Does Michigan Require a Contractor License Bond?

What the state license requires instead

Under the Occupational Code, "the department" issues these licenses, and the code creates a residential builders' and maintenance and alteration contractors' board. A residential builder includes a person who, for a fixed sum, fee or other compensation other than wages for personal labor only, undertakes or offers to undertake the construction of a residential structure. A residential maintenance and alteration contractor is a person who, for similar compensation, repairs, alters or improves a residential structure, builds a garage or lays concrete on residential property. A residential structure means a detached one- or two-family dwelling, or a townhouse of not more than three stories above the grade plane.

To be licensed, an applicant must generally pass an examination and maintain a place of business in Michigan. The department issues the license for a period of three years, and a licensee must meet continuing competency requirements and keep documentation of them for at least five years. The maintenance and alteration license covers crafts and trades including carpentry, concrete, swimming pool installation, waterproofing a basement, excavation, insulation work, masonry work, roofing, siding and gutters, screen or storm sash installation, tile and marble work, and house wrecking.

Some work is exempt from the license. A single undertaking is exempt if the aggregate contract price for the labor, material and other items is less than $600, but not where the work is part of a larger operation or is split into contracts under $600 to evade the act. A person who works solely under contract with a licensed residential builder or maintenance and alteration contractor is also exempt, as are electrical, mechanical and plumbing contractors licensed under the Skilled Trades Regulation Act, for their own trade work.

Detroit's wrecking license bond

Detroit requires a bond for its wrecking (demolition) license. Its wrecking license Classes A, B and C each require a security bond of $50,000. Detroit's page marks a State of Michigan residential builder's or maintenance and alteration contractor's license as required for the unrestricted Class A and B and the Class C wrecking licenses, and its 2024 wrecking license application asks for a state license with the "House Wrecking" classification, so confirm your class with Detroit. For that application, you submit a certificate of liability and the surety bond to the Law Department for review, and the Business License Center Division issues a bond approval letter.

All Detroit wrecking licenses expire on December 31 of each year. For Detroit's general buildings contractor registration, you must hold a current and valid State of Michigan contractor license before you apply, and Detroit's checklist does not list a bond for it.

Steps

1. Confirm your license type. Decide whether your work makes you a residential builder or a residential maintenance and alteration contractor under the Occupational Code.
2. Check for an exemption. You may not need the license if a single undertaking's aggregate price is under $600, or if you work solely as a subcontractor for a licensed builder, or hold an electrical, mechanical or plumbing contractor license for that trade work.
3. Meet the state license conditions. Plan to pass the examination (unless an exception applies), keep a place of business in Michigan, and renew on the three-year term with continuing competency.
4. Check your trade. If you do electrical, mechanical or plumbing work, you are licensed under the Skilled Trades Regulation Act, not the residential builder article.
5. Check local and project bond needs. In Detroit, a wrecking license needs a $50,000 security bond, and most classes also need the state license; elsewhere, confirm local rules with the city or county office.

Sources

• Michigan Occupational Code, MCL 339.2401 (definitions)
• Michigan Occupational Code, MCL 339.2402 (board)
• Michigan Occupational Code, MCL 339.2403 (exemptions)
• Michigan Occupational Code, MCL 339.2404 (license conditions, crafts)
• Skilled Trades Regulation Act, Act 407 of 2016 (index)
• Skilled Trades Regulation Act, MCL 339.5705 (compiler's note on transfer to LARA)
• Skilled Trades Regulation Act, MCL 339.5805 (compiler's note on transfer to LARA)
• Skilled Trades Regulation Act, MCL 339.6105 (compiler's note on transfer to LARA)
• City of Detroit BSEED, Construction Inspection (wrecking bond and fees)
• City of Detroit, Class A wrecking license application 2024
• City of Detroit BSEED, Buildings License Checklist

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