Builder Title Requirements in Michigan: What Buyers and Builders Need to Know

The home is finished. The walkthrough went well. The buyer is excited, the builder is ready to close, and the lender has signed off on the loan. Then the title company flags a mechanic's lien. A subcontractor who installed the drywall three months ago was never paid. The lien is valid, it is attached to the property, and it has to be resolved before the deed can transfer.

Closing is postponed. The builder scrambles. The buyer waits. What looked like a routine new construction closing has turned into a legal and financial headache that neither party anticipated.

This scenario plays out in Michigan more often than most people realize, and it almost always traces back to one root cause: title requirements for new construction were not fully understood or properly managed from the start. Builder title requirements in Michigan are distinct from those involved in a standard resale transaction. New construction introduces a different set of risks, a different timeline for title work, and a different legal framework around construction liens, lien waivers, and the chain of ownership that must be established before a buyer can take clear title. For builders, understanding these requirements protects the integrity of every closing. For buyers purchasing new construction, understanding them protects the single largest investment most people will ever make.

In this post, we break down how Michigan builder title requirements work, what both parties need to know before a project reaches the closing table, and how to prevent the most common title complications in new construction transactions.

How New Construction Title Work Differs from a Resale Transaction

In a standard resale transaction, title work focuses primarily on the property's recorded history: prior ownership transfers, existing liens, unpaid taxes, and recorded encumbrances. New construction adds a layer of active risk that does not exist in resale. The property is being improved in real time, which means subcontractors, suppliers, and laborers are acquiring potential legal rights against it while the building is still underway. A buyer purchasing a finished new home may be inheriting claims that were created during construction but have not yet appeared in the public record. That is a fundamental difference, and it requires a fundamentally different approach to title work.

Michigan's Construction Lien Act and Why It Matters at Closing

Michigan's Construction Lien Act, codified under MCL 570.1101 et seq., gives contractors, subcontractors, suppliers, and laborers who contribute to an improvement on real property the right to file a lien against that property if they are not paid. These liens can attach to the property and must be resolved before clear title can transfer to a buyer.

Who Has Lien Rights on a Michigan New Construction Project

Under Michigan law, lien rights extend broadly across the construction chain. General contractors, subcontractors at any tier, material suppliers, and laborers all have the ability to file a construction lien against a property if payment is not received. There is one critical qualification for residential projects: only licensed contractors and subcontractors have lien rights on residential structures in Michigan. A contractor who performs residential construction work without holding a valid Michigan Residential Builder license, or whose license has lapsed, cannot file a valid lien and may face additional legal consequences including misdemeanor or felony exposure under state law.

The Role of Lien Waivers in Protecting Buyers and Builders

Lien waivers are the primary mechanism used in Michigan new construction closings to confirm that everyone who worked on or supplied materials to the project has been paid and is releasing their right to file a lien. Before a title company will issue a clean title commitment on a new construction closing, it will typically require a sworn statement from the builder identifying all subcontractors and suppliers, along with lien waivers from each party. For buyers, demanding confirmation that all lien waivers have been collected before closing is one of the most important due diligence steps in a new construction purchase. For builders, managing lien waivers throughout the project, not just at the end, is the most reliable way to protect the closing timeline.

The Notice of Commencement and Title Commitments in Michigan New Construction

Michigan requires a Notice of Commencement to be filed at the start of a construction project. This document identifies the property, the owner, the general contractor, and the designated party to receive legal notices related to the project. Subcontractors and suppliers use this information to serve their Notices of Furnishing, which protect their lien rights. For title work, the Notice of Commencement establishes the official start point for the project, and title professionals use it to track which parties may have acquired lien rights during construction. A title commitment on a new construction closing will reflect all recorded instruments filed against the property through the date of the commitment, and construction loan lenders in Michigan typically require periodic title updates, called Construction Loan Update Endorsements, as draws are issued throughout the build.

What Buyers Should Verify Before Closing on a New Build in Michigan

New construction buyers in Michigan should treat title due diligence as seriously as they would a resale purchase, and then go a step further. Before closing, confirm that the builder holds a current Michigan Residential Builder license issued by the Michigan Department of Licensing and Regulatory Affairs. Verify that a complete sworn statement identifying all subcontractors and suppliers has been provided, and that lien waivers have been collected from each. Request a copy of the title commitment and review Schedule B carefully for any exceptions or outstanding requirements that have not yet been cleared. Ask whether a title search was conducted on the underlying land before construction began, since any pre-existing lien, easement, or survey error on the raw parcel carries forward into your ownership once construction is complete.

Title Insurance for New Construction in Michigan

Title insurance is essential in new construction transactions, and it functions differently than in a resale context. A lender's title insurance policy is required by virtually every Michigan construction lender to protect the mortgage interest through each draw disbursement. An owner's title insurance policy provides a separate layer of protection for the buyer, covering issues that existed before closing, including any pre-existing encumbrances on the land itself or title defects that a thorough search did not uncover. For new construction specifically, an owner's policy also provides long-term protection against construction lien claims that may surface after the buyer takes possession if proper lien waiver procedures were not followed during the build.

Final Thoughts: Get the Title Right Before the Keys Change Hands

New construction should be one of the cleanest real estate transactions possible. The property is newly built, the ownership history is short, and the parties involved are known from the start. But without proper management of Michigan's Construction Lien Act requirements, lien waivers, and title commitments, even a brand-new home can arrive at closing with unresolved legal exposure attached to it.

Builders who treat title work as a process to manage throughout a project, rather than a box to check at the end, protect their reputation and their closing timelines. Buyers who understand what to verify before they sign protect the investment they worked hard to make.

If you are a Michigan builder preparing for a new construction closing, or a buyer preparing to close on a new build, our team is here to make sure the title side of your transaction is handled correctly from the start. Reach out today to get the conversation started.