New Skilled Trades Regulation Act Impacts Section 114 of Michigan Construction Lien Act

During the recent lame duck session in December, the Michigan Legislature passed a series of bills aimed at consolidating the licensing and regulation of skilled trades, including residential builders, electricians, plumbing and mechanical contractors. All of these trades are now regulated under the “Skilled Trades Regulation Act.” 

S.B. 963 repealed the Electrical Administrative Act, the Forbes Mechanical Contractors Act, the State Plumbing Act, the Boiler Act, and the Building Officials and Inspectors Registration Act and created in its place the "Skilled Trades Regulation Act" to regulate all of those trades. Signed by Governor Snyder on January 3, 2017, the new statute, designated Public Act 407 of 2016 will take effect in 90 days on April 4, 2017

Passage of Skilled Trades Regulation Act also affects the Michigan Construction Lien Act for residential construction.  

Section 114 of the Construction Lien Act requires that contracts for residential construction include certain statutory language regarding licensure.  In a companion bill, S.B. 971 (PA 415 of 2016), the Michigan Legislature changed Section 114 to refer to the new “Skilled Trades Regulation Act.”  

TAKE ACTION IN JANUARY, 2017 –

1. Residential builders and other contractors that perform residential construction, you should update your contracts to incorporate the new language. It’s an easy fix. Do it today.   

2. Residential Builders and contractors who do not use a written contract or whose contract does not include any of the language required by Section 114, you should use this opportunity fix things. Amend your contract form to include the (new) statutory language. Don’t wait.

NEW LANGUAGE / ADD TO YOUR CONTRACT

“Pursuant to Section 114 of the Michigan Construction Lien Act, Homeowner is advised as follows:

“(a) That a residential builder or a residential maintenance and alteration contractor is required to be licensed under article 24 of the occupational code, 1980 PA 299, MCL 339.2401 to 339.2412. That an electrician is required to be licensed under article 7 of the skilled trades regulation act, MCL 339.5701 to 339.5739. That a plumbing contractor is required to be licensed under article 11 of the skilled trades regulation act, MCL 339.6101 to 339.6133. That a mechanical contractor is required to be licensed under article 8 of the skilled trades regulation act, MCL 339.5801 to 339.5819. 

“(b) If the contractor is required to be licensed to provide the contracted improvement, that the contractor is licensed and the contractor’s license number.

For residential builders, use the following: 

(b) {Name of Contractor} is a licensed residential builder in the State of Michigan (License No. ___________; {qualifying officer’s name}, Qualifying Officer.

For electrical contractors, use the following:

(b) {Name of Contractor” is a licensed electrician in the State of Michigan (License No. _______; {qualifying officer’s name}, Qualifying Officer.  

NOTE: Under Michigan law, for residential construction, the entity contracting for the work must be properly licensed. It is not sufficient for an individual to be licensed if the business entity, corporation or LLC, which is contracting with the homeowner, is not licensed. This is a common pitfall that builders, licensed individually, can fall into when they start a new business and fail to secure a builder’s license for the business.

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