I built forts as a kid out of dirt and scrap wood. I never intended to become a building contractor in adulthood, but I did. I started by making repairs in homes that wore out or were done poorly, which reinforced, for me, my parents’ insistence on doing it right the first time. Those repairs taught me that doing it right was ultimately the least expensive way to build.
My early married life in Leelanau County, Michigan, gave me the opportunity to work on a number of new home constructions. Young families banded together to help each other build homes as part of the “Back-to-the-Land” movement (Google it, if unfamiliar) of the 1960s and 70s. That experience taught me that a dedicated group of inexperienced workers could build a lot of house with good organization and leadership from an experienced builder.
I went on as a tradesman, then licensed building contractor for over fifty years. I have built in multiple areas of rural Michigan and the Twin Cities. It is with that experience that I can say building in Minnesota’s Arrowhead region is unique. My purpose in this article is to offer some unsolicited advice to benefit current and future residential contractors in our area. The lack of housing, combined with climate migration to our region, increases the need for competent builders. My intention in this article is to honor and protect the profession.
Rural Arrowhead communities used to be more insular and self-contained. A lot of structures were built with a handshake and a plan sketched on a luncheon napkin. Many homes were built to withstand gravity and the weather by loggers, fishermen, and Do-itYourselfers. That system worked for a long time within a community where both parties lived and raised their families as members of a tight community. But newcomers are arriving in ever-increasing numbers. Some new folks want to establish themselves as active residents, while others want to remotely cash in on the area’s seasonal beauty and tourist revenues. Both types of new folks have one thing in common. Most of them are coming from urban and/or high-value regions, complete with expectations and demands not necessarily matched by local building contractors and land use regulations. There are potential problems for local builders when local methods and requirements don’t align with newcomer expectations. Problems for local property owners can also arise when working with newly arriving building contractors whose experience doesn’t align with local conditions.
One local family needed to time their new home for the arrival of their firstborn child. Not able to wait several years for a local builder, they connected with a contractor out of the cities. Early in the building process, it became clear that the builder was not experienced with local soils, frost depths, and our remoteness. The contractor took advantage of the absence of inspections to perform in-floor plumbing for which he was not licensed. It had to be torn out and redone by a professional plumber. As a retired builder and neighbor, I coached the young property owner and ultimately the builder in best practices to meet local conditions. The end result was a fine home for the new family. A second project in the area by the same builder didn’t end so well. Contracts were terminated, money returned, and the local property owners were left with a torn-up building site.
Experienced local builders need to be alert to legal consequences when working with newcomers to our area. A few years back, I had a discussion with a local bank executive about Minnesota’s lien laws. The banker wanted lien waivers for the payments made to contractors. I noted the builders had no legal right to put a lien on a title because none of them had given the homeowner a “Pre-lien Notice.” After a brief explanation of that requirement, the banker responded, “Well, our builders are really busy, so may not be up on the latest laws.” I was taken aback because Minnesota Statutes Ch. 514 has been the law for a very long time.
There are many examples of uninformed contractors being financially harmed by their clients taking advantage of knowing the laws better than their builder. One builder lost seventy-five thousand dollars in a lawsuit because the Pre-lien Notice in his contract with the property owner was not in bold print. The homeowner took advantage of this error of the law and refused to pay. He won, and the builder took a huge financial loss for a very minor infraction.
Minnesota’s lien laws are established to ensure that builders get paid for their services. But this protection is for licensed contractors only. Without a MN license, there is no protection from a property owner’s refusal to pay. One old-time builder up the Gunflint Trail suffered a total loss when a high-dollar summer resident refused any payment. Being unlicensed, this respected builder had no legal recourse as he was operating illegally in the eyes of the court system. Our state requires a Residential Building Contractor or a Remodeler License for anyone who contracts directly with a homeowner for projects that total over fifteen thousand dollars per year. Independent tradespeople without a license are at risk unless they subcontract with a company with a state license and a “Qualifying Person” who holds the license and attends the required annual continuing education classes. Legal information is easily accessible on the MN Dept. of Labor and Industry (DOLI). A Google search is a good start.
I have a few other suggestions for our local builders to promote their continued success. One retired excavator tells young start-ups to save twenty percent of all revenues for emergencies and retirement. He did that very well! A national survey of construction businesses found that any markup of costs less than twenty-five percent indicated a probability of business failure. So mark up your costs (including what you pay yourself) at least that much. Many companies use a much higher percentage of cost markup for their clients.
Finally, read the state statutes and talk with a lawyer (which I am not) to protect yourselves and safeguard your success. Our Community Education organizations are a good resource. Get some insights from other contractors working with new arrivals to our area. There are a lot of newcomers, and their numbers will increase over the next decade. They bring a lot of great business opportunities. We need a growing number of prosperous and successful builders to meet this change in our region. Best of Luck!
