Residential Builder's License--Individual or Company?
Most residential builders understand the need to be licensed. However, not all residential builders understand that if they are operating as a business entity, the business, not just the owner, must be licensed. There are severe penalties for ignoring this rule. Read on to find out more.
The big penalty facing an unlicensed builder, individual or business, is MCL 339.2412. Most alarmingly, the statute authorized a prosecutor or the attorney general's office to bring an action for fines. Also important, an unlicensed builder is not allowed to place a construction lien on any property if the project was constructed while the builder was unlicensed. Finally, an unlicensed builder may not bring a lawsuit against the homeowner to collect any compensation for a project while the builder was unlicensed. The unlicensed builder is stuck in the worst spot--he cannot place a lien or sue on the project if he is unpaid, but the owner may sue him if the owner wishes.
So, what of the scenario where the owner of the company has an individual residential builder's license but the company does not? Cases interpreting the statute have definitively stated that is not enough--if it is the company entering into the construction contract (and it should be for liability reasons), then the company must have its own license.
Contractors who disregard this statute do so at their peril. If you are a contractor who wants to be sure you are in accordance with the statute, or a homeowner who has a dispute with an unlicensed builder, please contact me for more information.
Link to search for residential builder's licenses
Residential Builder Company License Application
Annex Constr v Fenech, 191 Mich App 219 (1991)
Epps v 4Quarters Restoration LLC, 498 Mich 518 (2015)