Michigan Contracting Law, Unlicensed Practice & Construction Liens
Michigan law bars an unlicensed builder from suing to collect and sets strict deadlines under the Construction Lien Act. This chapter covers MCL 339.2412, the residential-builder contract disclosures, and the notice, recording, and foreclosure timeline for construction liens.
Unlicensed builders cannot sue to collect (MCL 339.2412)
Michigan enforces licensure through the pocketbook. Under MCL 339.2412, a residential builder or M&A contractor who was not licensed when the work was performed may not bring or maintain an action in any Michigan court to collect compensation for that work. The contractor loses the right to sue for the contract price or for the reasonable value of labor and materials. Unlicensed contracting is also a violation that can carry criminal penalties. Being licensed before contracting is therefore a precondition to getting paid through the courts.
Residential-builder contract requirements
Michigan requires residential building contracts to be clear and in writing for the protection of homeowners. A licensed builder must include the license number on contracts and advertising, and residential contracts should state the parties, a description of the work, and the contract price. The board can discipline a licensee for fraud, for departing from accepted construction standards, for failing to account for money or property received, or for other conduct listed among the grounds in Article 24. These consumer-protection duties are heavily tested because they distinguish a professional builder from an unlicensed operator.
The Michigan Construction Lien Act timeline (MCL 570.1101 et seq.)
Payment security on Michigan projects runs through the Construction Lien Act. A subcontractor or supplier who is not in direct contract with the owner generally must serve a Notice of Furnishing within 20 days of first furnishing labor or materials to preserve lien rights. A claimant must record a Claim of Lien within 90 days after the last furnishing of labor or materials, and must file a proceeding to enforce (foreclose) the lien within one year after the Claim of Lien is recorded. On residential projects the owner is generally protected from paying twice by the residential-structure provisions and the homeowner's right to a sworn statement and waivers before payment.