4 PROPOSED ADMINISTRATIVE RULES

 

SOARH 2005-040

DEPARTMENT OF LABOR AND ECONOMIC GROWTH DIRECTOR’S OFFICE

 

RESIDENTIAL BUILDERS AND MAINTENANCE AND ALTERATION CONTRACTORS

 

Filed with the Secretary of State on

 

These rules become effective immediately upon filing with the Secretary of State unless adopted under sections 33, 44, or 45a(6) of 1969 PA 306. Rules adopted under these sections become effective 7 days after filing with the Secretary of State.

 

Draft October 24, 2005

 

(By authority conferred on the director of the department of labor and economic growth by section 308 of 1980 Act 299, MCL 339.308, and Executive Reorganization Orders No. 1996-2, MCL 445.2001 and

2003-1, MCL 445.2011)

 

R 338.1511, R338.1521, R338.1524, R338.1525, R338.1526, R338.1531, R338.1532, R338.1533, R338.1534,

R338.1535, R338.1536, and R338.1551 are amended and R338.1537 is added to the Michigan Administrative Code as follows:

 

PART 1. GENERAL RULES

 

R 338.1511 Definitions.

Rule 11. As used in these rules:

(1)   “Act” means 1980 PA 299, MCL 339.101, known as the occupational code. Act No. 383 of  the Public Acts of 1965, as amended, being ''338.1501 to 338.1519 of the Michigan Compiled Laws.

(b)     “Board” means the state residential builders and maintenance and alteration contractors board.

(c)   “Builder” means a residential builder as defined by the act.

(d)  “Contractor” means a residential maintenance and alteration contractor as defined by the act.

(e)     “Department”  means  the  department  of  licensing  and  regulation  labor  and  economic growth.

(f)  “Director” means the director of licensing and regulation labor and economic growth. PART 2. LICENSES AND BONDS

R 338.1521 Applications for licenses. ; submission.

Rule 21. (1) An applicant shall submit to the department in Lansing an application on the forms  prepared and furnished by the department. and the board. An application shall be accompanied by the proper fee, shall be made under oath, and each question shall be fully answered. An employing builder  or contractor under whom a salesman is to be licensed shall submit the application for a salesman=s license. The application shall indicate the principal Michigan place of business.

 

 

(2)    (1) An application for a license shall include the residence address of all individuals, partners, officers and/or members, as requested by the department, and the address of the principal place of business in Michigan. A nonresident applicant for licensure shall maintain a place of business in Michigan, and His the application shall include the address of show his the Michigan place of business and the address of his the applicant’s principal place of business outside of Michigan. A nonresident applicant shall file a consent to service with his the application. A foreign corporation or a foreign limited liability company shall submit evidence of qualification  to  do business in Michigan.

(3)   An applicant operating under an assumed name or d.b.a. shall submit a certified copy of the  assumed name certificate. An applicant operating as a co-partnership shall submit a certified copy of the certificate of co-partnership. An applicant operating as a corporation shall submit a copy of the articles  of incorporation. and the latest corporation annual report, if any, and be in good standing as a corporation.

(2)   Applicants shall furnish documentation as determined acceptable by the department to verify the applicant’s current business structure. Documents include, but are not limited to, the following:

(a)    For an application for an individual license using an assumed name, a copy of the current filed assumed name certificate issued by the county clerk.

(b)   For an application for a partnership license, a copy of the current filed certificate of co- partnership issued by the county clerk.

(c)    For an application for a limited liability company, a filed copy of the filed articles of organization, certificate of assumed name, if applicable, and current certificate of good standing.

(d)   For an application for a corporation license a filed copy of the articles of incorporation, certificate of assumed name, if applicable, and current certificate of good standing.

(e)    Any other documentation requested by the department to determine the applicant’s business structure and current authorization to do business in Michigan.

(3) A foreign company shall submit evidence of current authority to do business in Michigan.

(4)   If an applicant is a Michigan corporation, but is a wholly owned subsidiary of a foreign corporation not admitted to do business in Michigan, then the parent company shall file an affidavit of assumption of liability and a consent to jurisdiction. The director shall be the proper party to receive service of process and he shall immediately forward a copy of the process to the corporation’s last known address.

(5)    At the request of the department, an An applicant shall request submit a construction credit report to be furnished by a construction credit reporting service which is acceptable to the department. The applicant may be required to direct the credit reporting service which shall to send such the credit report directly to the department, which shall determine the adequacy or sufficiency of the reports report. Credit reports shall be for the confidential use of the department only and not for public inspection.

(6)   At the request of the department or board, an applicant shall submit within 60 days of a written request, either of the following:

(a)    A cash or surety bond acceptable to the department.

(b) A financial statement showing the current financial condition of the applicant, for a builder's or contractor's license, in accordance with established accounting practices which shall be completed in detail, properly signed, and submitted with the application.

(7)    If an application is incomplete and requires additional data, exhibits, information or other material, such material shall be furnished to the department within 15 days from the date of the department=s request therefor. Failure to furnish such material without good cause therefore may be

 

 

grounds for denial of an application and forfeiture of the application fee. If an applicant fails to complete all application requirements, including information requested by the department, and any written required examination, within 1 year from date of first making application to the department, his then the application shall be void and the application processing fee shall be forfeited. denied. The applicant when reapplying, shall submit a new application including the proper fees.

(8)   A contractor who desires to add additional trades trade or trades to those indicated on his

the contractor’s license shall do all of the following:

(a)   Pass an examination apply for the additional trades trade or trades on a regular

(b)   Submit an application form to add the trade or trades to the existing license listing the additional trades desired,

(d)   Upon notification by the department, receipt of the new license, the licensee shall return the

old identification card and wall license. for reissuance.

(9)   A passing score on an examination, or on a portion of an examination if the examination is given in separate parts, shall be valid for 1 year from the date the examination or portion of the examination was passed.

 

R 338.1524 Licenses; issuance or denial.

Rule 24. (1) The department shall issue a license including an identification card only after an applicant has successfully completed all requirements., including the receiving of the minimum passing  grade on an examination, if required, and by having a proper bond, if required, on file with the department.

(2) If an applicant for a license completes all requirements for a license except furnishing a bond,  a license shall be prepared by the department and retained as an inactive license and shall not be issued  to the applicant. When the applicant furnishes a bond in the required amount and a current credit report and current financial statement, and meets all other requirements for a license, such license shall be transferred to active status and mailed by the department to the applicant.

(2)   The physical office location shall be printed on the license.

(3)   The department may deny an application for a license for good and sufficient cause. Prior to entering an order of denial, the department shall notify the applicant by certified mail of its decision by a notice of intent to deny. The notice of denial shall advise the applicant of reasons for denial and of his or her right to submit a petition for review of the denial. make written request for a hearing. An order  of denial shall be entered after 15 days from the date of mailing the notice of intent to deny unless the applicant within that time requests in writing a hearing before the department

(4)    A builder or contractor shall display his license and the licenses of all his salesmen in a conspicuous position in his place of business.

 

R  338.1525   Salesperson’s  license;  identification  card;  discharge;  termination  or  transfer  of  salesperson; temporary license for salesperson or salesperson license applicant.

Rule 25. (1) A salesperson shall be licensed under a person holding a license as a builder or contractor, but shall not be licensed under more than 1 builder or contractor during the same period of time. In addition to the license,

(2)    An application for a salesperson license shall be submitted by the employing builder or contractor. An applicant for a salesperson license who is currently licensed as a residential builder or maintenance and alteration contractor, or has been licensed as a residential builder or maintenance and alteration contractor within the past 3 years, shall not be required to take the salesperson examination.

 

 

(3)   Upon approval, the department shall prepare and deliver to each salesperson issue a license and an identification card containing the name and business address of the salesperson., the imprint of  the seal of the department, and a certificate that the person whose name appears thereon is a licensed salesperson. The card shall be carried by the salesperson and shall be shown as identification to every prospective customer. A salesperson shall not commence work until the builder or contractor under whom the salesperson is licensed receives the salesperson’s permanent or temporary license and identification card from the department.

(2)     (4) When a salesperson licensed under this act is discharged or otherwise terminates employment with the builder or contractor under whom he or she is licensed, the builder or contractor shall return the salesperson’s license, and the salesperson shall return the identification card to the department by certified mail within 5 days from the date of such discharge or termination.

(3)   (5) When a licensed salesperson transfers employment from the builder or contractor under which he or she is presently licensed to a new employer, the new employer shall submit to the department an application for transfer of the salesperson’s license to the new employer. The salesperson shall, at that time, give notice to the former employer to return the salesperson’s license and identification card to the department by certified mail. The department shall issue a temporary license and identification card to the new employer for the use of the salesperson upon receipt of the application  for transfer. No permanent license or identification card shall be issued until the salesperson=s previous permanent license and card have been returned by the former employer or accounted for satisfactorily. The temporary license shall be valid for 60 days.

(4)     If an applicant for a salesperson’s license has not had a license denied, suspended, or revoked, the prospective employer of the applicant may endorse the salesperson’s application for  licensure requesting that a 60-day temporary license and identification card be issued to the employer  for the applicant’s use while awaiting processing of the application and the taking and scoring of the salesperson’s examination.

(5)   The temporary license application shall include a statement by the applicant that he or she has read and understood the licensing act and shall abide by it during the period of the temporary license. Failure to achieve a passing score on the subsequent examination, a change in employment during the 60 days, or failure to meet the requirements for the permanent license shall terminate the temporary license.

(6) A temporary license and pocket card issued under section 7a of the act shall bear the words  “temporary license” with expiration date.

 

R 338.1526 Termination of licenses.

Rule 26. (1) If a bond is cancelled, a an issued license predicated upon such a bond shall be suspended effective upon the date of become inoperative 60 days after notice of cancellation, if the licensee has not replaced the surety or cash bond.

(2)   Upon final order of license suspension or revocation, a license shall be inoperative and the licensee shall forthwith surrender the license to the department within 10 days of the date of suspension or revocation. If the license of a builder or contractor is suspended or revoked, the licenses of salesmen salespersons issued under the license of that builder or contractor are suspended shall lapse, and such licenses shall be surrendered at the same time. Any such salesman salesperson may have his or her license transferred to another licensed builder or contractor before the expiration date of the salesperson’s license.

(3)   If the qualifying officer of a corporation, association, partnership, limited liability company or organization consisting of more than 1 person is a party to events that led to suspension or revocation, any license issued to any other organization where the such individual is the qualifying officer shall be

 

 

suspended or revoked and any license issued to such the qualifying officer in an individual capacity shall be suspended or revoked.

(4)   A qualifying officer of a company shall notify the department in writing within 10 days of ceasing to be the qualifying officer, and shall return the wall license and pocket card of the company.

(5) When a qualifying officer ceases to act as the qualifying officer, and the company intends to continue to operate, the remaining officer, owner, member or partner of the company shall submit a written request to the department to allow the company time to obtain a new qualifying officer.

 

PART 3. OPERATIONS OF LICENSEES

 

R 338.1531 Place of business.

Rule 31. (1) A builder or contractor shall maintain a place of business in this state, which is an actual, established physical location from which the builder or contractor can and does conduct conducts business and where applicable books and records are maintained. A post office box, secretarial service, mailbox rental, receiving service, resident agent address, or telephone answering service alone is not sufficient.

(2) A builder or contractor shall display the license and the licenses of all salespersons in a conspicuous position in the builder's or contractor's place of business.

 

R 338.1532 Advertising.

Rule 32. (1) Advertising shall not misrepresent material facts.

(2)    A licensee shall include the name, license number, and actual business address, as shown on the license, in all advertising. Advertising placed in advertising media shall indicate the name and actual address of the licensee as shown on the license. The use of a telephone or post office box number alone is prohibited. When sales of new homes are being made by a licensed builder, through a licensed real estate broker, advertisements may indicate the broker’s name or both the names of the builder and broker.

(3)    A licensee placing advertising in or through any advertising media shall furnish to such  media the license number issued to him as evidence of being licensed under the act.

(4)   (3) NoA licensee shall not solicit any contract for home improvements by a promise to the purchaser or the prospective purchaser of a bonus, whether of merchandise or cash, which is contingent upon the purchaser’s or prospective purchaser’s using or displaying his a dwelling to a third person or upon the licensee’s obtaining an order or orders for merchandise or service from a third person.

(5)    (4) A licensee making or attempting to make sales through the use of displays, models or model installations, shall accurately portray the goods and services being offered so as to not mislead or deceive the public.

 

R 338.1533 Purchase and sales agreements.

Rule 33. (1) A builder or contractor shall deliver to his customer fully executed copies of all agreements between them, including specifications, and when construction is involved, both plans and specifications. All agreements and changes to the agreements between a builder, or contractor, and the customer shall be in writing and signed by the parties. Copies of all agreements and changes to agreements shall be in writing, and provided to the customer.

(2) He The builder or contractor shall make certain that all such writings the written agreements clearly state are definite in their the terms and sufficient to express the intent of the parties with regard to of the transaction, including specifications, and when construction is involved, both plans and

 

 

specifications, including cost, the type and amount of work to be done, and the type and quality of materials to be used. and The parties shall adhere to applicable building, housing, and zoning regulations.

 (2)(3) If a purchase or sales agreement is for a new structure which is either substantially completed or in substantial conformance with a model, plans and specifications need not be furnished if the structure is specifically identified or related to the model and any changes, additions to or subtractions from the model are specifically agreed to and noted in writing.

(3) Changes in the agreement shall be in writing, dated and initialed by the parties. to be bound.

 

R 338.1534 Books and records.

Rule 34. A builder or contractor shall keep and maintain a complete, accurate set of books and records which disclose his the licensee’s current financial condition. The books and records shall be open to inspection by the department or any person duly authorized by it for good and sufficient cause during regular business hours after reasonable notice and for stated reasons.

 

R 338.1535 Financial statements.

Rule 35. A licensee, u Upon written demand and notice by the department, a licensee shall submit within 30 days submit a current, accurate and sworn financial statement showing his the licensee’s current financial status. The demand notice for a financial statement may be based upon an unsatisfied judgment, a lien filed against the licensee or the department’s reasonable belief that the licensee does not have the ability to perform. financial resources to meet contractual obligations. The department’s written demand notice shall be in writing and may be served personally on the licensee or by certified mail sent to his the licensee’s last known business address on file with the department. A request for an extension of time shall be in writing and may be granted for good and sufficient cause.

 

R 338.1536 Brokerage.

Rule 36. Acceptance or performance of a contract procured by a salesman salesperson not licensed under a builder or contractor, or acceptance or performance of a contract, other than the sale of real property, procured by anyone not licensed under the act, is prohibited.

 

R 338.1551 Complaints; filing.

Rule 51. (1) A complaint shall be submitted in a form specified by the department in writing, signed by the party filing it and submitted to the bureau of regulation of the department. The department shall provide forms for submitting complaints.

(2)   Upon receipt of a valid and written complaint, the department shall assign a complaint number, acknowledge the complaint and forward a copy of the complaint to the licensee. He The licensee shall reply to the department within 15 days from receipt of the complaint and shall confirm or deny the justification of the complaint. A complaint acknowledged as justified shall be corrected within a reasonable time. If a complaint or a portion of the complaint thereof is not acknowledged by the licensee as being justified, then the department shall notify the complainant of the area of disagreement.

(3)   If the complaint or the information submitted by the complaining party is incomplete or disputed by the licensee, the department may require the complaining party to furnish additional information.  Such The report shall indicate what steps, if any, have been taken by the complaining party before any other governmental agency or any other pertinent information regarding the subject matter of the complaint. Before the department takes any further action it shall obtain a report from local building officials or proper local authorities, and if the department cannot obtain a report from the local

 

 

building official or proper local authorities, then  in the absence of such, a person authorized by the department shall make an inspection to determine if the complaint is justified.

(4)    If a complaint is justified by the local building inspector or by a person authorized by the department to make inspections, the builder or contractor shall correct the complaint within a reasonable time. Failure or refusal by the licensee  to correct a structural matter that is materially deficient, dangerous, or hazardous to the owners shall be presumed to be dishonest or unfair dealing.

(5)   Standards of construction shall be in accordance with the local building code, or in the absence of a code in accordance with the building code of the nearest political subdivision having a building code.