In early October 2010, Governor Granholm signed into law the Commercial Real Estate Broker’s Lien Act (the “Act”). The intent of the Act is to remedy the concerns of commercial real estate brokers regarding their inability to collect payment for their brokerage work. The Act permits commercial real estate brokers to record a lien on property in which they are entitled to a commission before the parties actually close on the sale of the property. Persons entering into commercial real estate transactions need to be aware of the implications of the Act.
Below are a few of the key provisions the Act:
- To assert a lien, there must be a written commission agreement entered into after October 5, 2010.
- The broker must actually be entitled to a commission pursuant to the written agreement.
- The individual asserting the lien must be a licensed real estate broker in Michigan.
- The lien must be recorded with the register of deeds before the real estate transaction closes and before the real estate is conveyed.
- The lien must be mailed to the land owner within ten (10) days of recording.
- If there is a commission dispute, escrow accounts are to be established with funds to satisfy the lien until the dispute is resolved.
- The broker has one year to foreclose upon the lien after it is recorded.
Commercial real estate transactions often involve complex legal issues. The recent enactment of the Act further adds to the complications of entering into a commercial real estate transaction. Parties entering into real estate transactions may wish to consult with an attorney in order to obtain a lien waiver from the real estate agents involved in the transaction before closing.
This article was written by Matt Ehrlich, Associate Attorney at Demorest Law Firm.
