Navigating construction licensing in Michigan can be tricky. While many handypeople and trades contractors assume small projects don't require state oversight, Michigan law under the Occupational Code (Act 299 of 1980) sets a clear bar for when a Residential Builders License is mandatory.
Here is a breakdown of when a Michigan Residential Builders License is required, key exceptions, and the risks of operating without one.
The Rule of Thumb: $600 and Structure Type
Under Michigan law, you are required to hold either a Residential Builder License or a Residential Maintenance & Alteration (M&A) Contractor License if:
You contract directly with a property owner to construct, repair, alter, or improve a residential or combination residential/commercial structure.
The total contract price—including labor AND materials—is $600 or more.
The building is a 1- to 3-unit residential structure (such as a single-family home, duplex, or triplex).
Note on the "$600 Rule": You cannot split a $1,200 job into two $500 contracts to bypass licensing. If the work is part of a single continuous project or a larger improvement scheme exceeding $600, a license is legally required.
When Do You Need a Full Residential Builders License?
Michigan offers two primary residential construction credentials through the Department of Licensing and Regulatory Affairs (LARA):
Residential Builder
Full project oversight, ground-up construction, and complete residential remodels.
• Building new single-family homes
• Adding a room, garage, or second story
• Whole-home structural renovations
• Managing subcontractors across multiple trades
Maintenance & Alteration (M&A) Contractor
Specific individual trades/crafts only. You may only contract for the specific trade listed on your pocket card.
• Specialty trades like roofing, siding, masonry, concrete, excavation, or insulation over $600
Important limitation: Neither license allows you to perform specialized mechanical trades yourself. Electrical, plumbing, and HVAC work always require separate, trade-specific state licenses and must be subcontracted out to individuals holding those specific credentials.
Key Exemptions: When Do You Not Need One?
You generally do not need a Michigan Residential Builders License in the following scenarios:
Projects Under $600: Small handyman tasks, minor fixes, or cosmetic work where labor plus materials total less than $600.
True Owner-Builders: Property owners building or improving their own personal primary residence. (Note: Michigan law restricts owner-builders from flipping or selling the house within 12 months of completion without disclosing their owner-builder status).
Subcontractors Working Under a Licensed Builder: If you act purely as a subcontractor working for a licensed Residential Builder or M&A contractor who pulls the permits and oversees the project, you are generally exempt from needing the general builder license.
Commercial Properties or 4+ Unit Complexes: Multi-family buildings with 4 or more units, apartments, or pure commercial structures operate under commercial construction codes and licenses rather than residential builder requirements.
Work Performed Without Compensation: True volunteer work or unpaid favors (though local building permits and safety codes still apply).
Penalties and Risks of Unlicensed Contracting
Operating without a required license in Michigan carries severe civil and legal consequences under Article 24 of the Michigan Occupational Code:
Loss of Lien Rights: Unlicensed contractors forfeit all rights under Michigan's Construction Lien Act. If a homeowner refuses to pay, an unlicensed builder cannot file a mechanic's lien or enforce the contract in state court.
Criminal Misdemeanor Charges: A first-offense conviction for unlicensed building can carry fines up to $5,000, up to 93 days in jail, or both. Repeat offenses bring harsher criminal penalties and higher fines.
Inability to Pull Permits: Local building code authorities will not issue permits to contractors who cannot show a valid state builder license and pocket card.
Steps to Get Licensed
If your work triggers the $600 threshold or involves residential building/remodeling, obtaining a license requires:
Pre-Licensure Course: Complete 60 hours of LARA-approved pre-licensure coursework. Check out DetroitTraining.com
State Application: Apply to LARA with proof of education, background verification, and identity.
Pass the Exam: Schedule and pass the PSI State Residential Builder Exam.

