Michigan Residential Builder Exam — All Questions

An unlicensed Michigan builder completes residential work and then sues the homeowner for the unpaid balance. Under MCL 339.2412, what is the result?

• a.The builder may collect the full contract price
• b.The builder may not bring or maintain a court action to collect compensation for the work✓
• c.The homeowner must pay double damages
• d.The builder may collect the cost of materials only

Under MCL 339.2412, a builder who was unlicensed when the work was performed may not bring or maintain an action in any Michigan court to collect compensation for that work — losing the right to sue for either the contract price or the value of labor and materials.MCL 339.2412

Under the Michigan Construction Lien Act, within what time after last furnishing labor or materials must a claimant record a Claim of Lien?

• a.Within one year
• b.Within 10 days
• c.Within 90 days✓
• d.Within 30 days

The Michigan Construction Lien Act (MCL 570.1101 et seq.) requires a Claim of Lien to be recorded within 90 days after the claimant last furnished labor or materials to the project.Michigan Construction Lien Act, MCL 570.1101 et seq.

After recording a Claim of Lien in Michigan, within what time must the claimant start a proceeding to enforce (foreclose) the lien?

• a.There is no deadline once the lien is recorded
• b.Within 90 days of recording
• c.Within 30 days of recording
• d.Within one year of recording the Claim of Lien✓

Under the Construction Lien Act, a claimant must commence a proceeding to enforce the lien within one year after the Claim of Lien is recorded, or the lien is lost.Michigan Construction Lien Act, MCL 570.1117

A Michigan subcontractor not in direct contract with the owner wants to preserve construction-lien rights. What step is generally required soon after starting work?

• a.Nothing; lien rights attach automatically with no notice
• b.Filing a lawsuit within 10 days
• c.Recording a Claim of Lien before any work begins
• d.Serving a Notice of Furnishing, generally within 20 days of first furnishing labor or materials✓

Under the Construction Lien Act, a claimant not contracting directly with the owner generally must serve a Notice of Furnishing within 20 days of first furnishing labor or materials to preserve lien rights.Michigan Construction Lien Act (Notice of Furnishing)

Which of the following is a recognized ground for the Michigan board to discipline a residential builder?

• a.Fraud or a substantial departure from accepted construction standards, or failing to account for money or property received✓
• b.Hiring licensed subcontractors
• c.Carrying more insurance than the minimum
• d.Charging market-rate prices for work

Article 24 of the Occupational Code lists grounds for discipline including fraud, a bad-faith or substantial departure from accepted construction standards, and failing to properly account for money or property received from an owner.MCL 339.2411 (grounds for discipline)

What must appear on a licensed Michigan residential builder's contracts and advertising?

• a.The name of the homeowner's bank
• b.Nothing is required to be shown
• c.The builder's license number✓
• d.The builder's home address only

A licensed Michigan builder must display the license number on contracts and advertising, part of the consumer-protection framework that distinguishes a licensed builder from an unlicensed operator.Michigan residential-builder contract / advertising rules

Why is holding a valid Michigan license so important to a builder's ability to get paid?

• a.It has no effect on collection rights
• b.Because an unlicensed builder cannot sue to collect, licensure is a precondition to using the courts to enforce payment✓
• c.It only lowers permit fees
• d.It doubles the amount the builder can charge

Because MCL 339.2412 bars an unlicensed builder from suing to collect, a builder must be licensed at the time of the work to preserve the right to enforce payment through the courts.MCL 339.2412 (effect of licensure on collection)

In Michigan, acting as a residential builder without the required license, in addition to barring a suit to collect, may also result in:

• a.Automatic issuance of a license
• b.A tax refund to the builder
• c.Criminal penalties for unlicensed practice✓
• d.A warning with no other consequence in any case

Unlicensed residential contracting in Michigan is not only a bar to collecting through the courts; it is a violation of the Occupational Code that can carry criminal penalties in addition to the loss of collection rights.MCL 339.2403 (unlicensed practice)