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Real estate transaction disputes: Broker-placed liens

Both individuals and businesses in Michigan know that liens can be placed against property for a variety of reasons. Common reasons that come to mind might include tax issues or failure to make mortgage payments. When it comes to commercial property, the real estate broker has the power to place a lien if payment for real estate services or commissions is not made.

According to Public Act 201 of 2010, only licensed brokers can place the lien on properties in this case. The agents, employees or contractors of a licensed broker may not take such action, and the broker can only move forward with a lien if there is a written agreement regarding the commission entitlement. The broker must prove that the agreement was not adhered to and record a claim of lien that meets timeframes supplied by Michigan state law.

The property in question must also classify as commercial real estate to afford the broker lien power. Property that is zoned for single-family use or features four or fewer residential units is not considered commercial property for this purpose. Property that includes more than four residential units isn't considered commercial property if the units are conveyed individually.

Michigan state law also provides remedies for property owners who face broker-placed liens or other title disputes on real estate. Commercial real estate transactions can be complex, especially when zoning variances or other issues are involved. In some cases, transactions move slowly, which could result in the appearance of a failure to pay commissions. Whatever the reason a lien is placed on your property, it may be to your advantage to investigate the legality of the situation and take your own legal action in response.

Source: Department of Licensing and Regulatory Affairs, "Commercial Real Estate Broker's Lien Act" Aug. 20, 2014

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