AUGUST 17, 2001 - Michigan Department of Consumer & Industry Services (CIS) Director Kathleen M. Wilbur said Michigan consumers have more options to resolve complaints against builders and contractors, thanks to a new law recently signed by Governor John Engler.

The new state law (PA 113 of 2001) enables CIS, the state agency which licenses and regulates builders, to offer alternative dispute resolution as an option for resolving consumer complaints. Alternative dispute resolution must be agreed to in advance in a contract between the homeowner and builder.  If the homeowner does not want to agree to arbitration, he or she need not sign the contract. One of two things will then happen.  First, the builder may drop that provision from the contract. Alternatively, the homeowner can find another builder who won't insist on arbitration. 

“The arbitration only applies to workmanship disputes; it does not apply to code violations.  Builders are held accountable to code violations regardless of whether or not there is an arbitration contract,” Wilbur said.

Wilbur said CIS has already had great success though voluntary mediation between licensees and complainants.

“The average length of time it takes to resolve builders’ cases has improved by 25 percent in the last five years.  And in those cases that go to mediation, agreement is reached 83 percent of the time and 75 percent of these agreements are honored,” Wilbur said. “Mediation will continue to be a successful alternative to the administrative law and board review process because it resolves problems faster and more economically.”

Anyone offering to do work which totals $600 or more in labor and materials must be licensed by CIS. A Residential Builder’s license allows a contractor to build a complete residential structure and do maintenance & alteration (remodeling) work on a residential structure. A Maintenance & Alteration license indicates that the holder has met requirements for trades, such as basement waterproofing, carpentry, roofing, siding, swimming pools, and tile and marble. The trades for which a maintenance & alteration contractor is qualified to practice are listed on the license issued by CIS.

Wilbur said “We encourage consumers to research a builder or any licensee before they make any financial investment.  A little legwork before a project starts may save a consumer the headaches they find later in trying to resolve a dispute if they hire an individual or company who doesn’t meet the standards of the project established by the homeowner. A license look-up feature on the State of Michigan web site (www.michigan.gov) makes this process easier for the consumer. It is also one of the most popular features because it helps consumers make educated buying decisions.”
 

Wilbur further noted, “Builders and contractors are required to display their license in the place of business and all contractors and their salespersons must carry a pocket card, which consumers should ask to see. If there is a doubt, request to see their license.”

Consumers who want personal assistance in looking up a license can call the state’s Verification Unit at 517-241-9288.

Tips to consumers on how to choose a contractor are also on the State of Michigan website. Some helpful tips include:

Choosing a Builder/Contractor:

• Get references from the licensees you are considering and check them. Check with the Better Business Bureau and local authorities to see if there is a history of complaints.
• Be sure the licensee has a permanent business location and telephone number.
• Get estimates from different contractors/builders to compare prices. Remember that the cost of materials will affect the bid. A low bid based on inferior materials may not be any bargain, so consider more than price alone.
• Be wary of special prices because of left over materials, other jobs in the neighborhood, or discounts if you agree to get other customers. They are often gimmicks to get you to buy.

Get It In Writing

·         Make sure that you read all documents carefully. Ask for any changes or modifications before you sign the contract. Look for the new alternative dispute resolution provision in a builder’s contract. If you do not want alternative dispute resolution, then ask the builder to remove it from the contract or choose a builder who won’t insist on arbitration.

Paying a Builder/Contractor

• Never pay for an entire job in advance. Make a deposit when work begins to cover materials and startup costs. Pay by check to the company name and ALWAYS get a receipt. Make scheduled payments as work progresses.

Resolving Problems

• If you have problems, you should try to resolve them directly with the contractor/builder before making the final payment. You may contact the local building inspector for assistance in resolving workmanship and code violations.
• Small Claims Court is another alternative if the dispute involves a sum within its jurisdiction.
• If your efforts to resolve the matter fail, or if you feel you are a victim of fraud or deceit, contact CIS’ Commercial Enforcement Division to file a complaint. Consumers can file a complaint against a builder up to 18 months of the completion, occupancy, or purchase of a residence, which ever comes later.

“Most importantly, consumers must always get agreements in writing and make sure to keep a copy for the record. A written agreement will make sure there are no misunderstandings between you and your builder or contractor about the work or the terms of the contract,” Wilbur said. “Read all documents carefully and consider having an attorney review the contract and other forms before you sign them – especially if a large amount of money is involved in your project.”

Read more Michigan Department of Consumer & Industry Services press releases.