New Aid In Disputes Between Builders Customers

June 17, 2002
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GRAND RAPIDS — The statute that governs licensing for Michigan home builders has undergone two amendments that actually may work to the benefit of home builders and consumers alike.

Leslee Lewis, a lawyer with the Dickinson & Wright firm, is familiar with the law because she represents residential builders here from time to time, and because she and her husband own a residential construction contracting firm of their own.

The amendments entail two changes:

First, they prevent the jurisdictional body — the Michigan Consumer and Industry Service (CIS) — from recording a consumer’s complaint against a contractor unless the complaint is a clear allegation of a specified wrongdoing or failure on the contractor’s part.

Second, the amendments create an alternative dispute resolution option whereby a contractor and consumer can work out a disagreement without going through the drawn-out, stressful and often expensive process of a CIS administrative hearing. In such a proceeding, the burden of proof is upon the consumer.

Lewis explained that as the law stood until recently, the owner of a newly constructed home had an 18-month framework in which to file a complaint with the state against the builder of the home.

“That’s 18 months from the time the owner bought the home, or moved in, or it was completed — whichever is latest,” she said.

The problem with the measure, Lewis added, is that in some instances it worked an unjustified hardship upon contractors when the actual issue was a consumer’s anger resulting from something such as a simple misunderstanding.

“It would be one thing if the contractor did something wrong during the project,” she said, citing examples such as a leaking roof or a collapsing foundation.

But on occasion, she said, consumers have been known to file vague complaints with CIS alleging poor workmanship while never indicating what the substance of the complaint was.

Sometimes, Lewis said, during the subsequent administrative hearing, CIS might disclose a valid complaint. But other times, she explained, such hearings would reveal no workmanship problem at all — or, if there was a workmanship problem, a hearing might reveal that the consumer never had contacted the contractor or given the contractor either opportunity or access to remedy the problem.

But valid or not and specific or otherwise, Lewis said, CIS’s old practice was to record the complaint against the contractor’s license. And the complaint would stay there until a hearing resolved the issue.

“So you can imagine,” Lewis said, “what this means if someone is considering a contractor for a job. They call CIS and there it is: a complaint of ‘poor workmanship.’ CIS at that point couldn’t say whether the complaint was something real or not.”

She said she has encountered cases where consumers filed complaints for no reason other than wanting to vent.

All that has changed.

“Now,” she said, “if a consumer lodges a complaint, CIS no longer will accept it unless it’s clear and specific. It must cite code violations.

“‘Poor workmanship,’ without any supporting detail, won’t get it any longer,” Lewis added. “Any complaint has to describe an actual, factual basis why there’s a problem. If an owner writes just ‘poor workmanship,’ he’s liable to have it sent back to him.

“After all, you wonder what the problem might be if the complaint comes from somebody living in the home. The home has been built in conformity with the building codes. If it hadn’t been, the township or city building inspectors never would have issued a certificate of occupancy.”

Lewis explained that given a clear and substantive allegation of substandard work or some other substantive problem, CIS then will list the complaint and proceed toward its administrative hearing.

But even that hearing might be unnecessary if first the consumer and homebuilder enter a construction contract containing an agreement to first try to resolve disputes through arbitration.

She explained that CIS has yet to work out details and procedures for arbitration cases. As she understands it, however, CIS wants to arrange dispute resolution that can involve arbitrators who understand residential construction contracting.

In such proceedings, she said, the burden of proof will be upon the consumer.

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