How to Hire a Contractor in Michigan: 7 Things to Check Before You Sign

The Michigan Contractor Landscape

Michigan is different from most Midwest states in one important way: it actually requires residential contractors to hold a state license. Any contractor performing residential construction or remodeling work totaling $600 or more — materials and labor combined — must be licensed by the Michigan Department of Licensing and Regulatory Affairs (LARA) as either a Residential Builder or a Maintenance and Alteration Contractor. This licensing requirement gives Michigan homeowners a verification tool that states like Ohio, Illinois, and Indiana largely lack for general contracting.

But a license requirement does not eliminate fraud — it changes its character. Michigan contractor fraud cases increasingly involve licensed contractors who collect large deposits and abandon projects, contractors whose licenses are expired or suspended, and operators who present false certificates. The Michigan Attorney General's office secured a consent judgment in early 2026 against a construction company whose owner accepted homeowner deposits for projects that were never started and then refused to return the money. Contractors ranked as a top consumer complaint category in Michigan in 2025.

The license requirement is your first line of defense — but it is only the first line. Here are the seven things to check before signing.

1. Verify the State License Through LARA

Michigan's LARA license lookup is the starting point for every contractor hire. Visit michigan.gov/lara and search by the contractor's name, business name, or license number.

What to confirm in the lookup:

• The license is listed as active — not expired, suspended, or revoked
• The license type matches the scope of your project (Residential Builder for full construction or new builds; M&A Contractor for remodeling and repairs)
• The license holder's name matches the person or business you are hiring
• The license has not been subject to disciplinary action

Michigan also requires residential builders to carry a $25,000 surety bond and maintenance and alteration contractors to carry a $15,000 bond. Ask for proof and verify the bond is current.

For specific trade contractors — electrical, plumbing, HVAC — Michigan issues separate trade licenses also administered through LARA. Verify each trade contractor's license individually.

If a contractor cannot provide a license number for lookup, or if the lookup shows anything other than an active license in good standing, that contractor is operating illegally in Michigan and you should not hire them.

For projects in the Detroit metro area, see our guide to finding a contractor in Detroit for additional local verification steps.

2. Confirm Insurance by Calling the Carrier

Michigan requires residential builders to carry minimum $500,000 general liability insurance and M&A contractors to carry minimum $100,000 general liability. Workers' Compensation is required for any contractor with employees.

Request a Certificate of Insurance and then call the carrier at a number you find independently. Ask whether the policy is currently active, what the per-occurrence limits are, and whether it has lapsed at any point in the past 12 months.

Why call independently? Insurance certificates can be backdated or altered. Policies lapse for non-payment and are sometimes reinstated, but the certificate may not reflect the lapse period. A contractor who knows you will call the carrier has no incentive to hand you falsified paperwork.

Michigan's LARA consumer guidance for homeowners specifically recommends verifying insurance directly with the carrier — it is not enough to accept the certificate at face value. A 3-minute call is your protection.

3. Require an Itemized Bid — Not an Estimate

Michigan law requires all residential construction contracts over $600 to be in writing. A real bid should go considerably further than that baseline. Every legitimate Michigan contractor bid includes:

• A detailed, specific description of all work to be performed
• Materials specified by brand, product line, grade, and quantity
• Labor broken down by phase or trade
• Permit and inspection fees itemized separately
• Estimated start date and projected completion date
• Payment schedule with specific milestone triggers
• The contractor's LARA license number (required by law to appear in the contract)
• Insurance carrier name and policy number

The inclusion of the LARA license number in the contract is not optional — Michigan's Occupational Code requires it. A contractor who hands you a bid that does not include their license number is already out of compliance before the project begins.

4. Get Three Bids from Three Different Contractors

Three competing bids calibrate the market and protect against two common problems: scope gaps that produce change orders later, and material substitutions that reduce quality without reducing price.

When you compare bids in Michigan, look for specific details:

• Are the materials described at the same specificity in each bid, or does one bid say "windows" while another specifies manufacturer, series, and U-factor?
• Does each bid include the same scope, or has one contractor omitted items (waterproofing, disposal, site prep) that the others included?
• Does each bid reflect Michigan-specific requirements — Michigan Energy Code compliance, frost-depth footings, local wind load requirements?

Michigan's climate creates specific construction requirements, particularly around insulation values, foundation depths, and roofing systems. A contractor who regularly works in Michigan builds these requirements in automatically. One who doesn't may price them out or get flagged at inspection.

Bids 25–30% below competitors almost never represent genuine savings. They represent a gap between what the contractor priced and what the job requires.

5. Check References from the Last 12 Months

Request three references from projects completed in the past year with comparable scope. When you call:

• Did the project finish within a reasonable window of the original timeline?
• Did the final cost match the bid, or were there significant undisclosed change orders?
• Were permits pulled and inspections passed without delays or failures?
• Was the contractor's LARA license current throughout the project?
• How did they handle problems that came up?
• Would you hire them again for a larger project?

Michigan-specific follow-up question: "Did the contractor pull all required permits, and were all inspections scheduled and passed before the work in each phase was covered up?" In Michigan, LARA can require contractors to open completed work for inspection if required inspections were skipped. References can tell you whether this is a contractor who manages the inspection process professionally.

6. Understand the Deposit and Payment Schedule

Michigan does not set a statutory percentage cap on contractor deposits, but the required written contract must include a payment schedule. Professional norms and LARA consumer guidance align on this structure:

• Deposit: 10–25% at contract signing
• Progress payments: Tied to verified completion milestones — framing, rough-in inspections, finish work, final inspection
• Final payment: Held until punch list is resolved and the final inspection is passed

Red flags:

• Any request for more than one-third of the total contract before work begins
• A payment schedule tied to calendar dates rather than project milestones
• "I need the money to order materials" from a contractor who cannot show established supplier relationships
• Requests for payment in cash or by wire transfer without a written record

Michigan AG enforcement patterns show that deposit fraud — collecting money and abandoning projects — is the most common form of residential contractor misconduct. The required written contract with a milestone-based payment schedule is your primary protection. A contractor who resists a milestone structure is a contractor who knows they cannot meet milestones.

7. Get Lien Waivers at Every Payment

Michigan has a detailed statutory lien waiver system. Under the Michigan Construction Lien Act (MCL 570.1101 et seq.), contractors, subcontractors, and material suppliers can file a construction lien against your property for unpaid amounts — even if you paid the general contractor in full.

Michigan provides four statutory lien waiver forms:

• Partial Unconditional Waiver — covers payment received, unconditional
• Partial Conditional Waiver — takes effect only when the payment clears
• Full Unconditional Waiver — final payment received, all claims released
• Full Conditional Waiver — same as above, conditional on clearance

At each payment milestone:

1. Obtain a Partial Unconditional Waiver (or Partial Conditional if paying by check) from your GC and any subcontractors you know of.
2. At project completion, obtain a Full Unconditional Waiver from your GC and all subcontractors.
3. For large material purchases, use a joint check arrangement made payable to both the GC and the material supplier.

Michigan's Construction Lien Act requires contractors and subcontractors to provide a Notice of Furnishing early in the project, which alerts you to who is working on your project. Keep this notice — it tells you which parties have lien rights and from whom you need waivers.

The Fastest Verification Shortcut

If the above process sounds like a lot of work, AboveBoardPros does most of it for you. Contractors in our network have passed license verification, insurance confirmation, reference checks, and business history review before you see their name. You still get three bids and still read the contract carefully — but you start with a filtered pool instead of a blank search.