Rights and Risks Under Special Tools Lien Act
Tool and die makers – and the manufacturers who use their products – need to be familiar with special lien rights that can be created and enforced under the Michigan Special Tools Lien Act. The Act was passed by the Michigan legislature to give toolmakers greater protection than the traditional mechanic’s lien alone provides.
The Act sets forth procedures allowing toolmakers to create a lien on any tool they fabricate or improve. Among other things, toolmakers need to be marking the tool itself to reflect the lien and also making sure to provide notice of the lien, including UCC Financing Statements, to both their customers and the end-users of the tool. Additionally, the Act sets forth certain procedures by which toolmakers can claim possession of the tool, which offers considerable leverage when negotiating unpaid balances for work performed.
Protections under the Act are not automatic. Rather, toolmakers must make sure they comply with certain statutory requirements to avail themselves of the rights available to them. Similarly, those dealing with toolmakers need to make sure they understand the exposure they face by risk of the provisions of the Act. You can find the Act at www.legislative.mi.gov (MCL 570.541-.571).
Feel free to contact Wright Penning & Beamer with questions about how it works or about how your business may be impacted.
Dirk A. Beamer