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 written-contract and advertising rules, 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. An unlicensed builder also cannot place a construction lien on the property (MCL 339.2412). Unlicensed contracting is a crime as well: a first offense is a misdemeanor with a fine of $5,000 to $25,000, up to one year in jail, or both (MCL 339.601). 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. Under the builder rules, every agreement and every change to it must be in writing and signed by the parties, with a copy given to the customer (R 338.1533). The agreement must clearly state its terms, including the specifications, the cost, the type and amount of work, and the type and quality of materials. A licensee must also give information about his or her license as part of the contract (MCL 339.2404a). Advertising must show the licensee's name, license number, and actual business address; a telephone number or post office box alone is not enough (R 338.1532). A licensee can be disciplined for abandoning a contract without legal excuse, diverting project funds, failing to account for money that belongs to others, willfully departing from plans or specifications without the owner's consent, willfully violating building laws, or workmanship that does not meet the Michigan residential code (MCL 339.2411). Fraud is a ground under the code's general provisions (MCL 339.604). These consumer-protection duties 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.
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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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