So Close, Yet So Far: Title Issues That Delay New Construction Closings in Michigan

The furniture is scheduled for delivery on Saturday. The utilities are transferred. You have already given notice at your apartment. Your builder confirmed the home passed its final inspection, and closing is set for Friday afternoon. Then Thursday morning arrives and your phone rings. The title company has flagged an issue. A roofing subcontractor filed a mechanic's lien against the property three weeks ago over a payment dispute with your builder. The lien has to be resolved before the deed can transfer. Closing is postponed. Saturday's furniture delivery needs to be rescheduled. And the home you have been watching go up brick by brick for the past eight months is sitting finished and empty while attorneys sort out a payment dispute that has nothing to do with you.

This is not a worst-case horror story. According to a study by the American Land Title Association, title problems surface in 36% of real estate transactions, and new construction closings carry some of the highest risk of any transaction type. The combination of active construction liens, open permits, subdivision plat requirements, and builder entity issues creates a title environment that is fundamentally more complicated than a standard resale closing, and the buyers caught in the middle are almost always the ones who never saw it coming.

For Michigan home buyers purchasing a new build, understanding which title issues most commonly delay closings, and why they happen, is one of the most practical things you can do before you reach the closing table. In this post, we break down the title problems that most frequently push new construction closing dates in Michigan, explain how each one arises, and outline what buyers can do to reduce the chance of getting caught off guard.

Why New Construction Closings Are More Title-Complex Than Resale Transactions

In a resale transaction, the title examination focuses primarily on the property's recorded history. The home has been owned before, and the title search traces that history to identify existing liens, encumbrances, and ownership gaps. In a new construction closing, the title company is dealing with an actively evolving record. Subcontractors may have filed Notices of Furnishing that preserve their lien rights. Permits opened during construction may not yet be closed out. The subdivision plat may still be pending recordation. The builder entity's good standing with the state must be verified. And the chain of lien waivers from every tier of the construction chain must be assembled and confirmed before a clean title commitment can be issued. Each of these elements represents a potential delay point, and any one of them can push a closing date that looked secure a week earlier.

The Most Common Title Issues That Delay New Construction Closings in Michigan

Mechanic's Liens From Unpaid Subcontractors and Suppliers

Mechanic's liens are the single most common title issue in Michigan new construction closings. Under Michigan's Construction Lien Act, contractors, subcontractors, material suppliers, and laborers have the right to file a lien against a property if they are not paid for their contribution to the build. In Michigan, a lien must be filed within 90 days from the date the claimant last provided labor or materials, and an action to enforce the lien must be commenced within one year of filing. A recorded lien creates immediate title friction. The title company cannot issue a clean commitment, the lender will not fund, and the closing cannot proceed until the lien is resolved, bonded off, or otherwise addressed. The most difficult aspect of mechanic's liens for buyers is that they can arise from payment disputes entirely between the builder and a subcontractor. A buyer who has paid their builder every dollar owed can still face a valid lien filed by a supplier the builder failed to pay.

Open or Unresolved Building Permits

Every permit opened during construction must be closed out with a final inspection and municipal sign-off before the title company can issue a clean commitment and the lender can fund the loan. An open permit signals to the lender that work may not have been completed to code, and lenders will not fund against that uncertainty. In Michigan, if codes changed between the time a permit was opened and the time the final inspection is requested, the work may need to be brought up to current standards before the permit can be closed. This is a common source of delay on projects where certain phases of construction were completed well before the scheduled closing date and were never formally signed off. Buyers should confirm with their builder well in advance of closing that every permit opened during construction has received a final inspection and is recorded as closed with the local municipality.

Missing or Incomplete Lien Waivers

Before a Michigan new construction closing can proceed, the title company requires a sworn statement from the builder identifying every subcontractor and supplier who contributed to the project, along with lien waivers confirming that each party has been paid and is releasing their right to file a claim. A single missing lien waiver from any party in the construction chain is sufficient to hold up the closing. Missing waivers are most commonly the result of a builder who has not yet fully paid all parties, a subcontractor who is in a payment dispute and refuses to sign, or administrative gaps in the builder's tracking of who received waivers and who did not. Under Michigan law, buyers and lenders cannot rely on a lien waiver issued by anyone other than the named lien claimant for residential construction without first verifying its authenticity directly with that claimant, which adds an additional verification step that takes time when it surfaces at the last minute.

Subdivision Plat and Easement Recording Issues

For buyers purchasing in a new subdivision, the closing can be delayed if the subdivision plat has not yet been formally recorded with the county. The plat establishes the legal descriptions of individual lots, the location of roads, utility easements, and common areas, and the framework of rights and restrictions that govern the subdivision. A lender will not fund a loan against a lot that does not yet have a recorded legal description. Buyers purchasing in an early phase of a new development should confirm the plat recording status early in the due diligence process and verify that all easements for utilities and road access are formally documented in the public record before closing day approaches.

Builder Entity and Licensing Problems

Before a Michigan new construction closing can proceed, the title company verifies that the builder entity is in good standing with the state and legally authorized to convey title. A builder operating through an LLC that has fallen out of good standing with the Michigan Department of Licensing and Regulatory Affairs cannot execute a valid deed until its standing is reinstated. Similarly, Michigan requires builders performing residential construction to hold a current Michigan Residential Builder license. A builder whose license has lapsed may face legal exposure, and the closing cannot proceed until the entity and licensing issues are resolved. Buyers should verify their builder's license status through the Michigan LARA database and confirm entity good standing before signing a purchase agreement.

What Buyers Can Do Before Closing Day to Reduce Delay Risk

The most effective thing a Michigan new construction buyer can do is engage with their title company early, well before the scheduled closing date, and ask specifically about the status of each of these potential delay points. Request confirmation that all permits are closed, that lien waivers are being collected throughout the build rather than assembled at the last minute, and that the builder's entity status and licensing are current. Review the title commitment carefully when it is issued and ask your title company to explain any exceptions or outstanding requirements that have not yet been cleared. Purchase an owner's title insurance policy at closing, which provides long-term protection against covered title defects including post-closing mechanic's lien claims that surface after the deed has transferred.

Final Thoughts: The Last Thing You Want Is a Friday Morning Phone Call

New construction buyers invest months of anticipation into a closing date. The title issues that delay those closings are not random. They are predictable, they are common, and most of them are resolvable when they are identified early enough to address without disrupting the timeline.

The difference between a closing that happens on schedule and one that gets postponed at the last minute almost always comes down to how much attention the title side of the transaction received during the weeks and months before closing day.

If you are purchasing a new construction home in Michigan and want a title team that starts protecting your closing long before the final walkthrough, we are here to help. Reach out today and let us make sure your closing day goes exactly as planned.