Michigan Residential Builders License Practice Test

A contract is not required if the job is under which amount?

1. $500.00

2. $750.00

3. $1,000.00

4. $2,500.00

The correct answer is: $1,000.00

In Michigan, the threshold for requiring a written contract for residential construction projects is typically set at $1,000. If the cost of the project is below this amount, a written contract is not legally mandated. This allowance is designed to facilitate smaller jobs and repairs, where formalizing a contract may not be practical or necessary. Choosing this answer reflects an understanding of state regulations regarding contracts for residential builders. Contracts serve to protect both the builder and the homeowner by outlining terms, conditions, and expectations. For projects costing less than $1,000, it is often assumed that the scope is manageable and less complex, reducing the need for formal documentation. In contrast, amounts lower than $1,000 represent informal transactions that typically involve smaller jobs that may not require the level of detail that a contract would provide. Thus, recognizing this threshold is crucial for builders and homeowners alike in managing expectations and responsibilities in a residential construction context.