For nearly twenty years, condominium boards investigating construction defects heard the same answer from lawyers: the licensed residential builder that put up the buildings is exempt from the Michigan Consumer Protection Act. That answer is no longer correct.
On July 31, 2026, the Michigan Supreme Court decided Attorney General v Eli Lilly & Co, ___ Mich ___; ___ NW3d ___ (2026) (Docket No. 165961), and overruled Liss v Lewiston-Richards, Inc, 478 Mich 203; 732 NW2d 514 (2007), the case that created the builder exemption. A licensed builder can no longer escape the Michigan Consumer Protection Act (MCPA), MCL 445.901 et seq., simply because it holds a license.
For community associations, that means a construction defect case against a licensed builder may now include a statutory claim that carries attorney fees under MCL 445.911 — something ordinary contract, warranty, and negligence claims usually do not. But to use the decision well, boards and managers need to keep two very different parties straight: the developer and the builder. The MCPA always reached the developer. What changed is that the licensed builder is no longer exempt.
What Boards Were Told for Years — and Why It Is No Longer True
The MCPA prohibits unfair, unconscionable, or deceptive methods, acts, or practices in trade or commerce. It also contains an exemption, MCL 445.904(1)(a), for a transaction or conduct “specifically authorized” under laws administered by a state or federal regulatory board or officer.
In Liss, the Supreme Court read that exemption very broadly. It held that the exemption covers residential home builders engaged in the activities that define a residential builder, because the Occupational Code allows only licensed builders to perform that work. In practice, as long as a builder was licensed, almost any claim connected to the general business of building homes fell outside the MCPA. MCPA counts against licensed builders were routinely dismissed at the pleading stage, and most community associations stopped pleading them at all.
Eli Lilly involved insulin pricing, not construction, but its holding applies across every industry. The Court held that Liss and the earlier Smith v Globe Life Ins Co decision were wrongly decided because they inserted the word “general” into the statute and read the words “specifically authorized” out of it. Going forward, the Supreme Court held that the question is whether the specific transaction or conduct the plaintiff challenges is specifically authorized by law — not whether the defendant’s overall line of business is licensed or regulated. Notably, the Court listed home builders first among the industries that Liss had improperly immunized.
The decision was 4–3. The three dissenting justices would have dismissed the case because, in their view, the Attorney General lacked standing. The majority opinion is published and binding on Michigan’s trial courts and Court of Appeals.
The bottom line for boards: a residential builder’s license authorizes a company to build homes. It does not authorize that company to misrepresent its work, conceal defects, or mislead buyers about what they are getting.
Developer vs. Builder: Who Can a Michigan Condominium Association Sue?
A condominium association does not have a “builder” in the legal sense. The Michigan Condominium Act is written around the developer — the person or entity that establishes the condominium project, records the master deed, markets and sells the units, and controls the association until transition. The Act uses “developer” and “builder” differently, and so should boards.
The builder is the licensed residential builder or contractor that actually performs the construction. Residential builders must be licensed under Article 24 of the Occupational Code, MCL 339.2401 et seq. A developer does not need to hold a builder’s license to develop and sell a condominium project. Some developers hold one; most hire a licensed builder or general contractor to do the work.
That distinction is the key to understanding what Eli Lilly actually changed:
- Claims against the developer were always available. Because the Liss exemption turned on licensure, and developing and selling condominium units does not require a professional license, Liss never shielded a developer acting as a developer. Misrepresentations in marketing materials, purchase agreements, or the disclosure statement could support an MCPA claim against the developer before Eli Lilly, and they still can.
- Claims against the licensed builder are what is new. Before Eli Lilly, the builder’s license was effectively a complete defense. Now the builder must show that the specific conduct being challenged was specifically authorized by law — a much harder showing.
- Where the developer and builder are the same company, defendants often argued that the builder license immunized everything the company did. That argument is gone.
When reviewing a potential claim, boards should identify each entity separately: the developer, the builder or general contractor, and any significant subcontractors. Each may have a different relationship to the association and the co-owners, and each will raise different defenses.
What the MCPA Adds to a Construction Defect Claim
Most construction defect cases are built on breach of contract, breach of warranty, negligence, and, for developers, the Condominium Act itself. The MCPA adds two things those theories often lack.
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Attorney fees.
Under MCL 445.911, a person who suffers loss from an MCPA violation may recover actual damages or $250, whichever is greater, together with reasonable attorney fees. Michigan otherwise follows the American rule, under which each side pays its own lawyers unless a statute, court rule, or contract says otherwise. Builder contracts rarely give the owner a right to fees, and community associations generally cannot rely on their own bylaws to shift fees onto a builder.
A viable MCPA count can change settlement leverage and make a moderate-dollar defect claim economically worth pursuing. The statute also authorizes declaratory and injunctive relief and, in appropriate cases, class actions on behalf of consumers.
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Conduct beyond bad workmanship.
The MCPA targets deception and unfairness. Among the practices listed in MCL 445.903(1) are:
- representing that goods or services have characteristics or benefits they do not have;
- representing that they are of a particular standard or quality when they are of another;
- failing to reveal a material fact that the consumer could not reasonably know and that tends to mislead;
- causing confusion about legal rights, obligations, or remedies;
- gross discrepancies between oral representations and the written agreement; and
- failing to reveal facts that are material in light of representations that were made.
Which Construction Defects and Builder Practices May Fall Under the Michigan Consumer Protection Act
With the blanket exemption gone, boards and their engineers should look for facts that connect a physical defect to what the builder said or failed to say. Examples include:
- Code and specification misrepresentations — representing that roofing, flashing, fire separations, or structural elements were built to code, to the approved plans, or to the manufacturer’s installation requirements when they were not.
- Material substitutions — installing cheaper or different siding, windows, membranes, or insulation while representing that the specified products were used.
- False completion or inspection claims — representing that work was completed, corrected, or inspected when it was not, or billing for work that was never performed.
- Concealment of known defects — failing to disclose known water intrusion, drainage, or foundation problems during construction, sales, or warranty service.
- Warranty and remedy confusion — misrepresenting what a warranty covers, or burying waivers and remedy limitations in documents in a way that misleads buyers about their rights.
- Oral promises contradicted by the contract — assurances about quality, materials, or repairs that the written documents later disclaim.
Expect builders to respond with the new Eli Lilly test. A builder may argue that particular work was “specifically authorized” because it was permitted and passed a municipal inspection. Passing an inspection is not the same as being authorized to misrepresent the work, but courts will be sorting out these arguments over the next several years.
Boards should also evaluate who the proper plaintiff is. The MCPA applies to goods and services provided primarily for personal, family, or household purposes. A co-owner’s purchase of a residence fits that description comfortably. A condominium association’s own contract for common element repairs may draw a challenge, and a builder with no contract with the association may argue the association lacks a consumer relationship with it. These issues should be analyzed at the outset, not after suit is filed.
Timing and Limitations Issues to Check Before Adding an MCPA Count
The new opportunity is only useful if the claim is timely. Before adding an MCPA count, condominium associations should review:
- The MCPA’s own limitations period. MCL 445.911 bars an action brought more than six years after the occurrence of the challenged practice, or more than one year after the last payment in the transaction, whichever ends later.
- The construction statute of repose. MCL 600.5839 limits actions against licensed contractors, architects, and engineers arising from defective improvements to real property — generally six years after occupancy, use, or acceptance, with a narrow gross-negligence extension capped at ten years. Builders will argue it applies to MCPA claims against them.
- Retroactivity. Eli Lilly does not say whether it applies only prospectively. Michigan decisions are generally given retroactive effect, but courts sometimes limit decisions that overrule clear precedent to future cases. Expect builders to argue that conduct before July 31, 2026, remains protected by Liss. Claims previously dismissed on Liss grounds may be barred by finality rules.
- Contract terms. Builder contracts and purchase agreements may contain shortened limitations periods, arbitration clauses, and waivers. The MCPA itself restricts certain consumer waivers, but every contract should be read carefully.
- Condominium Act timing for developer claims. Claims against the developer should also be evaluated under the Condominium Act’s provisions tied to transition of control.
- Pending cases. If your association is already in litigation against a licensed builder, talk with counsel now about whether to seek leave to amend to add an MCPA claim before scheduling deadlines close.
What Eli Lilly Means for Michigan Condominium Associations
Boards should not assume that advice they received before July 31, 2026, about suing a builder is still accurate. Practical next steps include:
- Revisit any pending or contemplated defect claim against a licensed builder.
- Ask your engineer or building consultant to document not just what is wrong, but how the as-built condition differs from the plans, specifications, and representations.
- Gather the paper trail: marketing materials, purchase agreements, the disclosure statement, warranties, permits, inspection records, change orders, and warranty-service correspondence.
- Identify every potential defendant separately — developer, builder, and subcontractors — and the role each played.
- Factor fee recovery, and fee exposure, into the litigation budget and settlement strategy.
Key Takeaways for Condominium and Homeowners Associations
- Licensed builders are no longer exempt. Eli Lilly overruled Liss; a builder’s license no longer bars an MCPA claim.
- Developers were never exempt on licensure grounds. Developing and selling condominium units does not require a professional license, so MCPA claims against the developer were always available.
- Keep “developer” and “builder” distinct. They are different parties with different roles, relationships, and defenses.
- The MCPA adds attorney fees. MCL 445.911 allows recovery of actual damages (or $250) plus reasonable attorney fees.
- Deception is the hook. Tie defects to misrepresentations, substitutions, or concealment — poor workmanship alone is not enough.
- Check timing now. Review the MCPA limitations period, the statute of repose, contract terms, and likely retroactivity arguments before relying on the new claim.
Eli Lilly restores the Michigan Consumer Protection Act as a meaningful tool against licensed builders for the first time since 2007. For associations dealing with construction defects, that can change both the value of a claim and the leverage in resolving it — but only if the claim is properly framed against the right party and brought on time.
If your condominium or homeowners association is evaluating construction defect claims against a developer or builder, contact the experienced Michigan community association lawyers at Hirzel Law, PLC.
