Michigan Property Law: Construction/Home Renovations: Real-estate Litigation

Homeowners, for a litany of potential reasons, may need to remodel or reconstruct portions of their home. Unfortunately, things do not always turn out well and litigation may ultimately be necessary. Builders and homeowners may need to resort to litigation in order to resolve disputes over a contract or to resolve claims over property damage.

Under Michigan law, parties may file a complaint in different courts depending upon their amount of damages and the type of relief they are seeking. Typically, though, homeowners or contractors/builders, unless an injury was involved, will sue under contract theories in either District Court, or if the amount is above $25,000.00 in damages, Circuit Court.

Either homeowners or builders/contractors or government entities may resort to litigation over a litany of potential issues. These disputes often result from disagreements over a wide variety of issues.

One key area of potential litigation may be alleged violations of the applicable rules and regulations for the particular project. There may be potential issues with:

  • Local ordinances and building codes;
  • Zoning;
  • Building codes, which may vary significantly;
  • Building permits/permitting process;
  • privately negotiated rules as part of a subdivision or local association;
  • environmental regulations;
  • Federal regulations;
  • State regulations;

Certain projects just cannot be built, legally, or may be far too expensive to get all the necessary permits and approvals, especially for people living near environmentally sensitive areas. A single construction project may involve at-least three separate levels of government and multiple government agencies. These cases often involve a myriad of complex laws.

Finances are often a key issue of contention as well. Financial problems have slowed or ultimately cancelled many projects over the years. Financial disputes over contractual payments, anecdotally, seem to be the key issue in a majority of these types of disputes.  Among other issues, and this is and is not an exhaustive list; litigation may be ultimately be necessary if:

  • the financing for the project is in dispute,
  • a party is not paying as required pursuant to a contract or other obligation;
  • Sub-contractors are not being paid, which, if builder’s trust act violations are alleged, could result in civil lawsuits, criminal charges, and administrative proceedings;
  • insurance payment disputes;
  • cost-overruns;
    • disputes with lenders, investors, or third-party financiers;
  • there are unpaid-wages;
  • unpaid invoices for parts or supplies;
  • other sorts of finance-related disputes

Occasionally, whether a contractor or builder is licensed will be an issue as well. If, for example, someone does unlicensed work, it will have significant impact on the legal enforceability of any contracts they enter and it may be grounds for a litigation by the client.

  • If a homeowner, for example, is interested in hiring someone in the building trades, they should make sure they are properly licensed prior to discussing any terms.
  • Licensing information is available on the Michigan Government’s website.
  • Is the general or subcontractor insured or bonded? In a vast majority of professions, there is some type of insurance or bonding available for practitioners.
  • Getting sued over unlicensed work is a significant issue for builders and contractors and performing unlicensed work may also result in criminal charges as well.

Generally speaking, however, the most important issue with a vast majority of litigation involving home-owners and builders/contractors is the contract:

  • was there a written contract?
    • did all the parties sign the agreement?
    • did the parties carefully review the agreement?
    • Be aware of the fine print…all the language in that contract is in there for a reason.
  • Were there any modifications to the contract?
  • Did the contract cover everything?
  • Were there issues outside of the scope of the contract?

If litigation is ultimately necessary, the written contract will be a key issue. The written contract is the first place the lawyers and court will look at when examining a dispute over terms.

Even with a good contract in place, resolving disagreements over issues may be necessary. Generally speaking, it is a better option to:

  • put concerns in writing,
  • send the other party a letter informing them of a party’s concerns, ask them to fix the issues, and save a copy.
  • document concerns and make sure the other party has time to address those concerns, i.e., give the parties a chance to “cure” any issues with performance.
  • Put any amendments to the contract in writing.
  • Oral amendments to a contract, for example, are much harder to enforce.
    • Financing is often essential; gamesmanship with payments may result in disasterous consequences for all the parties involved.
    • communication about deadlines and advising the other party of future issues in advance is often helpful.
  • Communication issues over dates is a key dispute in many of cases if they end up in litigation.
    • Keep the lines of communication open.

So many potential disputes may be resolved through simple and direct communication. Patience, understanding, and communication is necessary for all the parties if they wish to keep a good relationship. Good relationships will usually significantly reduce the chances of litigation. However, even good relationships may ultimately breakdown and litigation may ultimately be necessary.

If things break down and if you would like a free consultation, feel free to call us at (517) 507-5077. Our firm has a lot of experience with civil litigation and real-estate issues.

For information on Deeds under Michigan Law, click here.

For information on Nuisance claims under Michigan law, click here.

For information on the Summary Proceedings Act, under Michigan Law, click here.
Disclaimer: This page is only general legal advice. It relates to Michigan legal issues only.  If you need specific legal advice, please privately consult with a lawyer properly licensed in your respective state. Circumstances vary significantly depending on the alleged facts.