  presumption that an improvement to real property  pursuant to               

                                                                                

26  under a contract  which was entered into by  with an owner or               

                                                                                

27  lessee  shall be presumed to have been  was consented to by any             


                                                                                

1   other co-owner or co-lessee.  , but the presumption shall in all            

                                                                                

2   cases be rebuttable.  If enforcement of a construction lien                 

                                                                                

3   through foreclosure is sought and the court finds that the                  

                                                                                

4   improvement  has been  was consented to by a co-owner or                    

                                                                                

5   co-lessee who did not contract for the improvement, the court               

                                                                                

6   shall order the entire interest of that co-owner or co-lessee,              

                                                                                

7   including any subsequently acquired legal or equitable interest,            

                                                                                

8   to be subject to the construction lien.  A deficiency judgment              

                                                                                

9   shall not be entered against a noncontracting owner, co-owner,              

                                                                                

10  lessee, or co-lessee.                                                       

                                                                                

11      (6) If the real property of an owner or lessee is subject to                

                                                                                

12  multiple construction liens, the sum of the construction liens              

                                                                                

13  shall not exceed the amount  which  the owner or lessee agreed to           

                                                                                

14  pay the person with whom he or she contracted for the improvement           

                                                                                

15  as modified by  any and  all additions, deletions, and  any                 

                                                                                

16  other amendments, less payments made by or on behalf of the owner           

                                                                                

17  or lessee, pursuant to either a contractor's sworn statement or a           

                                                                                

18  waiver of lien, in accordance with this act.                                

                                                                                

19      (7) After the effective date of the amendatory act that                     

                                                                                

20  added this subsection, a construction lien of a subcontractor or            

                                                                                

21  supplier for an improvement to a residential structure shall not            

                                                                                

22  include an amount charged or assessed under the contract between            

                                                                                

23  the subcontractor or supplier and the general contractor for                

                                                                                

24  interest on the unpaid principal amount due, a time-price                   

                                                                                

25  differential, a finance charge, or any other item of interest.              

                                                                                

26      Sec. 114.  A contractor  shall  does not have a right to a                  

                                                                                

27  construction lien  upon  on the interest of  any  an owner or               


                                                                                

1   lessee in a residential structure unless the contractor has                 

                                                                                

2   provided an improvement to the residential structure pursuant to            

                                                                                

3   a written contract between the owner or lessee and the contractor           

                                                                                

4   and any amendments or additions to the contract are also  shall             

                                                                                

5   be  in writing.  The contract required by this section shall                

                                                                                

6   contain a statement, in type no smaller than that of the body of            

                                                                                

7   the contract,  setting forth  stating all of the following:                 

                                                                                

8       (a) That a residential builder or a residential maintenance                 

                                                                                

9   and alteration contractor is required to be licensed under                  

                                                                                

10  article 24 of  Act 299 of the Public Acts of 1980, as amended,              

                                                                                

11  being sections 339.2401 to 339.2412 of the Michigan Compiled                

                                                                                

12  Laws  the occupational code, 1980 PA 299, MCL 339.2401 to                   

                                                                                

13  339.2412.  That an electrician is required to be licensed under             

                                                                                

14  Act No.  217 of the Public Acts of 1956, as amended, being                 

                                                                                

15  sections 338.881 to 338.892 of the Michigan Compiled Laws  the              

                                                                                

16  electrical administrative act, 1956 PA 217, MCL 338.881 to                  

                                                                                

17  338.892.  That a  plumber  plumbing contractor is required to be            

                                                                                

18  licensed under  Act No.  266 of the Public Acts of 1929, as                 

                                                                                

19  amended, being sections 338.901 to 338.917 of the Michigan                  

                                                                                

20  Compiled Laws  the state plumbing act, 2002 PA 733, MCL 338.3511            

                                                                                

21  to 338.3569That a mechanical contractor is required to be                

                                                                                

22  licensed under the Forbes mechanical contractors act, 1984 PA               

                                                                                

23  192, MCL 338.971 to 338.988.                                                

                                                                                

24      (b) If the contractor is required to be licensed to provide                 

                                                                                

25  the contracted improvement, that the contractor is  so  licensed            

                                                                                

26  and the contractor's license number.                                        

                                                                                

27      (c) If a license is required, the contractor's license                      


                                                                                

1   number.                                                                     

                                                                                

2       Sec. 114a.  (1) The owner of residential property on which a                

                                                                                

3   construction lien has been recorded by a person who was not                 

                                                                                

4   licensed as described in section 114, or any person affected by             

                                                                                

5   the lien, may bring an action to discharge the lien.                        

                                                                                

6       (2) If the court in an action under subsection (1) determines               

                                                                                

7   that the person who recorded the lien was not licensed as                   

                                                                                

8   required, the person is liable to the person who brought the                

                                                                                

9   action for all damages that result from the recording and any               

                                                                                

10  attempts to enforce the lien, including actual costs and attorney           

                                                                                

11  fees.                                                                       

                                                                                

12      (3) A person who brings an action to recover for the                        

                                                                                

13  performance of an act or contract for which a license is required           

                                                                                

14  as described in section 114 shall allege in the complaint and has           

                                                                                

15  the burden of proving that he or she was properly licensed.                 

                                                                                

16      Sec. 201.  (1)  A  The homeowner construction lien recovery                 

                                                                                

17  fund is created within the department.  of licensing and                    

                                                                                

18  regulation.  The fund shall be self-supporting and shall  consist           

                                                                                

19  of assessments charged in the following manner  be funded as                

                                                                                

20  follows:                                                                    

                                                                                

21      (a)  Except as provided in subsection (4), when applying for                

                                                                                

22  renewal licensure for 1982 and when applying for initial                    

                                                                                

23  licensure, each of the following persons shall be assessed in  In           

                                                                                

24  addition to the license fee, a  fee of $50.00 for deposit in the            

                                                                                

25  fund  person who applies for 1 of the following shall pay a fee             

                                                                                

26  of $10.00 and a person who applies to renew 1 of the following              

                                                                                

27  shall pay a fee of $10.00 for each year that the renewed license            


                                                                                

1   will be valid:                                                              

                                                                                

2                                                                                (i) A  person applying for a  residential builders license                          

                                                                                

3   or a residential maintenance and alteration contractor's license            

                                                                                

4   under article 24 of the occupational code,  Act No.  299 of the             

                                                                                

5   Public Acts of 1980, as amended, being sections 339.2401 to                 

                                                                                

6   339.2412 of the Michigan Compiled Laws  1980 PA 299, MCL 339.2401           

                                                                                

7   to 339.2412.                                                                

                                                                                

8       (ii)  A person applying for an  An electrical contractor's                   

                                                                                

9   license under the electrical administrative act,  Act No.  217 of           

                                                                                

10  the Public Acts of 1956, as amended, being sections 338.881 to              

                                                                                

11  338.892 of the Michigan Compiled Laws  1956 PA 217, MCL 338.881             

                                                                                

12  to 338.892.                                                                 

                                                                                

13      (iii) A  person applying for an authorized master plumber's                  

                                                                                

14  plumbing contractor's license under  Act No.  266 of the Public             

                                                                                

15  Acts of 1929, as amended, being sections 338.901 to 338.917 of              

                                                                                

16  the Michigan Compiled Laws, which license authorizes the securing           

                                                                                

17  of plumbing installation permits  the state plumbing act, 2002 PA           

                                                                                

18  733, MCL 338.3511 to 338.3569.                                              

                                                                                

19      (iv) A  person applying for a  mechanical contractor's                       

                                                                                

20  license under the Forbes mechanical contractors act, 1984 PA 192,           

                                                                                

21  MCL 338.971 to 338.988.                                                     

                                                                                

22      (b) A laborer who seeks to recover from the fund for the                    

                                                                                

23  first time shall not be required to pay a fee until he or she               

                                                                                

24  obtains a recovery from the fund, at which time a fee of $15.00             

                                                                                

25  shall be withheld by the fund from the laborer's final recovery.            

                                                                                

26  However, in no event shall the total amount withheld by the fund           

                                                                                

27  from a laborer in a 1-year period exceed $50.00.                            


                                                                                

1       (c) Except for persons described in subdivisions (a) and                    

                                                                                

2   (b), all other lien claimants may become members of the fund by             

                                                                                

3   paying a fee of $50.00 prior to the date of the lien claimant's             

                                                                                

4   contract for the improvement to  the  a residential structure.              

                                                                                

5   A lien claimant under this subdivision shall not pay a fee of              

                                                                                

6   more than $50.00 in a calendar year.  If the lien claimant is a             

                                                                                

7   supplier that conducts business from more than 1 retail location,           

                                                                                

8   each retail location shall be treated as a separate person for              

                                                                                

9   purposes of paying fees and renewal fees for fund membership.               

                                                                                

10      (d) A person who has paid a fee under subdivision (b) or (c)                

                                                                                

11  shall pay a renewal fee as follows:                                         

                                                                                

12                                                                               (i) If the person paid the initial fee on or before June 1,                         

                                                                                

13  2002, a renewal fee of $50.00 shall be paid on or before June 1,            

                                                                                

14  2005, and a renewal fee of $50.00 on or before June 1 of every              

                                                                                

15  third year after the first renewal payment.                                 

                                                                                

16      (ii) If the person paid the initial fee after June 1, 2002,                  

                                                                                

17  a renewal fee of $50.00 on or before the first June 1 following             

                                                                                

18  the third anniversary date of the initial payment, plus a                   

                                                                                

19  proportional amount for the portion of the year from that                   

                                                                                

20  anniversary date to June 1, and a renewal fee of $50.00 on or               

                                                                                

21  before June 1 of every third year after the first renewal                   

                                                                                

22  payment.                                                                    

                                                                                

23      (2)  If, on December 1 of any year, the balance in the fund                 

                                                                                

24  is less than $1,000,000.00, the director of licensing and                   

                                                                                

25  regulation may require an additional assessment or payment, not             

                                                                                

26  to exceed $50.00, from each of the persons described in                     

                                                                                

27  subsection (1)(a) and (c), unless, within 30 legislative days               


                                                                                

1   after the director requires an additional assessment, the                   

                                                                                

2   legislature, by majority vote of the members elected and serving            

                                                                                

3   in both houses by record roll call vote, adopts a concurrent                

                                                                                

4   resolution to prohibit the additional assessment.  As used in               

                                                                                

5   this subsection "legislative day" means a day on which the senate           

                                                                                

6   and house is called to order and a quorum of the senate and house           

                                                                                

7   is present.  A person may pay a renewal fee under subsection                

                                                                                

8   (1)(d) after the date on which it is due, but is not entitled to            

                                                                                

9   recover from the fund for an improvement made after the due date            

                                                                                

10  and before the renewal fee is paid.                                         

                                                                                

11      (3) A person who becomes a member of the fund by paying a                   

                                                                                

12  fee under subsection (1) shall notify the department division               

                                                                                

13  that administers the fund, in writing, of a change in the                   

                                                                                

14  person's name, address, or form of business organization within             

                                                                                

15  30 days of the change.  Proof that a notice or other document was           

                                                                                

16  mailed or, if another method of delivery is required by law or              

                                                                                

17  rule, delivered by that other method to a member at the last                

                                                                                

18  address that the member provided to the fund administrator is               

                                                                                

19  conclusive proof that the notice or document was received by the            

                                                                                

20  member.                                                                     

                                                                                

21      (4)  (3)  A person  shall  is not  be  entitled to recover                  

                                                                                

22  from the fund unless  he or she  the person has paid into the               

                                                                                

23  fund as required by this  section  act.                                     

                                                                                

24      (4) Notwithstanding subsection (1)(a), a person shall not                   

                                                                                

25  be assessed more than $50.00 in an assessment period regardless             

                                                                                

26  of the number of licenses applied for or held.                              

                                                                                

27      Sec. 202.  (1) The director of  licensing and regulation                    


                                                                                

1   the department shall manage the  affairs of the fund pursuant               

                                                                                

2   fund according to this act.  A detailed financial statement of              

                                                                                

3   the condition of the fund shall be published by the director                

                                                                                

4   annually.   This  The fund shall be subject to an audit by the              

                                                                                

5   auditor general.  The state treasurer shall deposit or invest               

                                                                                

6   money from the fund, in the same manner as and subject to all               

                                                                                

7   provisions of law  with respect  that apply to the deposit or               

                                                                                

8   investment of state funds by the state treasurer, and interest              

                                                                                

9   earned shall be credited to the fund.  The unexpended fund                  

                                                                                

10  balance shall carry forward to the new fiscal year at the end of            

                                                                                

11  each fiscal year.                                                           

                                                                                

12      (2) The department may employ  such  office clerical and                    

                                                                                

13  professional help and claims investigators as  are  necessary to            

                                                                                

14  carry out  the provisions of  this act.  The attorney general               

                                                                                

15  shall assign members of his or her staff and may supplement that            

                                                                                

16  staff by contracting with  those  private attorneys as  are                 

                                                                                

17  necessary to adequately defend  the  actions against the fund.              

                                                                                

18  All wages, professional fees, and other administrative                      

                                                                                

19  expenditures necessary for operation and defense of the fund,               

                                                                                

20  including legal counsel, shall be charged to and payable from the           

                                                                                

21  fund.  Except  as provided in subsection (3)  for legal counsel             

                                                                                

22  fees, the amount paid in a fiscal year for wages, professional              

                                                                                

23  fees, and other administrative expenditures  necessary for the              

                                                                                

24  operation of the fund  shall not exceed 20% of  funds collected             

                                                                                

25  by the fund in the previous fiscal year  the average of the                 

                                                                                

26  ending balances in the fund for the previous 2 fiscal years.                

                                                                                

27      (3) If the $50.00 fee is not assessed against license                       


                                                                                

1   applications and renewals during a year under section 201, the              

                                                                                

2   limitation on fund expenditures provided in subsection (2) shall            

                                                                                

3   be calculated on the basis of the closest previous year in which            

                                                                                

4   the $50.00 fee was assessed and collected for license application           

                                                                                

5   and renewals under section 201.                                             

                                                                                

6       Sec. 203.  (1) A claim of construction lien  shall  does not                

                                                                                

7   attach to a residential structure, to the extent payments have              

                                                                                

8   been made, if the owner or lessee files an affidavit with the               

                                                                                

9   court indicating that the owner or lessee has done all of the               

                                                                                

10  following:                                                                  

                                                                                

11      (a) Paid the contractor for the improvement to the                          

                                                                                

12  residential structure,  and  indicating in the affidavit the                

                                                                                

13  amount of the payment.                                                      

                                                                                

14      (b) Not colluded with any person to obtain a payment from                   

                                                                                

15  the fund.                                                                   

                                                                                

16      (c) Cooperated and will continue to cooperate with the                      

                                                                                

17  department in the defense of the fund.                                      

                                                                                

18      (2)  In the absence of a  If there is no written contract                   

                                                                                

19  pursuant to  as required by section 114, the filing of an                  

                                                                                

20  affidavit under this section  shall create  creates a rebuttable            

                                                                                

21  presumption that the owner or lessee has paid the contractor for            

                                                                                

22  the improvement.  The presumption may be overcome only by a                 

                                                                                

23  showing of clear and convincing evidence to the contrary.                   

                                                                                

24      (3) Subject to section 204, a person who has recorded a                     

                                                                                

25  claim of lien and who is precluded from  recovering  having a               

                                                                                

26  construction lien under subsection (1) may recover from the fund            

                                                                                

27  the amount  for which the lien is established  he or she would              


                                                                                

1   have been entitled to recover but for subsection (1).  A person             

                                                                                

2   who seeks recovery from the fund shall establish all of the                 

                                                                                

3   following:                                                                  

                                                                                

4       (a) That he or she would be entitled to a construction lien                 

                                                                                

5   on a residential structure except for the defense provided in               

                                                                                

6   subsection (1).                                                             

                                                                                

7       (b) That payment was made by the owner or lessee to the                     

                                                                                

8   contractor or subcontractor.                                                

                                                                                

9       (c) That the contractor or subcontractor has retained or                    

                                                                                

10  used the proceeds or any part of the proceeds paid to the                   

                                                                                

11  contractor or subcontractor without having paid the person                  

                                                                                

12  claiming the construction lien.                                             

                                                                                

13      (d) That he or she has complied with section 201.                           

                                                                                

14      (e) That he or she has not colluded with another person to                  

                                                                                

15  obtain a payment from the fund.                                             

                                                                                

16      (f) That he or she has complied with any applicable                         

                                                                                

17  licensing acts.                                                             

                                                                                

18      (g) That he or she has made a reasonable effort to obtain                   

                                                                                

19  payment from the contractor or subcontractor.                               

                                                                                

20      (h) That the contractor or  the  subcontractor  ,  with whom                

                                                                                

21  the person claiming the construction lien contracted  with,  is             

                                                                                

22  licensed if required by law to be licensed.                                 

                                                                                

23      (i) That the contractor or subcontractor with whom the                      

                                                                                

24  person claiming the construction lien contracted is the same                

                                                                                

25  individual or legal entity with whom the owner or lessee                    

                                                                                

26  contracted.                                                                 

                                                                                

27      (4) A subcontractor, supplier, or laborer who seeks                         


                                                                                

1   enforcement of a construction lien on a residential structure               

                                                                                

2   through foreclosure shall join the fund as a defendant in the               

                                                                                

3   foreclosure action  ,  and serve a summons and complaint  shall             

                                                                                

4   be served  on the  director  office of the fund administrator               

                                                                                

5   within the department by certified or registered mail  ,  or by             

                                                                                

6   leaving a copy  thereof  at the office.  of the director.  The              

                                                                                

7   failure to serve a summons and complaint  upon the fund shall               

                                                                                

8   constitute a bar to  under this subsection bars recovery from the           

                                                                                

9   fund.  After  service upon the defendant of  a defendant is                 

                                                                                

10  served with a summons and complaint in an action  in which                  

                                                                                

11  enforcement of  to foreclose a construction lien,  through                  

                                                                                

12  foreclosure is sought,  the department may intervene in the                 

                                                                                

13  action as a party defendant with respect to other construction              

                                                                                

14  liens.                                                                      

                                                                                

15      (5) The attorney general shall make every reasonable effort                 

                                                                                

16  to defend the fund and may assert any defense to a claim of lien            

                                                                                

17  that would have been available to the owner or lessee.                      

                                                                                

18      (6) Payment from the fund shall be made only if the court                   

                                                                                

19  finds that a subcontractor, supplier, or laborer is entitled to             

                                                                                

20  payment from the fund.  Subject to section 204, after the                   

                                                                                

21  judgment has become final the department shall pay the amount of            

                                                                                

22  the judgment out of the fund.                                               

                                                                                

23      Sec. 204.  (1) A payment from the fund shall not include an                 

                                                                                

24  amount for interest on the unpaid principal amount due, a                   

                                                                                

25  time-price differential, a finance charge, or any other form of             

                                                                                

26  interest.                                                                   

                                                                                

27      (2) The department shall not pay out of the fund to                         


                                                                                

1   subcontractors, suppliers, and laborers more than $75,000.00 per            

                                                                                

2   residential structure.  When it appears that the amount claimed             

                                                                                

3   from the fund  ,  with respect to a residential structure  ,                

                                                                                

4   will exceed $75,000.00, the department may delay payment until              

                                                                                

5   the total amount to be paid can be ascertained.  If the total               

                                                                                

6   amount payable to subcontractors, suppliers, and laborers exceeds           

                                                                                

7   $75,000.00, they shall be paid their proportional shares of that            

                                                                                

8   amount.