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SALE OF RESIDENCES BUILT BY UNLICENSED "OWNER-BUILDERS"
by
Stephen W. Smith, Esq.
Michigan law generally requires residential contractors
to be licensed with the State before constructing a residence.
However, there is an exception to the requirement for those who build,
or act as general contractor for the construction of, a residence on
their own property for their own use and occupancy.
This well-meaning exception for so called - "owner-builders" was intended
to allow Michiganians to build their own home without being forced to
either hire a licensed contractor or else become licensed themselves.
Unfortunately, it created a loophole that has been abused in recent
years by builders who, without ever having to obtain a license, have
acquired property, built a residence allegedly for their own use and
occupancy, sold the residence promptly upon its completion, and then
acquired other property and started the process all over again, leaving
a trail of homes constructed by unlicensed and sometimes unqualified
builders.
A new Michigan statute seeks to close that loophole and put an end to
serial unlicensed building. Under the "Owner Built Residence
Transfer Act," which became effective in August,2008 an unlicensed builder
must, upon completion of a residence and receipt of an occupancy permit,
either reside in the house or sell it. If the owner-builder
decides to sell the residence, he/she is barred from selling any other
self- built residence during the same calendar year. If the
owner-builder begins living in the residence, he/she may not thereafter
sell or transfer ownership of it until at least 365 days have passed.
In either case, if the owner-builder puts the residence up for sale
within two years after the occupancy permit is issued, he/she must
provide notice that the residence, was built by an owner-builder who is
not a licensed builder. If the owner-builder fails to provide such
disclosure, then, for two years after the sale of the residence he/she
will be liable to the buyer for the cost of any repairs for defects in
workmanship, the cost of any repairs necessary to bring the residence
into compliance with the building code in effect at the time the
occupancy permit was issued, and, if the defects render the residence
uninhabitable or the repairs require the buyer to temporarily vacate the
house, the cost of temporary shelter for the buyer. Moreover if
the buyer successfully brings suit for such costs, the owner-builder
will be liable for the buyer's legal costs and actual attorney fees.
For more information contact :
Stephen W. Smith
The Troff, Petzke & Ammeson Newsletter is published as a free service to our clients and
friends. The articles in our Newsletter are for general information and cannot
be relied upon as legal advice or opinion.
It is simply not possible to provide competent legal advice
without knowledge of the specific facts attendant to a particular situation.
Therefore,
you are encouraged to contact the author to discuss the topic further before
acting on the information provided herein.
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