Michigan home improvement contract requirements

Licensing comes first

Article 24 of the Occupational Code licenses two kinds of contractor. A residential builder builds, replaces, repairs, alters, adds to, improves or demolishes a residential structure for pay. A residential maintenance and alteration contractor does repair, alteration, addition, improvement or demolition work, builds garages or lays concrete on residential property. A residential structure is a one- or two-family home or a townhouse up to three stories, with its appurtenant facilities. Electricians, plumbing contractors and mechanical contractors are licensed separately under the Skilled Trades Regulation Act.

• No license, no lawsuit. A residential builder or maintenance and alteration contractor can't sue to collect for work that needs a license without alleging and proving they were licensed throughout the work (MCL 339.2412).
• Hand over the whole deal. It's a violation to fail to deliver to the purchaser the entire agreement, including any finance or other charges (MCL 339.2411(2)(h)).
• Other violations include abandoning a job without legal excuse, diverting a project's funds to other uses, departing from plans without the owner's consent, and workmanship that doesn't meet the Michigan Residential Code. Homeowners have 18 months from completion, occupancy or purchase to complain about a maintenance and alteration contract.

The Construction Lien Act statement

Section 114 of the Construction Lien Act is the reason every Michigan residential contract should be in writing. You have no right to a construction lien on an owner's or lessee's interest in a residential structure unless you made the improvement under a written contract with them, and any amendments or additions are in writing too. The contract must also contain a statement, in type no smaller than the body of the contract, saying:

• That a residential builder or residential maintenance and alteration contractor must be licensed under article 24 of the Occupational Code, that an electrician must be licensed under article 7 of the Skilled Trades Regulation Act, a plumbing contractor under article 11, and a mechanical contractor under article 8.
• If you must be licensed to make the improvement, that you are licensed, and your license number.

The statute doesn't fix the wording, so state it plainly near the signatures. Unwritten change orders are the common way contractors lose lien rights on part of a job, so put every change in writing as well.

Home solicitation sales

The Home Solicitation Sales Act covers sales of goods or services over $25 where you solicit in person, by phone or in writing, the solicitation reaches the buyer at home, and they agree there. It excludes sales after negotiations at your fixed business location, sales at that location, and sales made through a printed advertisement in a publication of general circulation. The buyer can cancel until midnight of the third business day, and the agreement must carry this next to their signature:

• Bigger type than the contract. The notices must be at least 10-point bold and 2 points larger than the contract text, in the language of your sales presentation.
• The form travels with the buyer's copy: a notice of cancellation in duplicate, attached or printed on the back, with the transaction date and mailing deadline filled in.
• Saturdays don't count. Michigan defines a business day as Monday through Friday, excluding the listed holidays, so the window is longer than the federal rule's.
• Until you comply, the clock doesn't run. The buyer may cancel by any means at any time until you've met these requirements.
• Early work is unpaid work. If you performed services before a cancellation, you're not entitled to compensation for them (MCL 445.115). A buyer's emergency request is a narrow exception.

When the homeowner pays over time

A home improvement installment contract falls under the Home Improvement Finance Act. It must be dated and written, with the printed portion in at least 8-point type, and the words "home improvement installment contract" in 10-point bold at the top or directly above the buyer's signature. It must disclose the cash price, down payment and trade-ins, unpaid balance, insurance charges, official fees, amount financed, finance charge in dollars, the installment schedule and the time sale price. It must also carry this notice in at least 8-point bold:

Deliver a completed copy when it's signed: until you do, the buyer isn't obligated to pay (MCL 445.1204).

Signing it electronically

Michigan's Uniform Electronic Transactions Act lets both sides sign electronically (see e-signature law in Michigan), and under it an electronic record satisfies a law that calls for a writing. The home solicitation form is written for paper (attached to the buyer's copy, or on its back), so deliver the PDF with the form pages at once and consider leaving printed copies too. For notices the law requires in writing, get the consumer's consent to electronic records first (15 U.S.C. § 7001(c)).

Setting it up in SignMaster

1. 1

   Put the license statement in the template

   Type the section 114 statement and your license number into your contract before you save it as a template, in the same type size as the body.

2. 2

   Size the notices before upload

   Set the home solicitation notices in your PDF at least 2 points larger than the contract text, then add the notice of cancellation pages to the same document.

3. 3

   Sign at the house, collect later

   Use Sign in person for the contract. Count three Michigan business days from the date signed before you take payment or start work.

4. 4

   Write every change down

   Send each change as a change order for both signatures, which keeps the amendment in writing as section 114 requires.