In Michigan, individuals and businesses engaged in residential building and residential improvement or maintenance work need to be mindful of the licensing requirements for specific trades.
This article will provide a brief overview of some of the issues surrounding licensing requirements, including examples of some of the “less obvious” trades that require licensing in Michigan, the consequences of engaging in a trade without a proper license, and the steps to take to obtain the required license.
Does My Trade Require a License?
In general, a person or business who contracts with a property owner to do residential construction or remodeling on a project with a total value is $600 or more (including material and labor) is required to be licensed as either a Residential Builder or a Maintenance & Alteration Contractor under Michigan law. The definitions of a Residential Builder and a Maintenance & Alteration Contractor are very broad in terms of what falls under each license. The differences between the two types of licenses are as follows:
Residential Builder License
A residential building license is required to operate as what most people think of as the typical construction contractor. A residential builder may build a new home or do any kind of repair work. It is important to note that even if a residential builder contracts for the whole job, there are separate licensing requirements for certain specialty areas included in such work, such as plumbing, electrical, heating and cooling, and ventilation work. If the residential builder contracts for the entire job, the builder may use licensed subcontractors for the other areas of work.
Maintenance and Alteration Contractor License
A maintenance and alteration contractor need only be licensed for a specific trade(s) and may only accept contracts for completion of services in which they are licensed. This requirement exists whether or not the building being worked on is a new build or a remodel. The definition of a maintenance and alteration contractor is very broad and generally includes any repairs and most improvements or changes to a residential structure. Some of the unique types of activities that require licensing are:
- painting and decorating;
- tile and marble;
- swimming pools; and
- laying wood floors.
Please note that this list is not comprehensive. If you are unsure whether your trade requires a license, please contact us.
What Are the Consequences if I or My Business Engages in a Licensed Trade Without the Required License?
The consequences of failing to obtain the proper license are harsh. In fact, engaging in a licensed trade without a license is a criminal offense. In the case of a first offense, failing to be licensed when necessary is a misdemeanor punishable by a fine of not less than $5,000.00 or more than $25,000.00, or imprisonment for not more than one year, or both.
In addition, an unlicensed builder or maintenance and alteration contractor cannot collect monies if they are not paid by a customer. Examples of collection measures afforded to licensed builders are the use of construction liens, foreclosure, and the potential to obtain money damages through a collection lawsuit. If an unlicensed builder or contractor attempts to use these measures, the contractor and their business may not only be subject themselves to the criminal consequences above, but may also be liable for civil damages and restitution.
How Do I Obtain a License?
Generally, the licenses discussed above require at least sixty hours of approved education courses and that the contractor must take and pass a required examination for the specific type of license. It is important to remember that each profession, trade, and business entity has different license requirements. If you have questions regarding licensure requirements, whether your profession requires a license, or the steps you need to take to become licensed, please, do not hesitate to contact us directly regarding your specific situation.