The Michigan Construction Lien Act states that each contractor, subcontractor, supplier or laborer who provides an improvement to real property has a construction lien upon the interest of the owner or lessee who contracted for the improvement of the real property. MCL 570.1107(1).
The Michigan Residential Builders Act states that a person or qualifying officer for a corporation shall not bring or maintain a court action for the collection of compensation for the performance of an act or contract for which a license is required by this article without alleging and proving that the person was licensed under this article during the performance of the act or contract. MCL 339.2412(1). A builder may not bring an action for collection of compensation unless it can prove that it possesses the license “required by this article.” Id.
“Contracts by a residential builder not duly licensed are not only voidable but void.” Stokes v. Millen Roofing Co., 466 Mich. 660, 672, 649 N.W.2d 371, (2002) (citing Bilt-More Homes, Inc v French, 373 Mich. 693, 699; 130 N.W.2d 907 (1964)). Unlicensed contractors cannot defy the residential builders act and the construction lien act by refusing to obtain a Michigan residential builders license. Id. A contractor’s failure to obtain a residential builder’s license constitutes a bar to its seeking compensation for improvements made. Id. at 673. Further, an unlicensed contractor’s construction lien is considered invalid. Id. at 670.
When an unlicensed contractor places a lien on an individual’s property, the lien is considered defective, therefore, the property owner does not have to seek clear title. Stokes, supra at p. 671. In said circumstance, the unlicensed contractor’s claim to the lien can be dismissed, and the property owner does not have to take any further legal or equitable action. Id.