Almost any builder who contracts with an owner for the construction of a residential structure or the combination of a residential and commercial structure is required to be licensed by the State of Michigan. There are a few exceptions to this rule. For example, a license is not required where the amount of the construction contract is less than $600.00. Likewise, a license is not required when an owner is working on his own property; a subcontractor is working for a licensed builder; or the person is an electrician, plumber or mechanical contractor who is licensed by the State in his own trade.
Most all residential construction activities are covered by the Michigan licensing law. Again, there are some exceptions. For example, a license is not required for installing fences, awnings, sprinklers, asphalt paving, carpet or vinyl floors.
There are several ways the licensing statutes are enforced. If an unlicensed person undertakes to perform residential construction for which a license is required, that person may not maintain an action for compensation. For example, if an unlicensed builder contracts with a homeowner for the construction of an addition to the home and the homeowner refuses to pay the builder as agreed, the unlicensed builder will not be allowed to maintain a lawsuit for compensation. That builder is also precluded from imposing a lien on the owner's property.
The State of Michigan can also enforce the licensing statute directly. The State can seek a civil fine between $5,000.00 and $25,000.00 for a violation of the laws relating to the licensing of a residential builder. Additionally, the State may institute criminal proceedings against an unlicensed builder.
Because the laws relating to the licensing of residential builders are fairly detailed, one must read those laws carefully before drawing conclusions in any particular factual situation.