The Inside Outside Guys ~ What to Know About a Contractor’s License

The Inside Outside Guys

July 28, 2023

From The Detroit News | By Ken Calverley and Chuck Breidenstein

DETROIT, July 27, 2023 ~ What good does a contractor’s license do? Not every state requires one, there is no reciprocity for those states that do, and most general enforcement is in the hands of local jurisdictions.

Even long-term professionals in the industry debate the merits of required licensure. But the mandates attendant to having a license may afford some protections to property owners.

Keep in mind the huge potential liability a homeowner accepts when they allow a company to work on their property.

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July 23, 2023 ~ Chuck “The Inside Guy” Breidenstein and Ken “The Outside Guy” Calverly offer the knowledge and resources you need to make the home of your dreams a reality. Catch them every Saturday and Sunday from 10 a.m. to noon on 760 WJR.

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The title is in jeopardy due to lien law criteria. Financial culpability could extend way beyond the terms of the written agreement, particularly if a worker or even a passerby is injured during the course of the work.

The Guys believe you should always include proof of proper and current licensure as part of the criteria you mandate before hiring a contractor.

To be a builder In Michigan, you must demonstrate successful completion of a 60-contact hour training program that covers an approved curriculum, including specific trade knowledge and legal requirements.

Some of those legal issues include the need to carry workers’ compensation insurance for employees and written contract requirements.

Did you know, for instance, that it is illegal to make you, as a part of the contract, allow placement of a yard sign advertising the company doing the work?

Did you realize that all such contracts must be in writing, specific in their intent, and include evidence of licensure?

Are you aware that a builder’s license is actually held by an individual who then must obtain a second license if she decides to attach it to a business entity like a corporation or partnership? So, while you may be doing business with “Chuck Builders Inc.” the initial license is in the name of the licensee attached to that entity.

The intention here is twofold: first to educate the business owner regarding applicable standards, practices and requirements, and second to offer protection to the client base whose property the builder will be working on.

Owners should also be aware that specific trades such as plumbing, electrical, HVAC and hazardous material remediation, among others, also carry license requirements.

While this state may allow a property owner to apply for issuance of a permit, it is good practice to always mandate the contractor actually doing the work obtain necessary permits and verify compliance with code, manufacturer’s instructions, and other applicable standards prior to completion.

Another dynamic at work at the local level may be registration or certification for a contractor. Anyone can obtain a list of locally “approved” contractors from the building department in their district.

A part of the owner due diligence the Guys suggest before engaging a contractor is to verify licensing and, if required, registration along with proof of insurance and workers compensation from the issuing carrier.

License status can be verified at MI.gov/LARA and registration at the local building department, which may be at the county level.

Some red flags to keep on your list include verbal contracts or vague written agreements, no licenses or insurance, a requirement that the property owner obtain needed permits, large, up-front, deposits for the anticipated work, and unverifiable references.

In this state, failure to comply with licensing requirements can result in significant monetary fines and potential imprisonment, so there is recourse beyond the courts for aggrieved property owners dealing with unscrupulous characters.

Always perform your research before hiring any contractor, but know that a successful experience nearly always begins with a good reference from a trusted resource like InsideOutsideGuys.com.

For housing advice and more, listen to “The Inside Outside Guys” every Saturday and Sunday on 760 WJR from 10 a.m. to noon, or contact them at InsideOutsideGuys.com.