Michigan Residential Builder Licensing & the $600 Threshold
Michigan licenses residential builders and maintenance & alteration (M&A) contractors through LARA's Bureau of Construction Codes. This chapter covers who issues the license, the $600 contract threshold that triggers licensure, the 60-hour prelicensure education requirement, and the closed-book combination exam.
The board and the Occupational Code (MCL 339.2401 et seq.)
Residential builders and maintenance & alteration contractors in Michigan are licensed by the Department of Licensing and Regulatory Affairs (LARA) through its Bureau of Construction Codes. The governing law is Article 24 of the Occupational Code, MCL 339.2401 and following. Article 24 also creates the Residential Builders' and Maintenance and Alteration Contractors' Board, which has nine members: four residential builders, two M&A contractors, and three members of the public (MCL 339.2402). PSI gives the licensing examinations under contract with the department. A Residential Builder license covers building or improving residential structures generally, while a Maintenance & Alteration Contractor license is limited to the specific trades named on it (MCL 339.2404).
When a license is required — the $600 threshold
Under MCL 339.2403, a person must hold a license to engage in the business of, or act as, a residential builder or M&A contractor unless an exemption applies. The small-job exemption covers only a project whose total contract price for labor, materials, and other items is less than $600 (MCL 339.2403(f)), so a job priced at $600 or more needs a license. The exemption is lost when a larger job is divided into contracts under $600 to get around the law. Because the trigger is only $600, nearly all paid residential construction, alteration, and repair work in Michigan requires a license. An owner working on a structure for the owner's own use and occupancy is exempt, but a person who builds or improves residential structures for others as a business must be licensed.
Prelicensure education, the combination exam, and license term
An applicant for an initial license must complete 60 hours of approved prelicensure courses, with at least 6 hours in each of seven areas: business management, estimating, and job costing; design and building science; contracts, liability, and risk management; marketing and sales; project management and scheduling; the current Michigan residential code; and MIOSHA construction safety standards (MCL 339.2404b). PSI delivers one closed-book combination exam for the Residential Builder license: 160 questions in 240 minutes, made up of 50 Business and Law questions and 110 Practice/Trade questions. The passing raw score is 116 for the whole exam. Since November 14, 2019 the two sections cannot be taken separately, and a repeat candidate retakes the whole exam. A residential builder license is issued for three years (MCL 339.2404) and must be renewed with continuing-competency requirements.
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State-specific details
State exam facts
- State regulator
- Michigan Department of Licensing and Regulatory Affairs (LARA), Bureau of Construction Codes
- Exam vendor
- PSI
- Prelicensing education
- 60 hours of approved prelicensure courses
- Passing score
- 116 of 160
- Scored questions
- 160
- Time limit
- 240 minutes
Does Michigan require a state contractor license?
Yes. Michigan's LARA (Bureau of Construction Codes) licenses Residential Builders and Maintenance & Alteration Contractors under the Occupational Code, MCL 339.2401 et seq. A license is required to contract for residential work where the combined labor-and-materials price is $600 or more.
What is on the Michigan residential builder exam?
PSI gives one closed-book combination exam: 160 questions in 240 minutes, with a passing raw score of 116 for the whole exam. 50 of the questions are Business and Law, and the sections have not been taken separately since November 14, 2019. Michigan requires 60 hours of approved prelicensure courses for an initial license (MCL 339.2404b), and the license runs a three-year cycle.
Can an unlicensed Michigan builder collect payment?
No. MCL 339.2412 bars an unlicensed builder from bringing an action to collect compensation, and construction liens run under the Michigan Construction Lien Act (MCL 570.1101 et seq.).
Sources: https://www.michigan.gov/lara, https://test-takers.psiexams.com/api/content/bulletin/553
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