By: Ashley Prew
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;
·
siding;
·
gutters;
·
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 law suit. 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.
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