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Residential Construction

Out-of-date State of Michigan LARA website causing ongoing confusion over whether contractors need to be licensed as residential builders for mixed commercial and residential construction projects.

As an attorney and the former Chairperson of the Michigan Residential Builders and Maintenance & Alterations Contractor Board, I am frequently asked whether a contractor on a commercial project that has residential components must have a residential builders license in Michigan.  Often I get these inquiries from owners who have disputes with their contractors on mixed use developments, and they want to take advantage of the statutes and court decisions that do not allow unlicensed contractors to have lien rights.  For years owners argued that if a commercial building had residential components, the contractor building those residential components needed to be a licensed residential builder.  However, this is no longer the case, and the law was recently changed in 2020, retroactive to January 1, 2019, to provide further clarification on this issue.

Part of the confusion stems from the information still provided by Michigan’s Department of Licensing and Regulatory Affairs (“LARA”) on its website, which continues to state: “Article 24 of Public Act 299 of 1980, as amended was created to license and regulate persons engaged in the construction of a residential structure or combination residential and commercial structure, or persons who undertake the repair, alteration, addition, subtraction or improvement of a residential structure or combination residential and commercial structure for compensation other than wages for personal labor.” https://www.michigan.gov/lara/bureau-list/bcc/sections/licensing-section/residential-builders (emphasis added).  This is misleading and should be changed.

In Public Act 341 of 2020, the definition of “residential structure” was changed to remove any language regarding combined residential and commercial structures.  As stated in the House Fiscal Analysis for what became PA 341, “[s]pecifically, the bill would remove a reference to combination residential and commercial structures so that a person engaged in constructing, manufacturing, or erecting a combination residential and commercial structure would not have to obtain a license as a residential builder, and a person that repairs or rehabilitates a combination residential and commercial structure would not have to obtain a license as a residential maintenance and alteration contractor.”  Instead, the definition of a “residential structure” in MCL 339.2401(c) is now defined to mean one or both of the following:

  • A detached one- or two-family dwelling, and all related facilities appurtenant to that dwelling, used or intended to be used as an adjunct of residential occupancy.
  • A townhouse of not more than three stories above the grade plane in height with a separate means of egress, and all related facilities appurtenant to that townhouse, used or intended to be used as an adjunct of residential occupancy.

Unfortunately, the LARA website continues to be cited by authors in 2023 who are still putting out misinformation on this issue.  See for example this website blog by an author in the insurance industry who in January of this year repeated the misinformation about licensure requirements for contractors on combined residential and commercial projects while citing to the LARA website. https://www.nextinsurance.com/blog/michigan-general-contractor-license-and-insurance-requirements/.

When you have a legal problem, there simply is no substitute for reading the statute itself and then consulting a knowledgeable attorney to explain what it means and how it has been interpreted by the Courts.  Relying on websites and blogs can result in serious financial mistakes.  Even if the website is from the state licensing authority itself.

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