Michigan Residential Builder Bond

What Is the Michigan Residential Builder Bond?

The Michigan Residential Builder Bond is a $25,000 surety bond required by the Michigan Department of Licensing and Regulatory Affairs (LARA) under MCL 339.2412 for every licensed Residential Builder and Maintenance & Alteration Contractor in the state.

The bond protects homeowners who hire licensed contractors. If a contractor violates licensing law, fails to complete contracted work, or causes financial harm, the homeowner can file a claim against the bond for up to $25,000. The surety investigates valid claims and pays them — the contractor must then reimburse the surety.

Michigan residential builder licenses are 3-year terms. The bond must be maintained continuously throughout the license period without any gap in coverage.

Who Needs This Bond in Michigan?

• Residential Builders licensed under MCL 339.2403 who construct, remodel, or repair one-to-four-family residential structures must maintain a $25,000 bond.
• Maintenance & Alteration Contractors performing renovation, repair, or remodeling work on existing residential structures must also maintain the same $25,000 bond.
• License renewal applicants must have an active bond on file with LARA at all times during the license period.

How to Get Bonded — Step by Step

1. Apply for your Michigan residential builder license through LARA's online licensing portal at Michigan.gov/LARA.
2. Obtain the $25,000 surety bond. Click "Get Your Bond Now" on this page and complete the short application. Approval is typically instant for applicants with good credit.
3. Submit the bond to LARA. Upload the bond certificate through the LARA licensing portal as part of your license application or renewal.
4. Complete any required examination and education requirements for new applicants (experience documentation may substitute for examination in some categories).
5. Receive your license. LARA issues the residential builder license once all requirements are verified.

Renewal & Continuous Bond Coverage

Michigan residential builder licenses renew every 3 years. Your surety bond must cover the entire 3-year license term. Set a reminder 60 days before your license expiration to renew both the license and bond simultaneously through LARA's portal. A lapsed bond is a license violation that can result in suspension or revocation.

Frequently Asked Questions

Who in Michigan needs a residential builder bond?

Any person or company that contracts to build, remodel, repair, or alter one-to-four-family residential structures for compensation must hold a Michigan residential builder or maintenance & alteration contractor license and maintain the $25,000 bond. This includes general contractors, remodelers, and home improvement contractors who work on residential properties.

Is the bond different from contractor liability insurance?

Yes. The $25,000 surety bond is a financial guarantee that you will comply with licensing laws. It is separate from general liability insurance, which covers property damage and bodily injury. LARA requires the bond; your lender or homeowner clients may also require liability insurance. Both are typically needed.

What happens if a claim is paid against my bond?

If the surety pays a homeowner's valid claim, you are personally obligated to reimburse the surety. A paid bond claim is also reported to LARA, which can trigger a license investigation. Maintaining quality workmanship and resolving disputes directly with clients is always preferable to a bond claim.

Can I get bonded if I have past credit problems?

Yes. Most sureties can bond Michigan residential builders even with credit challenges. For applicants with credit issues, the premium will be higher — typically 3–5% of the $25,000 bond amount ($750–$1,250/yr) — but coverage is still available.

Related: All Michigan surety bonds · What is a surety bond? · How surety bond costs are calculated