Blog : Homeowners Associations

Residential Home-building Exempt from Michigan Consumer Protection Act

The Michigan Supreme Court in Liss v. Lewiston-Richards, Inc. issued a very important and favorable decision for residential homebuilders in the State of Michigan. After the Court’s decision in Liss, residential homebuilders are no longer subject to a homeowner’s claim that the builder’s actions violated the Michigan Consumer Protection Act.

The Consumer Protection Act prohibits “unfair, unconscionable, or deceptive methods, acts, or practices in the conduct of trade or commerce.” Builders would inevitable be faced with a Consumers Protection Act claim, in addition to a breach of contract claim, when litigation was pursued by a homeowner, because the Consumers Protection Act would allow a homeowner to recover both actual damages and reasonable attorney’s fees from the builder.

Seven years ago in Forton v. Laszar, and again two years ago in Hartman & Eichhorn Building Company, Inc. v. Dailey, the Michigan Court of Appeals allowed for homeowner recovery of attorney fees for a successful claim against the builder under the Consumer Protection Act. However, the Consumers Protection Act includes an exemption for any “transaction or conduct specifically authorized under laws administered by a regulatory board or officer acting under statutory authority of this state.

In Liss, the builder was faced with a Consumer Protection Act claim from the homeowner for failure to complete construction on time and in a workman-like manner. Agreeing with the builder’s argument that Forton and Hartman were wrongly decided because of the above exemption, the Michigan Supreme Court held that because the Michigan Occupational Code requires residential builders be licensed and regulates the builder’s activities, any residential building activity that requires the builder to be licensed is exempt from the Consumer Protection Act.

This is an important decision for residential homebuilders because homeowners no longer have the superior position of being able to threaten the builder with the recovery of attorney’s fees upon a successful Consumers Protection Act claim.

The comments in this article are not intended to be a substitute for legal guidance or advice for a specific situation.  You should obtain informed legal counsel to assist in your decisions relating to any issues which may be raised in this article.