Residential Builders Law - Higher Ed eBooks & … · 2009-11-05 · Residential Builders Law...

Residential Builders Law

ARTICLE 24RESIDENTIAL BUILDERS AND RESIDENTIAL

MAINTENANCE AND ALTERATION CONTRACTORS339.2401 Definitions.Sec. 2401. As used in this article:

(a) “Residential builder” means a person en-gaged in the construction of a residentialstructure or a combination residential andcommercial structure who, for a fixed sum,price, fee, percentage, valuable consideration,or other compensation, other than wages forpersonal labor only, undertakes with anotheror offers to undertake or purports to have thecapacity to undertake with another for theerection, construction, replacement, repair,alteration, or an addition to, subtractionfrom, improvement, wrecking of, or demoli-tion of, a residential structure or combinationresidential and commercial structure; a personwho manufactures, assembles, constructs,deals in, or distributes a residential or combi-nation residential and commercial structurewhich is prefabricated, preassembled, precut,packaged, or shell housing; or a person whoerects a residential structure or combinationresidential and commercial structure exceptfor the person’s own use and occupancy onthe person’s property.

(b) “Residential maintenance and alterationcontractor”means a person who, for a fixedsum, price, fee, percentage, valuable consid-eration, or other compensation, other thanwages for personal labor only, undertakeswith another for the repair, alteration, oran addition to, subtraction from, improve-ment of, wrecking of, or demolition of a res-idential structure or combination residential

and commercial structure, or building of agarage, or laying of concrete on residentialproperty, or who engages in the purchase,substantial rehabilitation or improvement,and resale of a residential structure, engag-ing in that activity on the same structuremore than twice in 1 calendar year, exceptin the following instances:(i) If the work is for the person’s own use

and occupancy.(ii) If the rehabilitation or improvement

work of residential type property or astructure is contracted for, with, orhired entirely to be done and per-formed for the owner by a person li-censed under this article.

(iii) If work is performed by a person em-ployed by the owner to perform workfor which the person is licensed by thestate.

(c) “Residential structure”means a premises usedor intended to be used for a residence purposeand related facilities appurtenant to the pre-mises, used or intended to be used, as an ad-junct of residential occupancy.

(d) “Salesperson”means an employee or agent,other than a qualifying officer, of a licensedresidential builder or residential maintenanceand alteration contractor, who for a salary,wage, fee, percentage, commission, or otherconsideration, sells or attempts to sell, negoti-ates or attempts to negotiate, solicits for orattempts to solicit for, obtains or attemptsto obtain a contract or commitment for, or

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furnishes or attempts or agrees to furnish,the goods and services of a residentialbuilder or residential maintenance and alter-ation contractor, except a person workingfor a licensed residential builder or residen-tial maintenance and alteration contractorwho makes sales which are occasional andincidental to the person’s principalemployment.

(e) “Wages”meansmoney paid or to be paid onan hourly or daily basis by an owner, lessor,or occupant of a residential structure orcombination residential and commercialstructure as consideration for the perfor-mance of personal labor on the structure bya person who does not perform or promiseto perform the labor for any other fixed sum,price, fee, percentage, valuable consider-ation, or other compensation and whodoes not furnish or agree to furnish thematerial or supplies required to be used inthe performance of the labor or an actdefined in subdivision (a) or (b).

History: 1980, Act 299, Imd. Eff. Oct. 21,1980;-- Am. 1991, Act 166, Imd. Eff. Dec. 19,1991 Compiler’s Notes: For transfer of powersand duties of certain occupational functions,boards, and commissions from the Departmentof Licensing and Regulation to the DepartmentofCommerce, seeE.R.O.No. 1991-9, compiledat MCL 338.3501 of the Michigan CompiledLaws.

***** 339.2402 THIS SECTION ISAMENDED EFFECTIVE JUNE 1, 2008: See339.2402.amended *****

339.2402 Residential builders’ andmaintenance and alteration contractors’board; creation; qualifications of members.Sec. 2402. A residential builders’ and mainte-nance and alteration contractors’ board is cre-ated. Four members shall be licensed residentialbuilders, and 2 members shall be licensed main-tenance and alteration contractors.

History: 1980, Act 299, Imd. Eff. Oct. 21,1980

***** 339.2402.amended THIS AMENDEDSECTION IS EFFECTIVE JUNE 1, 2008 *****

339.2402.amended Residential builders’ andmaintenance and alteration contractors’board; creation; qualifications of members.Sec. 2402. (1) A residential builders’ and main-tenance and alteration contractors’ board is cre-ated. Of the 9-member board, 4 members shallbe licensed residential builders, and 2 membersshall be licensed maintenance and alterationcontractors.

(2) Of the members representing the generalpublic, at least 1 member shall be registeredunder the building officials and inspectorsregistration act, 1986 PA 54, MCL338.2301 to 338.2313.

History: 1980, Act 299, Imd. Eff. Oct. 21,1980;-- Am. 2007, Act 157, Eff. June 1, 2008

339.2403 Engaging in business or acting incapacity of residential builder or residentialmaintenance and alteration contractor orsalesperson without license.Sec. 2403. Notwithstanding article 6, a personmay engage in the business of or act in the capac-ity of a residential builder or a residential mainte-nance and alteration contractor or salesperson inthis state without having a license, if the person is1 of the following:

(a) An authorized representative of the UnitedStates government, this state, or a county,township, city, village, or other political sub-division of this state.

(b) An owner of property, with reference to astructure on the property for the owner’sown use and occupancy.

(c) An owner of rental property, with referenceto the maintenance and alteration of thatrental property.

(d) An officer of a court acting within the termsof the officer’s office.

(e) A person other than the salesperson whoengages solely in the business of perform-ing work and services under contractwith a residential builder or a residential

2 Michigan Real Estate Principles and Practices, 5e


maintenance and alteration contractorlicensed under this article.

(f) A person working on 1 undertaking or proj-ect by 1 or more contracts, the aggregatecontract price for which labor, material,and any other item is less than $600.00.This exemption does not apply if the workof a construction is only a part of a larger ormajor operation, whether undertaken by thesame or a different residential builder or res-idential maintenance and alteration contrac-tor, or in which a division of the operation ismade in contracts of amounts less than$600.00, to evade this act.

(g) An electrical contractor who is licensed un-der Act No. 217 of the Public Acts of 1956,as amended, being sections 338.881 to338.892 of the Michigan Compiled Laws.This exemption applies only to the electricalinstallation, electrical maintenance, or elec-trical repair work performed by the electricalcontractor.

(h) A plumbing contractor licensed under ActNo. 266 of the Public Acts of 1929, asamended, being sections 338.901 to338.917 of the Michigan Compiled Laws.This exemption applies only to plumbing in-stallation, plumbing maintenance, orplumbing repair work performed by theplumbing contractor.

(i) A mechanical contractor who is licensed un-der the mechanical contractors act. This ex-emption applies only to mechanicalinstallation, mechanical maintenance, ormechanical repair work performed by themechanical contractor.

History: 1980, Act 299, Imd. Eff. Oct. 21,1980;-- Am. 1982, Act 6, Imd. Eff. Feb. 15,1982;-- Am. 1984, Act 191, Imd. Eff. July 3,1984

***** 339.2404 THIS SECTION ISAMENDED EFFECTIVE JUNE 1, 2008:See 339.2404.amended *****

339.2404 Evidence of good moralcharacter and financial stability; payment

under construction lien act; examination;issuance of residential maintenance andalteration contractor’s license; scope ofcrafts and trades; place of business; branchoffice license.Sec. 2404. (1) The department may require anapplicant, licensee, or each partner, trustee, di-rector, officer,member, or shareholder to submitevidence of good moral character and financialstability. Before the issuance of a license, an ap-plicant shall submit any amount required to bepaid under the construction lien act, ActNo. 497of the Public Acts of 1980, being sections570.1101 to 570.1305 of the Michigan Com-piled Laws.

(2) The department shall require an applicantfor a license to pass an examination estab-lishing that the applicant has a fair knowl-edge of the obligations of a residentialbuilder or residential maintenance and al-teration contractor to the public and theapplicant’s principal, and the statutes relat-ing to the applicant’s licensure.

(3) The department, upon application, may is-sue a residential maintenance and alterationcontractor’s license to an applicant who,upon examination, qualifies for a license,which shall authorize the licensee accordingto the applicant’s qualifications, crafts, andtrades to engage in the activities of a resi-dential maintenance and alteration contrac-tor. A license shall include the followingcrafts and trades: carpentry; concrete;swimming pool installation; waterproofinga basement; excavation; insulation work;masonry work; painting and decorating;roofing; siding and gutters; screen or stormsash installation; tile and marble work; andhouse wrecking. The license shall specifythe particular craft or trade for which thelicensee has qualified. This subsection shallnot prohibit a specialty contractor from tak-ing and executing a contract involving theuse of 2 or more crafts or trades if the per-formance of the work in the craft or trade,other than in which the person is licensed,

Residential Builders Law 3


is incidental and supplemental to theperformance of work in the craft for whichthe specialty contractor is licensed.

(4) A residential builder or residential mainte-nance and alteration contractor shall main-tain a place of business in this state. If aresidential builder or residential mainte-nance and alteration contractor maintainsmore than 1 place of business within thisstate, a branch office license shall be issuedto the builder or contractor for each place ofbusiness so maintained.

History: 1980, Act 299, Imd. Eff. Oct. 21,1980;-- Am. 1980, Act 496, Eff. Mar. 31, 1981;--Am. 1981, Act 83, Imd. Eff. July 1, 1981;-- Am.1984, Act 193, Imd. Eff. July 3, 1984;-- Am.1988, Act 463, Eff. Sept. 1, 1989


339.2404.amended Evidence of goodmoral character and financial stability;submission; examination; issuance ofresidential maintenance and alterationcontractor’s license; scope of crafts andtrades; place of business; branch officelicense; duration of license; documentationof continuing competency requirements.Sec. 2404. (1) The department may require anapplicant, licensee, or each partner, trustee, di-rector, officer,member, or shareholder to submitevidence of good moral character, and financialstability. Before the issuance of a license, an ap-plicant shall submit the following:

(a) Any amount required to be paid under theconstruction lien act, 1980 PA 497, MCL570.1101 to 570.1305.

(b) A copy of an operator’s license or state per-sonal identification card, to be used by thedepartment only for proof of identity of theapplicant.

(2) The department shall require an applicantfor a license to pass an examination establish-ing that the applicant has a fair knowledgeof the obligations of a residential builder

or residential maintenance and alterationcontractor to the public and the applicant’sprincipal, and the statutes relating to theapplicant’s licensure.

(3) The department, upon application, may is-sue a residential maintenance and alterationcontractor’s license to an applicant who,upon examination, qualifies for a license,which shall authorize the licensee accordingto the applicant’s qualifications, crafts, andtrades to engage in the activities of a residen-tial maintenance and alteration contractor.A license shall include the following craftsand trades: carpentry; concrete; swimmingpool installation; waterproofing a basement;excavation; insulation work; masonry work;painting and decorating; roofing; siding andgutters; screen or storm sash installation; tileand marble work; and house wrecking. Thelicense shall specify the particular craft ortrade for which the licensee has qualified.This subsection shall not prohibit a specialtycontractor from taking and executing a con-tract involving the use of 2 or more crafts ortrades if the performance of the work in thecraft or trade, other than inwhich the personis licensed, is incidental and supplemental tothe performance of work in the craft forwhich the specialty contractor is licensed.

(4) A residential builder or residential mainte-nance and alteration contractor shall main-tain a place of business in this state. If aresidential builder or residential maintenanceand alteration contractor maintains morethan 1 place of business within this state, abranch office license shall be issued to thebuilder or contractor for each place of busi-ness so maintained.

(5) Beginning the license cycle after the effectivedate of the amendatory act that added thissubsection, the department shall issue thelicense of a residential builder and residentialmaintenance and alteration contractor for aperiod of 3 years in duration. Beginning theeffective date of the amendatory act thatadded this subsection, an applicant for



renewal of a residential builder or mainte-nance and alteration contractor license shallstate that he or she has a current copy of theMichigan residential code and has fulfilledthe appropriate requirements regardingcontinuing competency.

(6) Beginning the effective date of the amenda-tory act that added this subsection, a licenseeshall maintain documentation, for at least5 years, of activities meeting the continuingcompetency requirements as prescribed un-der this article.

History: 1980, Act 299, Imd. Eff. Oct. 21,1980;-- Am. 1980, Act 496, Eff. Mar. 31, 1981;--Am. 1981, Act 83, Imd. Eff. July 1, 1981;-- Am.1984, Act 193, Imd. Eff. July 3, 1984;-- Am.1988, Act 463, Eff. Sept. 1, 1989;-- Am. 2007,Act 157, Eff. June 1, 2008

***** 339.2404a.added THIS ADDED SEC-TION IS EFFECTIVE JUNE 1, 2008 *****339.2404a.added Information to beprovided as part of contract.Sec. 2404a. A licensee shall, as part of the con-tract, provide information relating to his or herindividual license and to any license issued to thatperson as a qualifying officer of another entity.

History: Add. 2007, Act 155, Eff. June 1, 2008

***** 339.2404b.added THIS ADDED SEC-TION IS EFFECTIVE JUNE 1, 2008 *****339.2404b.added Licensure as residentialbuilder or residential maintenance andalteration contractor; completion of pre-licensure course of study; exemption;continuing competency requirements;violation; approved courses; waiver ofrequirement of membership in trade asso-ciation; subject matter and instructionalqualifications; rules; alternate forms ofcontinuing competency; department audit;application for inactive status; designationof licensee as inactive.Sec. 2404b. (1) Beginning the effective date ofthe amendatory act that added this section,

applicants for initial licensure either as a residen-tial builder or as a residential maintenance andalteration contractor shall successfully completea prelicensure course of study as prescribed bythis subsection. Licensees holding a residentialbuilder or a residential maintenance and alter-ation contractor license on the effective date ofthe amendatory act that added this section thatare renewing a license in the capacity of an indi-vidual or qualifying officer, or both, are exemptfrom the requirement of successfully completingprelicensure courses described in this subsection.The department shall require an applicant notexempted under this subsection to successfullycomplete 60 hours of approved prelicensurecourses consisting of at least 6 hours of coursesin each of the following areas of competency:

(a) Business management, estimating, and jobcosting.

(b) Design and building science.(c) Contracts, liability, and risk management.(d) Marketing and sales.(e) Project management and scheduling.(f) The current Michigan residential code.(g) Construction safety standards promulgated

under the Michigan occupational safetyand health act, 1974 PA 154, MCL408.1001 to 408.1094.

(2) Beginning the calendar year after the effec-tive date of the amendatory act that addedthis section, a person obtaining initial licen-sure under this article as a residential builderor a residential maintenance and alterationcontractor shall successfully complete notless than 3 hours of activities demonstratingcontinuing competency per calendar year,during the first 6 calendar years of licensure,and 21 hours per 3-year time period sincethe issuance of his or her license. At least3 hours shall be devoted to those activitiesdesigned to develop a licensee’s under-standing and ability to apply state buildingcodes and laws relating to the licensed occu-pation, safety, and changes in constructionand business management laws. A licensee



who has held a license for more than 6 yearsor who has not been determined by the de-partment in a final order to have violatedthis act or a rule adopted under this act shallsuccessfully complete at least 3 hours of ac-tivities demonstrating continuing compe-tency per license cycle to include 1 hour ofcodes, 1 hour of safety, and 1 hour of legalissues as described in this subsection.

(3) In the case of a licenseewho has been deter-mined by the department in a final order tohave violated this act or a rule adopted un-der this act, he or she shall successfully com-plete, during the next complete licensecycle, up to 21 hours of activities that dem-onstrate the development of continuingcompetency during that next license cycleas determined appropriate by order of thedepartment, at least 3 hours of that con-tinuing competency to include 1 hour ofcodes, 1 hour of safety, and 1 hour of legalissues as described in subsection (2).

(4) As activities that demonstrate the develop-ment of continuing competency, the educa-tion courses described in section 3, pages3-6 through 3-58 of the January 2005 edi-tion of the publication “NAHB Universityof Housing, Blueprint for Success”, pub-lished by the national association of homebuilders, and taught by instructors meetingthe requirements of section 4, pages 4-5through 4-9 of the January 2005 edition of“NAHB University of Housing, Blueprintfor Success”, are considered approved, areconsidered appropriate for fulfilling the pre-licensure and continuing competency re-quirements of subsections (1), (2), and (3),and are incorporatedby reference.A licenseemay take any courses equivalent to thosecourses incorporated by reference by thissubsection. Updates to the courses de-scribed in this subsection or equivalentcourses are acceptable unless thedepartmentdetermines that the courses do not provide ameans of developing and maintaining con-tinuing competency for those applicants orlicensees who successfully fulfill the course

requirements. Any construction code up-date courses approved by the bureau of con-struction codes as well as fire safety orworkplace safety courses approved or spon-sored by the department are also consideredappropriate for fulfilling the continuingcompetency requirements of this subsec-tion. The department may, by rule, amend,supplement, update, substitute, or deter-mine equivalency regarding any courses oralternate activities fordeveloping continuingcompetency described in this subsection.

(5) The department may waive the requirementof membership in a local, state, or nationaltrade association contained in the instructorstandards of section 4, pages 4-5 through4-9of the January 2005 edition of the publica-tion “NAHB University of Housing, Blue-print for Success”, published by the nationalassociation of home builders, and incorpo-rated by reference. By rule, the departmentmay amend, supplement, update, substitute,or determine equivalency regarding the stan-dards in this subsection and shall establish in-structor qualifications for courses notincorporated by reference in subsection (4).

(6) The subject matter of the prelicensure andcontinuing competency activitiesmay be of-fered by a high school, intermediate schooldistrict, community college, university, bu-reau of construction codes, Michigan occu-pational safety and health administration,trade association, or a proprietary school li-censed by the department as meeting thesubject matter qualifications described insubsection (4) and the instructional qualifi-cations described in subsection (5).

(7) The department shall promulgate rules toprovide for the following:

(a) Requirements other than those listed insubsection (4) for determining that acourse meets the minimum criteria fordeveloping andmaintaining continuingcompetency.

(b) Requirements for acceptable coursesoffered at seminars and conventions by



trade associations, research institutes,risk management entities, manufac-turers, suppliers, governmental agenciesother than those named in subsection(4), consulting agencies, or otherentities.

(c) Acceptable distance learning.

(d) Alternate forms of continuing compe-tency, including comprehensive testing,participation in mentoring programs,research, participation in code hearingsconducted by the international codecouncil, and publication of articles in atrade journal or regional magazine as anexpert in the field. The alternate formsshall be designed to maintain and im-prove the licensee’s ability to performthe occupation with competence andshall prescribe proofs that are necessaryto demonstrate that the licensee has ful-filled the requirements of continuingcompetency.

(8) Each licensee may select approved coursesin his or her subject matter area or spe-cialty. Service as a lecturer or discussionleader in an approved course shall becounted toward the continuing compe-tency requirements of this section. Alter-nate forms of continuing competency maybe earned and documented as promul-gated in rules by the department.

(9) Thedepartmentmayaudit a predeterminedpercentage of licensees who renew in a yearfor compliance with the requirements ofthis section. Failure to comply with the au-dit or the requirements shall result in theinvestigation of a complaint initiated bythe department, and the licensee is subjectto the penalties prescribed in this act.

(10) A licensee as a residential builder or resi-dential alteration and maintenance con-tractor may apply for inactive status bycompleting an application, made availableby the department, in which he or she de-clares that he or she is no longer activelyengaged in the practice authorized by his

or her license and temporarily intends tosuspend activity authorized by his or herlicense. Upon submission of a completedapplication, the department shall desig-nate the licensee as inactive and note thatstatus on records available to the public. Alicensee designated as inactive must have acurrent copy of the Michigan residentialcode and is exempt from the continuingcompetency requirements imposed underthis section, but must still pay the per-yearlicense fee. An inactive licensee may acti-vate his or her license by submitting an ap-plication to the department requestingactivation of the license. Upon activationof a license, the licensee must complete atleast 1 credit hour of continuing compe-tency for that calendar year.


***** 339.2405 THIS SECTION ISAMENDED EFFECTIVE JUNE 1, 2008:See 339.2405.amended *****

339.2405 Application for license bycorporation, partnership, or association;designation and responsibilities ofqualifying officer; age and licenserequirements; suspension, revocation, ordenial of license.Sec. 2405. (1) If a license is applied for by acorporation, partnership, or association, the ap-plicant shall designate 1 of its officers, partners,members, or managing agent as a qualifyingofficer who, upon taking and passing the exam-ination, and upon meeting all other require-ments of this article, shall be entitled to alicense to act for the corporation, partnership,or association. The qualifying officer shall beresponsible for exercising the supervision orcontrol of the building or construction opera-tions necessary to secure full compliance withthis article and the rules promulgated underthis article. A license shall not be issued to acorporation, partnership, or association unlesseach partner, trustee, director, officer, member,and a person exercising control is at least18 years of age and meets the requirements for



a license under this article other than those re-lating to knowledge and experience.

(2) The license of a corporation, partnership, orother association shall be suspended when alicense or license application of a qualifyingofficer, partner, trustee, director, officer,member, or a person exercising control ofthe corporation, partnership, or other asso-ciation is suspended, revoked, or denied.The suspension shall remain in force untilthe board determines that the disability cre-ated by the suspension, revocation, or denialhas been removed.

(3) A suspension, revocation, or denial of a li-cense of an individual shall suspend, revoke,or deny any other license held or applied forby that individual issued under this article. Asuspension, revocation, or denial of a licenseby the department may suspend, revoke, ordeny any other license held or applied forunder this article by the qualifying officerof a corporation, partnership, or other asso-ciation whose license is suspended, revoked,or denied.

(4) If the qualifying officer of a licensee ceases tobe its qualifying officer, the license is sus-pended. However, upon request, the de-partment may permit the license to remainin force for a reasonable time to permit thequalification of a new qualifying officer.

History:1980, Act 299, Imd.Eff.Oct. 21, 1980


339.2405.amended Application for licenseby corporation, partnership, association,limited liability company, or other entity;designation and responsibilities ofqualifying officer; age and licenserequirements; suspension, revocation,or denial of license.Sec. 2405. (1) If a license is applied for by a cor-poration, partnership, association, limited liabil-ity company, or other entity, the applicant shalldesignate 1 of its officers, partners, members, ormanaging agent as a qualifying officer who, upon

taking and passing the examination, and uponmeeting all other requirements of this article, isentitled to a license to act for the corporation,partnership, association, limited liability com-pany, or other entity. The qualifying officer shallalso obtain andmaintain a license under this arti-cle as an individual. The qualifying officer shall beresponsible for exercising the supervision or con-trol of the building or construction operationsnecessary to secure full compliance with this arti-cle and the rules promulgated under this article.A license shall not be issued to a corporation,partnership, association, limited liability com-pany, or other entity unless each partner, trustee,director, officer, member, and a person exercis-ing control is at least 18 years of age, and meetsthe requirements for a license under this articleother than those relating to knowledge and ex-perience. If an individual licensee is also a quali-fying officer, the individual’s name and licensenumber shall be listed on any license issued tothe individual as a qualifying officer. In the caseof a license issued under this subsection, eachofficer, partner, member, or managing agent,whether or not he or she is the qualifying officer,shall provide a copy of his or her operator’s li-cense or state personal identification card to thedepartment for use by the department only foridentification purposes. A licensee granted inac-tive status under section 2404b is not eligible toserve as a qualifying officer.

(2) The license of a corporation, partnership, as-sociation, limited liability company, or otherentity shall be suspended when a license orlicense application of a qualifying officer, part-ner, trustee, director, officer, member, or aperson exercising control of the corporation,partnership, association, limited liability com-pany, or other entity is suspended, revoked, ordenied. The suspension shall remain in forceuntil the board determines that the disabilitycreated by the suspension, revocation, or de-nial has been removed.

(3) A suspension, revocation, or denial of a licenseof an individual shall suspend, revoke, or denyany other license held or applied for by that



individual issued under this article. A suspen-sion, revocation, or denial of a license by thedepartment shall suspend, revoke, or deny anyother license held or applied for under thisarticle by the qualifying officer of a corpora-tion, partnership, association, limited liabilitycompany, or other entity whose license is sus-pended, revoked, or denied.

(4) If the qualifying officer of a licensee ceases tobe its qualifying officer, the license is sus-pended. However, upon request, the de-partment may permit the license to remainin force for a reasonable time to permit thequalification of a new qualifying officer.

History: 1980, Act 299, Imd. Eff. Oct. 21,1980;-- Am. 2007, Act 155, Eff. June 1,2008;-- Am. 2007, Act 157, Eff. June 1, 2008

339.2406 Nonresident licensee; issuinglicense to foreign corporation; irrevocableconsent to service of process; resolutionauthorizing consent; service of process orpleading.Sec. 2406. A nonresident of this state maybecome a licensee under this article by conform-ing with this article. A license shall not be issuedto a foreign corporation unless the corporation isauthorized to do business in this state by the cor-poration and securities commission. The nonresi-dent shall file an irrevocable consent to service ofprocess. The consent shall be signed by the appli-cant or by an authorized officer, member, or part-ner of the applicant and shall be notarized. If theapplicant is a corporation, consent shall be accom-panied by a certified copy of the resolution of thecorporation authorizing the consent. A process orpleading served upon the department shall be suf-ficient service upon the licensee. A process orpleading served upon the department under thissection shall be in duplicate. The department im-mediately shall forward by registered mail 1 copyof the process or pleading to themain office of thelicensee served.

History: 1980, Act 299, Imd. Eff. Oct. 21,1980

339.2407 Licensing salesperson in employof 1 builder or contractor; application for

transfer and issuance of new license; sub-mission of salesperson’s license application.Sec. 2407. (1) A salesperson shall be licensed inthe employ of only 1 residential builder or main-tenance and alteration contractor. If a salesper-son desires to change employment from 1residential builder or maintenance and alterationcontractor to another, the license shall be for-warded to the department and applicationmade for a transfer and the issuance of a newlicense under the salesperson’s new employer.

(2) An application for a salesperson’s licenseshall be submittedby the employing residen-tial builder or residential maintenance andalteration contractor.

History: 1980, Act 299, Imd. Eff. Oct. 21,1980;-- Am. 1988, Act 463, Eff. Sept. 1, 1989

339.2408 Repealed. 1988, Act 463, Eff.Sept. 1, 1989.Compiler’s Notes: The repealed section per-tained to disposition of license fee after failureto pass examination.

339.2409 Failure to pay assessment;automatic suspension of licenses; reportingcertain changes.Sec. 2409. (1) Failure of a residential builder orresidential maintenance and alteration contrac-tor to pay within 90 days of notice of the re-quired assessment under section 201(2) of theconstruction lien act, Act No. 497 of the PublicActs of 1980, being section 570.1201 of theMichigan Compiled Laws, shall result in the au-tomatic suspension of all licenses issued underthis article.

(2) A licensee shall report to the department achange of name or address or a change ofmembers or addresses of the partnership, as-sociation, or corporation holding a licenseunder this article within 30 days after thechange occurs.

History: 1980, Act 299, Imd. Eff. Oct. 21,1980;-- Am. 1980, Act 496, Eff. Mar. 31, 1981;--Am. 1982, Act 410, Imd. Eff. Dec. 28, 1982;--Am. 1988, Act 463, Eff. Sept. 1, 1989



339.2410 Repeating examination notrequired when making application foradditional license.Sec. 2410. A person or qualifying officer for acorporation or member of a partnership orother business association who currently holdsa residential builder or maintenance and alter-ation contractor license shall not be requiredto repeat an examination for that license whenmaking application for an additional license.However, a maintenance and alteration con-tractor who currently holds a license andmakes application for a residential builders’license shall be required to take an examina-tion for that license.

History:1980,Act 299, Imd.Eff.Oct. 21, 1980


339.2411 Complaint; conduct subject topenalty; suspension or revocation of license;violations; administrative proceedingsregarding workmanship; “verifiedcomplaint” defined.Sec. 2411. (1) A complaint filed under this sec-tion or article 5, or both, shall bemade within 18months after completion, occupancy, or pur-chase, whichever occurs later, of a residentialstructure or a combination of residential andcommercial structure.

(2) A licensee or applicant who commits 1 ormore of the following shall be subject tothe penalties set forth in article 6:

(a) Abandonment without legal excuse ofa contract, construction project, or op-eration engaged in or undertaken bythe licensee.

(b) Diversionof funds or property receivedfor prosecution or completion of a spe-cific construction project or operation,or for a specified purpose in the prose-cution or completion of a constructionproject or operation, and the funds orproperty application or use for any

other construction project or opera-tion, obligation, or purposes.

(c) Failure to account for or remit moneycoming into the person’s possessionwhich belongs to others.

(d) A willful departure from or disregard ofplans or specifications in a materialrespect and prejudicial to another, with-out consent of the owner or an autho-rized representative and without theconsent of the person entitled to havethe particular construction project oroperation completed in accordancewith the plans and specifications.

(e) A willful violation of the building lawsof the state or of a political subdivisionof the state.

(f) In a maintenance and alteration con-tract, failure to furnish to a lender thepurchaser’s signed completion certifi-cate executed upon completion ofthe work to be performed under thecontract.

(g) If a licensed residential builder orlicensed residential maintenance andalteration contractor, failure to notifythe department within 10 days of achange in the control or direction ofthe business of the licensee resultingfrom a change in the licensee’s part-ners, directors, officers, or trustees, ora change in the control or direction ofthe business of the licensee resultingfrom any other occurrence or event.

(h) Failure to deliver to the purchaserthe entire agreement of the parties in-cluding finance and any other chargearising out of or incidental to theagreement when the agreement in-volves repair, alteration, or additionto, subtraction from, improvementof, wrecking of, or demolition of a res-idential structure or combination ofresidential and commercial structure,or building of a garage, or laying ofconcrete on residential property, or



manufacture, assembly, construction,sale, or distribution of a residential orcombination residential and commer-cial structure which is prefabricated,preassembled, precut, packaged, orshell housing.

(i) If a salesperson, failure to pay overimmediately upon receipt money re-ceived by the salesperson, in connec-tion with a transaction governed bythis article to the residential builder orresidential maintenance and alterationcontractor under whom the salesper-son is licensed.

(j) Aiding or abetting an unlicensed per-son to evade this article, or know-ingly combining or conspiring with,or acting as agent, partner, or associ-ate for an unlicensed person, or al-lowing one’s license to be used byan unlicensed person, or acting asor being an ostensible licensed resi-dential builder or licensed residentialmaintenance and alteration contrac-tor for an undisclosed person whodoes or shall control or direct, orwho may have the right to controlor direct, directly or indirectly, theoperations of a licensee.

(k) Acceptance of a commission, bonus, orother valuable consideration by a sales-person for the sale of goods or the per-formance of service specified in thearticle fromapersonother than the res-idential builder or residential mainte-nance and alteration contractor underwhom the person is licensed.

(l) Becoming insolvent, filing a bank-ruptcy action, becoming subject to areceivership, assigning for the benefitof creditors, failing to satisfy judgmentsor liens, or failing to pay an obligationas it becomes due in the ordinarycourse of business.

(m) Poor workmanship or workmanshipnot meeting the standards of the

custom or trade verified by a buildingcode enforcement official.

(3) The department shall suspend or revoke thelicense of a person licensed under this articlewhose failure to pay a lien claimant results in apayment being made from the homeownerconstruction lien recovery fund pursuant tothe construction lien act, 1980 PA 497,MCL570.1101 to 570.1305, regardless of whetherthe person was performing services as a li-censee under this article; under the electricaladministrative act, 1956 PA 217, MCL338.881 to 338.892; or under 1929 PA266, MCL 338.901 to 338.917. The depart-ment shall not renew a license or issue a newlicense until the licensee has repaid in full tothe fund the amount paid out plus the costs oflitigation and interest at the rate set by section6013 of the revised judicature act of 1961,1961 PA 236, MCL 600.6013.

(4) The department shall conduct a reviewupon notice that the licensee has violatedthe asbestos abatement contractors licensingact, 1986 PA 135, MCL 338.3101 to338.3319. The department may suspend orrevoke that person’s license for a knowingviolation of the asbestos abatement contrac-tors licensing act, 1986 PA 135, MCL338.3101 to 338.3319.

(5) Notwithstanding article 5, the following ap-ply to administrative proceedings regardingworkmanship under subsection (2)(m):

(a) A complaint submitted by an ownershall describe in writing to the depart-ment the factual basis for the allegation.The homeowner shall send a copy of theinitial complaint to the licensee concur-rent with the submission of the com-plaint to the department.

(b) The department shall presume the inno-cence of the licensee throughout theproceeding until the administrative lawhearing examiner finds otherwise in adetermination of findings of fact andconclusions of law under article 5. Thelicensee has the burden of refuting



evidence submitted by a person duringthe administrative hearing. The licenseealso has the burden of proof regardingthe reason deficiencies were notcorrected.

(c) Upon receipt of a building inspectionreport issued to the department by astate or local building enforcement offi-cial authorized to do so under the Stille-DeRossett-Hale single state construc-tion code act, 1972 PA 230, MCL125.1501 to 125.1531, which reportverifies or confirms the substance ofthe complaint, the department shallsend by certified mail a copy of the veri-fied complaint to both the complainantand the licensee. Failure of the depart-ment to send a copy of the verified com-plaint within 30 days of receipt of thebuilding inspection report prevents thedepartment from assessing a fine againstthe licensee under article 6 but does notprevent the department from pursuingrestitution, license suspension, or otherremedies provided under this act.

(d) A licensee may contractually provide foran alternative dispute resolution proce-dure to resolve complaints filed with thedepartment. The procedure shall be con-ducted by a neutral third party for deter-mining the rights and responsibilities ofthe parties and shall be initiated by thelicensee, who shall provide notice of theinitiation of the procedure to the com-plainant by certified mail not less than30 days before the commencement ofthat procedure. The procedure shall beconducted at a location mutually agreedto by the parties.

(e) The department shall not initiate a pro-ceeding against a licensee under thissubsection in the case of a licenseewho contractually provides for analternative dispute resolution proce-dure that has not been utilized andcompleted unless it is determined that

the licensee has not complied with adecision or order issued as a resultof that alternative dispute resolutionprocedure, that alternative dispute res-olution procedure was not fully com-pleted within 90 days after the filingof the complaint with the department,or an alternative dispute resolutionprocedure meeting the requirementsof subdivision (d) is not available to thecomplainant.

(f) The complainant shall demonstrate thatnotice has been provided to the licenseedescribing reasonable times and datesthat the residential structure was accessi-ble for any needed repairs and proofacceptable to the department that therepairs were not made within 60 daysafter the sending of the notice. Thissubdivision does not apply where thedepartment determines a necessity tosafeguard the structure or to protectthe occupant’s health and safety and,in such case, the department may utilizeany remedy available under section504(3)(a) through (d).

(g) In the case where the owner and licenseehave agreed contractually on mutuallyacceptable performance guidelines relat-ing to workmanship, the departmentshall consider those guidelines in its eval-uation of a complaint. The guidelinesshall be consistent with the Stille-DeRossett-Hale single state constructioncode act, 1972 PA 230,MCL 125.1501to 125.1531.

(6) As used in this section, “verified complaint”means a complaint in which all or a portionof the allegations have been confirmed bythe building inspection report.

History: 1980, Act 299, Imd. Eff. Oct. 21,1980;-- Am. 1980, Act 496, Eff. Mar. 31,1981;-- Am. 1982, Act 410, Imd. Eff. Dec. 28,1982;-- Am. 1990, Act 6, Imd. Eff. Feb. 12,1990;-- Am. 1991, Act 166, Imd. Eff. Dec. 19,



1991;-- Am. 2001, Act 113, Imd. Eff. July 31,2001Compiler’s Notes: In subdivision (5)(e), the ref-erence to “subdivision (D)” should evidently read“subdivision (d)”.


339.2411.amended Complaint; conductsubject to penalty; suspension orrevocation of license; violations;administrative proceedings regardingworkmanship; order of default; “verifiedcomplaint” defined.Sec. 2411. (1) A complaint filed under thissection or article 5, or both, shall be made within18 months after the latest of the following re-garding a residential structure or a combinationof residential and commercial structure asfollows:

(a) In the case of a maintenance and alter-ation contract:

(i) Completion.(ii) Occupancy.(iii) Purchase.

(b) In the case of a project requiring an oc-cupancy permit:

(i) Issuance of the certificate of occu-pancy or temporary certificate ofoccupancy.

(ii) Closing.

(2) A licensee or applicant who commits 1 ormore of the following shall be subject tothe penalties set forth in article 6:

(a) Abandonment without legal excuse ofa contract, construction project, or op-eration engaged in or undertaken bythe licensee.

(b) Diversion of funds or property receivedfor prosecution or completion of a spe-cific construction project or operation,or for a specified purpose in the prose-cution or completion of a constructionproject or operation, and the funds orproperty application or use for any

other construction project or opera-tion, obligation, or purposes.

(c) Failure to account for or remit moneycoming into the person’s possessionwhich belongs to others.

(d) A willful departure from or disregard ofplans or specifications in a material re-spect and prejudicial to another, with-out consent of the owner or anauthorized representative and withoutthe consent of the person entitled tohave the particular construction projector operation completed in accordancewith the plans and specifications.

(e) A willful violation of the building lawsof the state or of a political subdivisionof the state.

(f) In a residential maintenance and alter-ation contract, failure to furnish to alender the purchaser’s signed comple-tion certificate executed upon comple-tion of thework to be performedunderthe contract.

(g) If a licensed residential builder or li-censed residential maintenance and al-teration contractor, failure to notify thedepartment within 10 days of a changein the control or direction of the busi-ness of the licensee resulting from achange in the licensee’s partners, direc-tors, officers, or trustees, or a change inthe control or direction of the businessof the licensee resulting from any otheroccurrence or event.

(h) Failure to deliver to the purchaser theentire agreement of the parties includ-ing finance and any other charge aris-ing out of or incidental to theagreement when the agreement in-volves repair, alteration, or additionto, subtraction from, improvementof, wrecking of, or demolition of a res-idential structure or combination ofresidential and commercial structure,or building of a garage, or laying ofconcrete on residential property, or



manufacture, assembly, construction,sale, or distribution of a residential orcombination residential and commer-cial structure which is prefabricated,preassembled, precut, packaged, orshell housing.

(i) If a salesperson, failure to pay over im-mediately upon receipt money receivedby the salesperson, in connection witha transaction governed by this articleto the residential builder or residentialmaintenance and alteration contractorunder whom the salesperson islicensed.

(j) Aiding or abetting an unlicensed per-son to evade this article, or knowinglycombining or conspiring with, or act-ing as agent, partner, or associate for anunlicensed person, or allowing one’slicense to be used by an unlicensed per-son, or acting as or being an ostensiblelicensed residential builder or licensedresidential maintenance and alterationcontractor for an undisclosed personwho does or shall control or direct, orwho may have the right to control ordirect, directly or indirectly, the opera-tions of a licensee.

(k) Acceptance of a commission, bonus, orother valuable consideration by a sales-person for the sale of goods or the per-formance of service specified in thearticle from a person other than the resi-dential builder or residential mainte-nance and alteration contractor underwhom the person is licensed.

(l) Becoming insolvent, filing a bank-ruptcy action, becoming subject to areceivership, assigning for the benefitof creditors, failing to satisfy judgmentsor liens, or failing to pay an obligationas it becomes due in the ordinarycourse of business.

(m) Workmanship not meeting the stan-dards of the Michigan residentialcode as promulgated under the

Stille-DeRossett-Hale single stateconstruction code act, 1972 PA 230,MCL 125.1501 to 125.1531.

(3) The department shall suspend or revoke thelicense of a person licensed under this articlewhose failure to pay a lien claimant results ina payment beingmade from the homeownerconstruction lien recovery fund pursuant tothe construction lien act, 1980 PA 497,MCL 570.1101 to 570.1305, regardless ofwhether the person was performing servicesas a licensee under this article; under theelectrical administrative act, 1956 PA 217,MCL 338.881 to 338.892; or under thestate plumbing act, 2002 PA 733, MCL338.3511 to 338.3569. The departmentshall not renew a license or issue a new li-cense until the licensee has repaid in full tothe fund the amount paid out plus the costsof litigation and interest at the rate set bysection 6013 of the revised judicature actof 1961, 1961 PA 236, MCL 600.6013.

(4) The department shall conduct a review uponnotice that the licensee has violated the as-bestos abatement contractors licensing act,1986PA135,MCL338.3101 to338.3319.The department may suspend or revoke thatperson’s license for a knowing violation ofthe asbestos abatement contractors licensingact, 1986 PA 135, MCL 338.3101 to338. 3319.

(5) Notwithstanding article 5, the following ap-ply to administrative proceedings regardingworkmanship under subsection (2)(m):

(a) A complaint submitted by an ownershall describe in writing to the depart-ment the factual basis for the allegation.The homeowner shall send a copy of theinitial complaint to the licensee concur-rent with the submission of the com-plaint to the department.

(b) The department shall presume the inno-cence of the licensee throughout theproceeding until the administrative lawhearing examiner finds otherwise in adetermination of findings of fact and



conclusions of law under article 5. Thelicensee has the burden of refuting evi-dence submitted by a person during theadministrative hearing. The licensee alsohas the burden of proof regarding thereason deficiencies were not corrected.

(c) Upon receipt of a building inspection re-port issued to the department by a stateor local building enforcement officialauthorized to do so under the Stille-DeRossett-Hale single state constructioncode act, 1972 PA 230,MCL 125.1501to 125.1531, which report verifies orconfirms the substance of the complaint,the department shall send by certifiedmail a copy of the verified complaint tothe licensee. Failure of the department tosend a copy of the verified complaintwithin 30 days of receipt of the buildinginspection report prevents the depart-ment from assessing a fine against the li-censee under article 6 but does notprevent the department from pursuingrestitution, license suspension, or otherremedies provided under this act.

(d) A licensee may contractually provide foran alternative dispute resolution proce-dure to resolve complaints filed with thedepartment. The procedure shall beconducted by a neutral third party fordetermining the rights and responsibili-ties of the parties and shall be initiated bythe licensee, who shall provide notice ofthe initiation of the procedure to thecomplainant by certified mail not lessthan 30 days before the commencementof that procedure. The procedure shallbe conducted at a location mutuallyagreed to by the parties.

(e) The department shall not initiate aproceeding against a licensee underthis subsection in the case of a licenseewho contractually provides for analternative dispute resolution proce-dure that has not been utilized andcompleted unless it is determined thatthe licensee has not complied with a

decision or order issued as a result ofthat alternative dispute resolution pro-cedure, that alternative dispute resolu-tion procedure was not fully completedwithin 90 days after the filing of thecomplaint with the department, or analternative dispute resolution proce-dure meeting the requirements of sub-division (d) is not available to thecomplainant.

(f) The complainant shall demonstrate thatnotice has been provided to the licenseedescribing reasonable times and datesthat the residential structure was accessi-ble for any needed repairs and proof ac-ceptable to the department that therepairs were not made within 60 days af-ter the sending of the notice. This subdi-vision does not apply where thedepartment determines a necessity tosafeguard the structure or to protect theoccupant’s health and safety and, in suchcase, the department may utilize anyremedy available under section 504(3)(a) through (d).

(g) In the case where the owner and licenseehave agreed contractually on mutuallyacceptable performance guidelines relat-ing to workmanship, the departmentshall consider those guidelines inits evaluation of a complaint. Theguidelines shall be consistent with theStille-DeRossett-Hale single state con-struction code act, 1972 PA 230, MCL125.1501 to 125.1531.

(6) In any case where the licensee or respondentfails to appear, participate, or defend any ac-tion, the board shall issue an order grantingby default the relief requested, based uponproofs submitted to and findings made, bythe hearing examiner after a contested case.

(7) As used in this section, “verified complaint”means a complaint in which all or a portionof the allegations have been confirmed by anaffidavit of the state or local building official.

History: 1980, Act 299, Imd. Eff. Oct. 21,1980;-- Am. 1980, Act 496, Eff. Mar. 31,



1981;-- Am. 1982, Act 410, Imd. Eff. Dec. 28,1982;-- Am. 1990, Act 6, Imd. Eff. Feb. 12,1990;-- Am. 1991, Act 166, Imd. Eff. Dec. 19,1991;-- Am. 2001, Act 113, Imd. Eff. July 31,2001;-- Am. 2007, Act 155, Eff. June 1, 2008;--Am. 2007, Act 157, Eff. June 1, 2008

***** 339.2411a.added THIS ADDED SEC-TION IS EFFECTIVE JUNE 1, 2008 *****339.2411a.added Final order of board;posting on website.Sec. 2411a. (1) The department shall post on itswebsite any final order of the board and the dateit was issued. The posting shall occur within30 days after the final order is issued.

(2) The department shall annually post on itswebsite the number of final orders of theboard.



339.2412 Action for collection ofcompensation for performance of act orcontract; alleging and proving licensure;failure to use alternative disputeresolution.Sec. 2412. (1) A person or qualifying officer for acorporation ormember of a residential builder orresidential maintenance and alteration contrac-tor shall not bring ormaintain an action in a courtof this state for the collection of compensationfor the performance of an act or contract forwhich a license is required by this article withoutalleging and proving that the personwas licensedunder this article during the performance of theact or contract.

(2) Failure of the person bringing a complaintagainst a licensee to utilize a contractuallyprovided alternative dispute resolution pro-cedure shall be an affirmative defense to anaction brought in a court of this state againsta licensee under this article.

History: 1980, Act 299, Imd. Eff. Oct. 21,1980;-- Am.1980, Act 496, Eff. Mar. 31, 1981;--Am. 2001, Act 113, Imd. Eff. July 31, 2001


339.2412.amended Action for collection ofcompensation for performance of act orcontract; alleging and proving licensure;failure to use alternative dispute resolution;other legal action; civil violation.Sec. 2412. (1) A person or qualifying officer for acorporation ormember of a residential builder orresidential maintenance and alteration contrac-tor shall not bring ormaintain an action in a courtof this state for the collection of compensationfor the performance of an act or contract forwhich a license is required by this article withoutalleging and proving that the personwas licensedunder this article during the performance of theact or contract.

(2) Failure of the person bringing a complaintagainst a licensee to utilize a contractuallyprovided alternative dispute resolution pro-cedure shall be an affirmative defense to anaction brought in a court of this state againsta licensee under this article.

(3) A person or qualifying officer for a corpora-tion or a member of a residential builder orresidential maintenance and alteration con-tractor shall not impose or take any legal orother action to impose a lien on real prop-erty unless that person was licensed underthis article during the performance of theact or contract.

(4) A prosecuting attorney and the attorneygeneral may bring an action for a civilviolation in a court of competent jurisdic-tion against a person not licensed underthis article that has violated section 601(1) or (2). The court shall assess a civilfine, to be paid to the prosecuting attor-ney or the attorney general bringing theaction, of not less than $5,000.00 and notmore than $25,000.00, aside from anycivil damages or restitution.

History: 1980, Act 299, Imd. Eff. Oct. 21,1980;-- Am. 1980, Act 496, Eff. Mar. 31,1981;-- Am. 2001, Act 113, Imd. Eff. July31, 2001;-- Am. 2007, Act 155, Eff. June 1,2008



DEPARTMENT OF LABOR AND ECONOMIC GROWTH

ADMINISTRATIVE RULESRESIDENTIAL BUILDERS AND

MAINTENANCE AND ALTERATION CONTRACTORS(By authority conferred on the director of thedepartment of labor and economic growth bysection 308 of 1980 Act 299, MCL 339.308,and Executive Reorganization Orders No.1996-2, MCL 445.2001 and 2003-1, MCL445.2011)

PART 1. GENERALR 338.1511 Definitions.Rule 11. As used in these rules:

(1) “Act”means 1980 PA 299, MCL 339.101,known as the occupational code.

(b) “Board” means the state residentialbuilders and maintenance and alter-ation contractors board.

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

(d) “Contractor”means a residential main-tenance and alteration contractor as de-fined by the act.

(e) “Department” means the departmentof labor and economic growth.

(f) “Director” means the director of laborand economic growth.

History: 1954 ACS 49, Eff. Feb. 14, 1967;1979 AC; 2006 MR 10, Eff. May 19, 2006.

PART 2. LICENSESR 338.1521 Applications for licenses.Rule 21. (1) An application for a license shallinclude the residence address of all individuals,partners, officers and/or members, as requestedby the department, and the address of the princi-pal place of business in Michigan. A nonresidentapplicant for licensure shall maintain a placeof business in Michigan, and the applicationshall include the address of the Michigan place

of business and the address of the applicant’sprincipal place of business outside of Michigan.A nonresident applicant shall file a consent toservice with the application. A foreign corpora-tion or a foreign limited liability company shallsubmit evidence of qualification to do business inMichigan.

(2) Applicants shall furnish documentation asdetermined acceptable by the departmentto verify the applicant’s current businessstructure. Documents include, but are notlimited to, the following:

(a) For an application for an individual li-cense using an assumed name, a copyof the current filed assumed name cer-tificate issued by the county clerk.

(b) For an application for a partnership li-cense, a copy of the current filed certifi-cate of co-partnership issued by thecounty clerk.

(c) For an application for a limited liabilitycompany, a filed copy of the filed articlesof organization, certificate of assumedname, if applicable, and current certifi-cate of good standing.

(d) For an application for a corporation li-cense a filed copy of the articles of incor-poration, certificate of assumed name, ifapplicable, and current certificate ofgood standing.

(e) Any other documentation requestedby the department to determine theapplicant’s business structure and cur-rent authorization to do business inMichigan.

(3) A foreign company shall submit evidenceof current authority to do business inMichigan.



(4) If an applicant is a Michigan corporation,but is a wholly owned subsidiary of a foreigncorporation not admitted to do business inMichigan, then the parent company shall filean affidavit of assumption of liability and aconsent to jurisdiction. The director shall bethe proper party to receive service of processand shall immediately forward a copy of theprocess to the corporation’s last knownaddress.

(5) At the request of the department, an appli-cant shall submit a credit report furnished bya credit reporting service which is acceptableto the department. The applicant may be re-quired to direct the credit reporting serviceto send the credit report directly to the de-partment, which shall determine the ade-quacy or sufficiency of the report.

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

(a) A cash or surety bond acceptable to thedepartment.

(b) A financial statement showing the cur-rent financial condition of the applicant,for a builder’s or contractor’s license, inaccordance with established accountingpractices which shall be completed indetail, properly signed, and submitted.

(7) If an applicant fails to complete all applica-tion requirements, including informationrequested by the department, and any re-quired examination, within 1 year fromdate of first making application to the de-partment, then the application shall be voidand the application processing fee shall beforfeited.

(8) A contractor who desires to add additionaltrade or trades to those indicated on thecontractor’s license shall do all of thefollowing:

(a) Pass an examination for the additionaltrade or trades.

(b) Submit an application form to add thetrade or trades to the existing license.

(c) Furnish a current credit report upon re-quest by the department.

(d) Upon receipt of the new license, the li-censee shall return the old identificationcard and wall license.

(9) A passing score on an examination, or on aportion of an examination if the examinationis given in separate parts, shall be valid for1 year from the date the examination or por-tion of the examination was passed.


R 338.1524 Licenses; issuance or denial.Rule 24. (1) The department shall issue a licenseincluding an identification card after an applicanthas successfully completed all requirements.

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

(3) The departmentmay deny an application fora license for good and sufficient cause. Thenotice of denial shall advise the applicant ofreasons for denial and of his or her right tosubmit a petition for review of the denial.


R 338.1525 Salesperson’s license;identification card; discharge; terminationor transfer of salesperson; temporary licensefor salesperson or salesperson licenseapplicant.Rule 25. (1)A salesperson shall be licensed undera person holding a license as a builder or contrac-tor, but shall not be licensed under more than 1builder or contractor during the same period oftime.

(2) An application for a salesperson license shallbe submitted by the employing builder orcontractor. An applicant for a salesperson li-cense who is currently licensed as a residen-tial builder or maintenance and alterationcontractor, or has been licensed as a residen-tial builder or maintenance and alteration



contractor within the past 3 years, shallnot be required to take the salespersonexamination.

(3) Upon approval, the department shall issue alicense and an identification card contain-ing the name and business address of thesalesperson. The card shall be carried bythe salesperson and shall be shown as iden-tification to every prospective customer. Asalesperson shall not commence work untilthe builder or contractor under whom thesalesperson is licensed receives the salesper-son’s license and identification card fromthe department.

(4) When a salesperson licensed under this act isdischarged or otherwise terminates employ-ment with the builder or contractor underwhom he or she is licensed, the builder orcontractor shall return the salesperson’s li-cense, and the salesperson shall return theidentification card to the department within5 days from the date of discharge ortermination.

(5) When a licensed salesperson transfers em-ployment from the builder or contractor un-der which he or she is presently licensed to anew employer, the new employer shall sub-mit to the department an application ortransfer of the salesperson’s license to thenew employer.

History: 1954 ACS 49, Eff. Feb. 14, 1967;1954 ACS 100, Eff. Sept. 11, 1979; 1979AC; 2006 MR 10, Eff. May 19, 2006.

R 338.1526 Termination of licenses.Rule 26. (1) If a bond is cancelled, a license pred-icated upon such a bond shall be suspended ef-fective upon the date of cancellation, if thelicensee has not replaced the surety or cashbond.

(2) Upon final order of license suspension or rev-ocation, the licensee shall surrender the li-cense to the department within 10 days ofthe date of suspension or revocation. If thelicense of a builder or contractor is suspendedor revoked, the licenses of salespersons issued

under the license of that builder or contractorshall lapse, and licenses shall be surrendered atthe same time. Any salesperson may have hisor her license transferred to another licensedbuilder or contractor before the expirationdate of the salesperson’s license.

(3) If the qualifying officer of a corporation, as-sociation, partnership, limited liability com-pany or organization consisting of morethan 1 person is a party to events that ledto suspension or revocation, any license is-sued to any other organization where theindividual is the qualifying officer shall besuspended or revoked and any license issuedto the qualifying officer in an individual ca-pacity shall be suspended or revoked.

(4) A qualifying officer of a company shall notifythe department in writing within 10 days ofceasing to be the qualifying officer, and shallreturn thewall license and pocket card of thecompany.

(5) When a qualifying officer ceases to act as thequalifying officer, and the company intendsto continue to operate, the remaining offi-cer, owner, member or partner of the com-pany shall submit a written request to thedepartment to allow the company time toobtain a new qualifying officer.


PART 3. OPERATIONS OFLICENSEESR 338.1531 Place of business.Rule 31. (1) A builder or contractor shall main-tain a place of business in this state, which is anactual, established physical location from whichthe builder or contractor conducts business andwhere applicable books and records are main-tained. A post office box, secretarial service,mail-box rental, receiving service, resident agentaddress, or telephone answering service alone isnot sufficient.

(2) A builder or contractor shall display the li-cense and the licenses of all salespersons in a



conspicuous position in the builder’s or con-tractor’s place of business.


R 338.1532 Advertising.Rule 32. (1) Advertising shall not misrepresentmaterial facts.

(2) A licensee shall include the name, licensenumber, and actual business address, asshown on the license, in all advertising.The use of a telephone or post office boxnumber alone is prohibited. When sales ofnew homes are being made by a licensedbuilder, through a licensed real estate bro-ker, advertisements may indicate the bro-ker’s name or both the names of thebuilder and broker.

(3) A licensee shall not solicit any contract forhome improvements by a promise to thepurchaser or the prospective purchaser of abonus, whether of merchandise or cash,which is contingent upon the purchaser’sor prospective purchaser’s using or display-ing a dwelling to a third person or upon thelicensee’s obtaining an order or orders formerchandise or service from a third person.

(4) A licensee making or attempting to makesales through the use of displays, models ormodel installations, shall accurately portraythe goods and services being offered so as tonot mislead or deceive the public.


R 338.1533 Purchase and sales agreements.Rule 33. (1) All agreements and changes to theagreements between a builder, or contractor,and the customer shall be in writing and signedby the parties. Copies of all agreements andchanges to agreements shall be in writing, andprovided to the customer.

(2) The builder or contractor shall make certainthat the written agreements clearly statethe terms of the transaction, including

specifications, and when construction isinvolved, both plans and specifications, in-cluding cost, the type and amount of workto be done, and the type and quality ofmaterials to be used.

(3) If a purchase or sales agreement is for a newstructure which is either substantially com-pleted or in substantial conformance with amodel, plans and specifications need not befurnished if the structure is specifically iden-tified or related to the model and anychanges, additions to or subtractions fromthe model are specifically agreed to andnoted in writing.


R 338.1534 Books and records.Rule 34. A builder or contractor shall keepand maintain a complete, accurate set ofbooks and records which disclose the licensee’scurrent financial condition. The books and re-cords shall be open to inspection by the depart-ment or any person duly authorized by it forgood and sufficient cause during regular busi-ness hours after reasonable notice and for statedreasons.


R 338.1535 Financial statements.Rule 35. Upon notice by the department, a li-censee shall submit within 30 days sworn finan-cial statement showing the licensee’s currentfinancial status. The notice for a financial state-ment may be based upon an unsatisfied judg-ment, a lien filed against the licensee or thedepartment’s reasonable belief that the licenseedoes not have the financial resources to meetcontractual obligations. The department’snotice shall be in writing and may be served per-sonally on the licensee or by certified mail sent tothe licensee’s last known business address on filewith the department. A request for an extensionof time shall be in writing andmay be granted forgood and sufficient cause.



History: 1954 ACS 49, Eff. Feb. 14,1967; 1979 AC; 2006 MR 10, Eff. May 19,2006.

R 338.1536 Brokerage.Rule 36. Acceptance or performance of a con-tract procured by a salesperson not licensed un-der a builder or contractor, or acceptance orperformance of a contract, other than the saleof real property, procured by anyone not licensedunder the act, is prohibited.


PART 5. COMPLAINTS ANDHEARINGSR 338.1551 Complaints; filing.Rule 51. (1) A complaint shall be submitted in aform specified by the department.

(2) Upon receipt of a valid and writtencomplaint, the department shall assign acomplaint number, acknowledge the com-plaint and forward a copy of the complaintto the licensee. The licensee shall reply to thedepartment within 15 days from receipt ofthe complaint and shall confirm or deny thejustification of the complaint. A complaintacknowledged as justified shall be correctedwithin a reasonable time. If a complaint or aportion of the complaint is not acknowl-edged by the licensee as being justified,then the department shall notify the com-plainant of the area of disagreement.

(3) If the complaint or the information submit-ted by the complaining party is incompleteor disputed by the licensee, the departmentmay require the complaining party to furnishadditional information. The report shall in-dicate what steps, if any, have been taken bythe complaining party before any other gov-ernmental agency or any other pertinent in-formation regarding the subject matter ofthe complaint. Before the department takesany further action it shall obtain a reportfrom local building officials or proper local

authorities, and if the department cannotobtain a report from the local building offi-cial or proper local authorities, then a personauthorized by the department shall make aninspection to determine if the complaint isjustified.

(4) If a complaint is justified by the local buildinginspector or by a person authorized by the de-partment to make inspections, the builder orcontractor shall correct the complaint within areasonable time. Failure or refusal by the li-censee to correct a structuralmatter that isma-terially deficient, dangerous, or hazardous tothe owners shall be presumed to be dishonestor unfair dealing.

(5) Standards of construction shall be in accor-dance with the local building code, or in theabsence of a code in accordance with thebuilding code of the nearest political subdi-vision having a building code.

History: 1954 ACS 49, Eff. Feb. 14,1967; 1979 AC; 2006 MR 10, Eff. May 19,2006.

R 338.1552 Investigative conferences.Rule 52. The department, after investigation,may request a licensee to appear at such inves-tigative conference as is necessary to deter-mine whether there is cause for complaintwhich would require a hearing on, or dismissalof, the complaint. Notice of a request for aconference shall be in writing and mailed tothe address appearing on the license not lessthan 10 days before the conference and shallset the time and place of the conference. Thenotice shall be recorded in the file at the timeof mailing. Persons interested shall have theright to appear and be represented by counsel.Failure by an individual licensee or qualifyingofficer of a licensee to appear for the confer-ence may be a basis for suspension, revocationor denial of a license. The department maygrant an adjournment if requested by anyparty to the complaint if the request is madeat least 5 days prior to the date assigned forthe conference.



History: 1954 ACS 49, Eff. Feb. 14, 1967;1979 AC.

R 338.1553 Disposition of complaints;resolution or settlement.Rule 53. (1) A complaint may be resolved or set-tled prior to a conference and the complaint maybe closed by the department. If a complaint isresolved or settled by agreement, the licenseeshall notify the department in writing thereof.The department shall then notify the complain-ant that it has received information that the com-plaint has been resolved or settled. If thecomplainant takes issue with the licensee’s con-tention the department may investigate further.Resolution or settlement of a complaint shall notbe construed as a waiver by the department of itsstatutory right to take disciplinary action.

(2) The department may dismiss a complaint onits ownmotion if it determines that the com-plaint has been resolved, settled, is without

merit, or that there is insufficient evidence ofa violation of the act.

(3) If the department, after investigation of acomplaint, has reason to believe that a li-censee is in violation of the statute or therules, it may recommend to the directorthat a hearing be held to show cause whythe license should not be suspended orrevoked.

History: 1954 ACS 49, Eff. Feb. 14, 1967;1979 AC.

R 338.1555 Preservation of contractrights.Rule 55. The affirmative defense for failure toutilize a contractually provided alternative dis-pute resolution procedure authorized in 2001PA 113, MCL 339.2412(2) shall only be avail-able in actions brought under a contract enteredinto and executed after July 31, 2001.

History: 2002 MR 1, Eff. Jan. 16, 2002.

DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES

OCCUPATIONAL BOARDS(By authority conferred on the director ofthe department of consumer and industry ser-vices by section 205 of 1980 PA 299, asamended, and Executive Reorganization OrderNo.1996-2, MCL 339.205 and 445.2001.)

PART 1. LICENSE ANDREGISTRATION RENEWALSR 339.1001 Definitions.

(1) As used in these rules:

(a) “Act” means 1980 PA 299, asamended, MCL 339.101 et seq, andknown as the occupational code.

(b) “State license fee act” means 1979PA 152, as amended, MCL 338.2201et seq.

(2) The terms defined in article 1 of the act havethe same meanings when used in these rules.

History: 1979 ACS 8, Effective September17, 1981.Amended2000MR9EffectiveAu-gust 31, 2000.

R 339.1002 Certain occupations; licenseand license renewal expiration.Rule 2. (1) License and license renewals that areissued for the collection practices board, athleticboard of control, private employment board, realestate board, cosmetology establishments andschools, and mortuary science trainees shallexpire annually on the following dates and shallbe renewed every year thereafter:

Collection practices 6/30.Athletic board of control 8/31.Private employment 12/31.Real estate 10/31.Cosmetology establishmentsand schools 8/31.Mortuary science trainees 1/31.



(2) Licenses and license renewals that are issuedfor barber apprentices and student instruc-tors shall be valid for a period of 1 year fromthe date of issue and may be renewed on thesame date thereafter.

History: 1979 ACS 8, Effective September17, 198. Amended 1993 MR 8, EffectiveSeptember 15, 1993.

R 339.1003 Certain occupations; licenseor registration renewals; expiration.Rule 3. (1) Except as provided in R 339.1002and subrule (2) of this rule, licenses or registra-tions and license or registration renewals thatare issued for foresters, landscape architects, cos-metology, barbers, community planners, mortu-ary science, nursing home administrators,architects, professional surveyors, professionalengineers, hearing aid dealers, accountancy,real estate appraisers, and residential buildersand maintenance and alteration contractors,shall expire biennially on the following datesand shall be renewed every 2 years thereafter:

Foresters 5/31.Residential builders and maintenanceand alteration contractors

5/31.

Landscape architects 7/31.Real estate appraisers 7/31.Cosmetology 8/31.Barbers 9/30.Community planners 10/31.Mortuary science 10/31.Nursing home administrators 10/31.Architects 10/31.Professional surveyors 10/31.Professional engineers 10/31.Hearing aid dealers 11/30.Accountancy 12/31.

(2) Licenses and license renewals that areissued for barber students shall be valid fora period of 2 years from the date of issueand may be renewed on the same datethereafter.

(3) A person, firm, or corporation that has beenissued a license or registration pursuant tothe provisions of article 7 of the act shall re-new the license or registration on or before

July 31 and shall renew it every 2 yearsthereafter.

(4) A license or registration that has a limitationmay be renewed for a term that is less thanthe biennial period.

(5) For licenses that are to be renewed bienni-ally, the department may initially renew halfof the licenses for 1 year and half of the li-censes for 2 years to provide equal numbersof renewals in each fiscal year.

History: 1979 ACS 8, Eff. September 17,1981. Amended 1993 MR 8, Eff. September15, 1993. Amended 2000MR 9, Eff. August31, 2000.

PART 7. DISCIPLINARYPROCEEDINGSR 339.1701 Definitions.

Rule 701. (1) As used in these rules:

(a) “Adjournment” means an adjourn-ment, stay, continuation, or delay of acontested case hearing at any time afterthe issuance of a formal complaint.

(b) “Administrative procedures act”means1969 PA 306, MCL 24.201, et seq.

(c) “Compliance conference” means theconference provided for in accordancewith section 92 of the administrativeprocedures act, MCL 24.292.

(d) “Days”means calendar days.(e) “Department” means the department

of labor and economic growth.(f) “Informal conference” means the con-

ference defined in section 504 of theoccupational code, MCL 339.504,butdoesnotmeana compliance confer-ence provided in accordance with sec-tion 92(1) of the administrativeprocedures act, MCL 24.292.

(g) “Licensing law” means a law underwhich the department issues a license,registration, or other authorization topractice an occupation or profession orrender other services, and includes theoccupational code.



(h) “Occupational code” means 1980 PA299, as amended, MCL 339.101et seq.

(i) “Party” means a person, agency, ordesignated agent of the departmentnamed, admitted, or properly seekingand entitled of right to be admitted, asa party in a contested case.

(j) “Presiding officer” means an adminis-trative law judge who is employed bythe state office of administrative hear-ings and rules (SOAHR) who is desig-nated by SOAHR to conduct acontested case hearing.

(k) “Respondent” means a person againstwhom a formal complaint has beenissued.

(l) “Lapsed” license or registration meansa license or registration a person didnot renew, as defined in section 411of the occupational code, MCL 339.411.

(m) “Expired” license or registrationmeans a license or registration a personfailed to renew on or before the expira-tion date.

(n) “Revoked” license or registrationmeans that a person’s authorization orprivilege to engage in an occupation orprofession regulated under the occupa-tional code is terminated and shall notbe restored, reinstated, or renewed, ex-cept that an application for a new licenseor reinstatement of a license may beconsidered by the department andboard as permitted under the occupa-tional code.

(o) “Suspended” license or registrationmeans that a person’s authorization orprivilege to engage in an occupation orprofession regulated under the occupa-tional code is temporarily withdrawnand shall not be restored, reinstated, orrenewed until a term, condition, or re-quirement imposed upon the person bythe department or board has been met

or until a specified period of time haselapsed.

(p) “Surrendered” license or registrationmeans a license or registration that aperson voluntarily returns to the de-partment, or a license or registrationthat was returned to the departmentbefore, during, or after an investigationas defined in article 5 of the occupa-tional code, MCL 339.501 to MCL339.559.

(2) Except as provided in subrule (1) of thisrule, a term defined in the administrativeprocedures act or the occupational codeshall have the same meaning when used inthese rules.

History: 1990MR7,Eff. Aug. 1, 1990; 1997MR 11, Eff. Dec. 4, 1997; 2006 MR 8, Eff.April 28, 2006.

R 339.1703 Applicability of law and rules.Rule 703. Compliance conferences, the proces-sing of complaints, contested case hearings, andother related proceedings shall be conducted inaccordance with the provisions of the licensinglaw, these rules, rules promulgated by a board orthe department governing specific circumstancesunique to the occupation, profession, facility, orservice being regulated, and the administrativeprocedures act.

History: 1990 MR 7, Eff. Aug. 1, 1990.

R 339.1705 Issuance of license or changein licensure status not a bar to discipline.Rule 705. (1) The board or departmentmay takedisciplinary action based upon conduct whichoccurred before the issuance of a license withoutregard towhether the department or a board hadnotice of the alleged grounds for discipline at thetime the license was issued.

(2) The expiration, surrender, lapse, suspen-sion, or revocation of a license or registra-tion does not terminate the department’sauthority to proceed against a person underarticle 5 of the occupational code or aboard’s authority under articles 5 and 6 of



the occupational code to impose sanctionson a person whose license has expired,lapsed, or been surrendered, suspended,or revoked for the following, whicheveroccurs later:

(a) For a period of 7 years after the licenseor registration status change occurs.

(b) For a period of 3 years after all com-plaints against the license or registrationfiled with the department have beenclosed.

(c) Until the licensee or registrant, qualify-ing officer, or manager of a licensee is infull compliance with all final orders is-sued to the licensee or registrant, quali-fying officer or manager of a licensee.

(3) A “person” has the samemeaning as definedin section 105 of the occupational code,MCL 339.105(5).

History: 1990 MR 7, Eff. August 1, 1990;2006 MR 8, Eff. April 28, 2006.

R 339.1706 Reporting changes.Rule 706 (1) A licensee or registrant, or qualify-ing officer, or manager of a licensee shall reportto the department a change of name or addresswithin 30 days after the change occurs.

(2) If a license or registration has expired, is sur-rendered, lapsed, suspended, or revoked,then the licensee or registrant, qualifying of-ficer, or manager of a licensee shall report achange of name or address to the depart-ment within 30 days until 1 of the following,whichever occurs later:

(a) For a period of 7 years after the licenseor registration status change occurs.

(b) For a period of 3 years after all com-plaints against the license or registrationfiled with the department have beenclosed.

(c) Until the licensee or registrant, qualify-ing officer, or manager of a licensee is infull compliance with all final orders is-sued to the licensee or registrant, quali-fying officer, or manager of a licensee.

History: 2006 MR 8, Eff. April 28, 2006.

R 339.1709 Determination of compliancewith, or violation of, licensing law, rule,or order.Rule 709. In determining a violation of, or com-pliance with, the licensing law, a rule promul-gated pursuant to the licensing law, or an orderissued pursuant to the licensing law, the determi-nation shall be made on the basis of complianceor violation at the time of the alleged violation.

History: 1990 MR 7, Eff. August 1, 1990.

R 339.1713 Time computations.Rule 713. In computing a period of days pre-scribed or allowed by these rules, by order of aboard or the department or the director, or byany applicable statute, the first day is excludedand the last day is included. If the last day ofany period or a fixed or final day is a Saturday,Sunday, or legal holiday, the period or day is ex-tended to include the next day which is not aSaturday, Sunday, or legal holiday.


R 339.1721 Complaints; consolidation;withdrawal.Rule 721. (1) The department may consolidatemultiple complaints against a single respondentin 1 formal complaint.

(2) The department may withdraw a formalcomplaint at any time.


R 339.1726 Settlement of complaints.Rule 726. (1) Parties may confer informally atany time to attempt to settle a complaint.

(2) A settlement shall be in the form of a pro-posed stipulation signed by all parties. Theproposed stipulation shall be transmitted tothe appropriate board for acceptance. If theboard accepts the stipulation, a final ordershall be issued. If the board does not acceptthe stipulation, the matter shall proceed to acontested case hearing.




R 339.1731 Written statement in placeof compliance conference; conduct andadjournment of compliance conference;failure to demonstrate compliance.Rule 731. (1) If a respondent selects a compli-ance conference, the respondent may submit awritten statement with a request that the state-ment be considered in place of appearing for acompliance conference.

(2) A compliance conference shall be con-ducted informally by the department andshall not be conducted as an evidentiaryhearing.

(3) A compliance conference may be adjournedby the department for good cause shown.

(4) If the department determines that the re-spondent has not demonstrated compliance,or if the respondent has waived his or heropportunity to show compliance, themattershall proceed to a contested case hearing.

History: 1990 MR 7, Eff. August. 1, 1990.

R 339.1741 Answers and amendmentsto formal complaints.Rule 741. (1) A party may file an answer to aformal complaint.

(2) A formal complaint may be amended. If aformal complaint is amended, a presiding of-ficer may find that the charges have beensufficiently altered as to warrant granting arespondent additional time to prepare adefense.

History: 1990 MR 7, Eff. August 1, 1990.Amended 1997 MR 11, Eff. December 4,1997.

R 339.1743 Consolidation of cases;procedure.Rule 743. (1) Upon the request of a party orupon the presiding officer’s own motion, thepresiding officer may order a joint hearing ofpending cases that involve substantial andcontrolling common questions of law or fact

involving 1 or more respondents and 1 or moreboards or other agencies of government.

(2) A party’s request for the consolidation ofcases shall be filed not more than 15 daysafter service of the notice of hearing. Cop-ies of the request shall be served uponeach party to the cases that would be con-solidated. Not more than 10 days afterservice of the request for consolidation,the other parties may file a response. Un-less a request for oral argument is madeand granted, a determination on consoli-dation shall be made solely upon the writ-ten pleadings.

(3) Cases consolidated under this rule shall bejoined for hearing to address the commonquestions of law and fact and to receive com-monly relevant testimony and other evi-dence. Testimony or evidence that doesnot pertain to all of the consolidated casesmay be received with an appropriate limita-tion on its use.


R 339.1745 Appearance by counseland service.Rule 745. (1) The department may be repre-sented by an assistant attorney general or by aduly authorized agent. A respondent may be re-presented by an attorney or may appear on his orher own behalf.

(2) After a notice of hearing has been served, anattorney or agentwho represents the depart-ment or an attorney representing the re-spondent shall file a written appearanceindicating that he or she represents a party.Thereafter, service made upon an attorneyor agent of record who has filed an appear-ance shall be deemed service upon a party. Ifa written appearance is not filed, then serviceshall be made upon the party.




R 339.1747 Prehearing conference.Rule 747. (1) After a notice of hearing has beenserved and upon the request of a party, or uponhis or her own authority, a presiding officer mayorder the parties to conduct a prehearing confer-ence for the purpose of facilitating the disposi-tion of a contested case.

(2) At the prehearing conference, the partiesshall attempt, through agreement, to do allof the following:

(a) State and simplify the factual and legalissues to be litigated.

(b) Admitmatters of fact and the authentic-ity of documents and resolve other evi-dentiary matters to avoid unnecessaryproof.

(c) Exchange lists of witnesses.(d) Estimate the time required for the

hearing.(e) Resolve other matters that may aid in

the disposition of the case.

(3) The presiding officer shall participate in theprehearing conference unless the orderscheduling the conference indicates other-wise. The partiesmay request rulings pertain-ing to matters of evidence, law, andprocedure to the extent that such rulingsmay bemadewithout the presentation of tes-timony, except that testimony may be pre-sented upon agreement by the parties. Apresidingofficer’s rulings at a prehearing con-ference shall govern the proceedings to thesame extent as rulingsmade during a hearing.A record of requests for rulings, the responseby the parties to requests for rulings, and thedecisions thereon shall be made and shall be-come a part of the hearing record.

(4) The parties to a contested case are encour-aged to voluntarily confer for the purpose offacilitating the disposition of the case.

(5) Upon the request of a party, or upon his orher own authority, a presiding officer mayorder a hearing reporter to attend and re-cord a prehearing conference.


R 339.1751 Official notice of facts;notice; objection.Rule 751. (1) The presiding officer may take of-ficial notice of facts pursuant to section 77 of theadministrative procedures act upon the requestof a party or on his or her own authority in accor-dance with this rule.

(2) If a noticed fact pertains to a material, dis-puted issue which is being adjudicated, theparty who requested that official notice betaken shall notify all parties of the requestnot less than 15 days before the hearing, un-less good cause is shown for the failure to givenotice. A party may file objections to the tak-ing of official notice not less than 10 daysbefore the hearing if the party disputes thefact or its materiality. The objections shallset forth the basis for the dispute. Upon expi-ration of the time for the filing of objections,the presiding officer shall rule on the requestand give notice thereof to the parties.

(3) If the presiding officer takes official notice ofa fact on his or her own initiative, the partiesshall be so notified if the fact pertains to amaterial disputed issue which is being adju-dicated. A party may file objections to thetaking of official notice within 10 days afterservice of the notice thereof if the party dis-putes the fact or its materiality. The objec-tion shall set forth the basis for the dispute.Upon the expiration of the time for the filingof objections, the presiding officer shall sus-tain or overrule the objections and give no-tice thereof to the parties, at which time thedecision becomes final.

(4) If an objection to the taking of official noticeis not filed in a timely manner, official noticemay be taken.


R 339.1755 Format of hearing; openingstatement; closing statement.Rule 755. (1) The format of a hearing in a con-tested case shall be as set forth in this rule.

(2) The parties shall be provided an opportunityto make an opening statement before the



presentation of proofs. Either party may de-cline the opportunity and the respondentmay defer the opening statement until afterthe proofs of the complaining party arepresented.

(3) At the conclusion of the presentation ofproofs by the respondent, the complainingparty may present rebuttal evidence.

(4) At the conclusion of the presentation ofproofs, the parties may present closing argu-ments. The party who bears the burden ofproof shall present the first argument andmay present rebuttal argument. If so stipu-lated by the parties or required by the presid-ing officer, closing arguments may besubmitted in writing if submitted within10 days of the conclusion of the presentationof proofs.

(5) The parties may submit briefs within suchtime as may be agreed upon or as deter-mined by the presiding officer.


R 339.1757 Hearing decorum.Rule 757. At a hearing, the presiding officer shallinsure decorum within the confines of legitimateadvocacy and the assertion of opposing views. Aperson may be excluded or the hearing ad-journed, when necessary, to avoid undue disrup-tion of the proceedings.


R 339.1759 Evidence; objections; rulings.Rule 759. (1) Evidence may be retained in thecustody of a personwho is designated by the pre-siding officer if the retention is deemed necessaryto preserve the evidence without undue interfer-ence with other legal proceedings.

(2) Objections to the admissibility of evidenceshall be made solely by the parties and onstated grounds. The proponent of the evi-dence shall be afforded an opportunity torespond.

(3) The presiding officer shall rule on objectionswith respect to the admissibility of evidence.A ruling on an evidentiary question shall be

made on the record or reduced to a writtenopinion.


R 339.1761 Evidence; prior adjudicationof misconduct.Rule 761. Proof of an adjudication of misconductin a civil or disciplinary proceeding or of a judg-ment of guilt in a criminal proceedingmaybeusedas evidence when relevant to establishing a viola-tion of the licensing law, a rule promulgated pur-suant to the licensing law, or an order issuedpursuant to the licensing law. A copy of the courtor agency record that verifies the adjudication ofmisconductor judgment of guilt shall be admittedas evidence where there is no objection to its ac-curacy or authenticity.


R 339.1763 Formal complaint allegations;burden of proof.Rule 763. The complaining party shall have theburden of proving, by a preponderance of theevidence, the matters alleged in the formalcomplaint.


R 339.1765 Stipulations.Rule 765. (1) The parties may enter into stipula-tions on questions of fact and issues of law, sub-ject to the approval of the presiding officer.

(2) The parties may enter into stipulations onmatters of procedure, subject to approval bythe presiding officer.


R 339.1767 Witnesses.Rule 767. (1) Upon a request and a showing ofgood cause, a prospective witness other than aparty may be excluded from a hearing.

(2) Upon a request and a showing of goodcause, a witness who has testified may be



instructed not to communicate with a pro-spective witness regarding that testimony.


R 339.1771 Findings of fact andconclusions of law; submission;recommendations.Rule 771. (1) Unless the parties have otherwiseagreed to a disposition of the matter or as other-wise provided in the licensing law, the presidingofficer, at the close of the record on the matter,shallmake findings of fact and conclusions of law.

The presiding officer shall submit the findings tothe appropriate board for the assessment of pen-alties if a violation of the code is found.

(2) If the presiding officer finds that the depart-ment has failed tomeet its burdenof proof orhas otherwise not complied with the law orrules pertaining to thematter, he or she shallmake findings of fact and conclusions of lawto that effect.


REFUND OF FEES(By authority conferred on the department ofconsumer and industry services by section 5 of1979 PA 152 and Executive ReorganizationOrder No. 1996-2, MCL 338.2205 and445.2001.)

338.941 Definitions.Rule 1. As used in these rules:

(a) “Department” means the department ofconsumer and industry services.

(b) “Fee”means a fee for a permit, license, reg-istration, examination, reexamination, cer-tificate, verification, transfer, publication,or change of address.

(c) “Incapacitated” means an illness or injurywhich prevents a person from performingthe occupation for which the person is li-censed, registered, or certified.

(d) “Partial refund” means a refund of the feepaid minus a service charge of $15.00.

History: 1979 ACS 4, Eff. November 19,1980. Amended 2000,MR9, Eff. August 31,2000.

R 338.942 Applicability.Rule 2. These rules apply to all fees collected pur-suant to 1979 PA 152, MCL 338.2201 et seq.

History: 1979 ACS 4, Eff. November 19,1980.

R 338.943 Issuance of full refunds.Rule 3. (1) The department shall, upon its owninitiative or upon a request made within 1 year ofa fee validation date, issue a full refund for all ofthe following:

(a) A duplicate payment.(b) Payment of a fee when none is required.(c) Payment of an amount in excess of the

required fee.(d) A renewal fee, if a licensee dies or is in-

capacitated before the first day of a newlicense period.

(e) A license, registration, or certificationfee if the fee was collected at the sametime as a separate examination fee andthe applicant has failed the examination.

(2) A copy of a death certificate or a doctor’sstatement is required before the departmentshall issue a refund pursuant to subdivision(d) of subrule (1) of this rule.

History: 1979 ACS 4, Eff. November 19,1980.

R 338.944 Issuance of partial refunds.Rule 4. (1) Except as provided in subrule (2) ofthis rule, the department shall issue a partialrefund to a person whose application to takean examination or reexamination is withdrawnor denied 7 days before the date the examination



is scheduled to be administered by thedepartment.

(2) A partial refund shall not be issued to a per-son whose application has been denied aftera formal hearing and shall not be issued if the

examination fee is less than the $15.00 ser-vice charge.

History: 1979 ACS 4, Effective November19, 1980.

STATE LICENSE FEE ACT (Excerpts)P.A. 152 of 1979

AN ACT to provide for the establishment andcollection of fees for the regulation of certain oc-cupations and professions, and for certain agen-cies and businesses; to create certain funds; andto prescribe certain powers and duties of certainstate agencies and departments.

The People of the State of Michigan enact:

338.2201 Short title.Sec. 1. This act shall be known and may be citedas the “state license fee act”.

History: 1979, Act 152, Eff. Jan. 1, 1980.Amended 1988, Act 461, Eff. Sept.1, 1989.Amended 1990, Act 268, Eff. Oct. 17, 1990.Amended 1999, Act 171, Eff.Nov. 10, 1999.

338.2202 Definitions.Sec. 2. As used in this act:

(a) “Department” means the department ofconsumer and industry services.

(b) “Occupational code” means 1980 PA 299,MCL339.101 to 339.2721 of theMichiganCompiled Laws.

History: Add. 1988, Act 461, Eff. Sept. 1,1989. Amended 1999, Act 171, Eff.Nov. 10,1999.

338.2203 Fees; use; disposition.Sec. 3. (1) The fees prescribed by this act shall beused only to offset the cost of operating thedepartment.

(2) Except as otherwise provided in sections 37,38, and 51, the fees collected pursuant tothis act shall be credited to the generalfund of the state.

History: 1979, Act 152, Eff. Jan. 1, 1980;--Am. 1988, Act 461, Eff. Sept. 1, 1989;-- Am.1990, Act 268, Imd. Eff. Oct. 17, 1990;--Am. 1993, Act 139, Imd. Eff. Aug. 2, 1993.

338.2205 Refund of fees; rules.Sec. 5. (1) Except under rules promulgated bythe department pursuant to this section or otherapplicable statute, a fee collected by the depart-ment, when paid pursuant to this act, shall not berefunded.

(2) The department shall promulgate rulesconcerning the refund of fees, pursuantto the administrative procedures act of1969, Act No. 306 of the Public Acts of1969, as amended, being sections 24.201to 24.328 of the Michigan CompiledLaws.

History: 1979, Act 152, Eff. Jan. 1, 1980;--Am. 1988, Act 461, Eff. Sept. 1, 1989.

338.2206 Late renewal fee.Sec. 6. The department shall charge a $20.00 laterenewal fee if a person fails to renew a license orregistration on or before the expiration date pre-scribed by the department by rule as authorizedunder the occupational code.

History: Add. 1988, Act 461, Eff. Sept. 1,1989. Amended 1999, Act 171. Eff.Nov. 10,1999.

338.2207 Duplicate license or registration;signed statement; fee.Sec. 7. The department may charge a fee for theissuance of a duplicate license or registration.



The duplicate shall not be issued unless the per-son applying for the duplicate signs a statementthat the original document has been lost, stolen,or destroyed. The fee for the duplicate shall be$10.00.

History: 1979, Act 152, Eff. Jan. 1, 1980;--Am. 1988, Act 461, Eff. Sept. 1, 1989.

338.2208 Written verification that personnot licensed or registered; fee; charge forspecific detailed information.Sec. 8. (1) The department may charge a $5.00fee for providing written verification that a per-son is or is not licensed or registered at the timeofthe request for verification.

(2) If the person requesting written verificationseeks specific detailed information beyondthe information described in subsection (1),the charge for verification shall be $15.00.

History: Add. 1988, Act 461, Eff. Sept. 1,1989.

338.2209 Publication and distribution ofpublic act and rules; fee.Sec. 9. The department may charge a fee for thepublication and distribution of the public actfrom which a board’s authority is derived andthe rules promulgated under that act. The feeshall be $2.00 or the cost of the publication,whichever is greater.

History: 1979, Act 152, Eff. Jan. 1, 1980; --Am. 1988, Act 461, Eff. Sept. 1, 1989.

338.2210 Correcting records and issuingnew document; fee.Sec. 10. The department may charge a $10.00fee for correcting its records and issuing a new

document when a person notifies the depart-ment of a change of name, address, or employer.If the change does not require the issuance of anew document, no charge shall be made for cor-recting the department’s records.

History: Add. 1988, Act 461, Eff. Sept. 1,1989.

338.2239 Residential builder, residentialmaintenance and alteration contractor,salesperson, or branch office; fees.Sec. 39. Fees for a person licensed or seekinglicensure as a residential builder or residentialmaintenance and alteration contractor, salesper-son, or branch office under article 24 of the oc-cupational code, MCL 339.2401 to 339.2412,are as follows:

(a) Application processing fee $15.00(b) Examination fees:

(i) Complete builder ormaintenance andalteration contractor examination50.00

(ii) Law and rules portion 30.00(iii) Practice or trades portion 30.00(iv) Salesperson examination 30.00

(c) Examination review 20.00(d) License fee, per year as follows:

(i) If paid through September 30, 2003or after September 30, 2007 30.00

(ii) Beginning October 1, 2003 throughSeptember 30, 2007 40.00

History:1979,Act152,Eff. Jan.1,1980;--Am.1980, Act 295, Eff. Jan. 1, 1981;-- Am. 1988,Act461,Eff. Sept.1,1989;--Am.2003,Act87,Imd. Eff. July 23, 2003.

OCCUPATION LICENSE FOR FORMER OFFENDERSP.A. 381 of 1974

AN ACT to encourage and contribute to the re-habilitation of former offenders and to assistthem in the assumption of the responsibilitiesof citizenship; to prescribe the use of the term

“good moral character” or similar term as a re-quirement for an occupational or professional li-cense or when used as a requirement to establishor operate an organization or facility regulated



by this state; and to provide administrative andjudicial procedures to contest licensing board oragency rulings thereon.


338.41 “Good moral character” and“principal department” defined.Sec. 1. (1) The phrase “good moral character”,or words of similar import, when used as arequirement for an occupational or professionallicense or when used as a requirement to estab-lish or operate an organization or facility regu-lated by this state in the Michigan CompiledLaws or administrative rules promulgated un-der those laws shall be construed to mean thepropensity on the part of the person to servethe public in the licensed area in a fair, honest,and open manner.

(2) As used in this act, “principal department”means the department which has jurisdic-tion over the board or agency issuing thelicense.

History: 1974, Act 381, Eff. Apr. 1, 1975;--Am. 1978, Act 294, Imd. Eff. July 10, 1978.

338.42 Judgment of guilt in criminalprosecution or judgment in civil actionas evidence in determining good moralcharacter; notice; rebuttal.Sec. 2. A judgment of guilt in a criminal prosecu-tion or a judgment in a civil action shall not beused, in and of itself, by a licensing board oragency as proof of a person’s lack of good moralcharacter. It may be used as evidence in the de-termination, and when so used the person shallbe notified and shall be permitted to rebut theevidence by showing that at the current timehe or she has the ability to, and is likely to, servethe public in a fair, honest, and open manner,that he or she is rehabilitated, or that the sub-stance of the former offense is not reasonablyrelated to the occupation or profession for whichhe or she seeks to be licensed.

History: 1974, Act 381, Eff. Apr. 1, 1975;Am. 1978, Act 294, Imd. Eff. July 10,1978.

338.43 Using, examining, or requestingcertain criminal records prohibited;prerequisites for furnishing criminalrecords; rules.Sec. 3. (1) The following criminal records shallnot be used, examined, or requested by a licens-ing board or agency in a determination of goodmoral character when used as a requirement toestablish or operate an organization or facilityregulated by this state, or pursuant to occupa-tional or professional licensure:

(a) Records of an arrest not followed by aconviction.

(b) Records of a conviction which has beenreversed or vacated, including the arrestrecords relevant to that conviction.

(c) Records of an arrest or conviction for amisdemeanor or a felony unrelated tothe person’s likelihood to serve the pub-lic in a fair, honest, and open manner.

(d) Records of an arrest or conviction for amisdemeanor for the conviction ofwhich a person may not be incarceratedin a jail or prison.

(2) A criminal record shall not be furnished toa licensing board or agency except by theprincipal department, and shall be furn-ished only after the director of the princi-pal department or a person designated bythe director has determined that the infor-mation to be provided to the board oragency meets the criteria set forth in thissection.

(3) The director or a person designated by thedirector of the principal department shall pro-mulgate rules for each licensing board oragency under that department’s jurisdictionwhich prescribe the offenses or categories ofoffenses which the department considers in-dicate a person is not likely to serve the publicas a licensee in a fair, honest, and open man-ner. Each licensing board or agency maymake recommendations to the director re-garding the rules to be promulgated. Therules shall be consistent with this act and pro-mulgated pursuant to Act No. 306 of the



Public Acts of 1969, as amended, being sec-tions 24.201 to 24.315 of the MichiganCompiled Laws. Prior to the promulgationof the rules pertaining to a board or agency,all felonies shall be consideredby theboardoragency to be relevant to the ability or likeli-hood the person will serve the public in a fair,honest and open manner.


338.44 Use of public records or othersources to determine person’s fitness.Sec. 4. This act shall not bar the use by a licensingboard or agency in its determination of a person’sfitness, of any other public record, not related toarrest or prosecution, or of any other source ofunbiased and accurate information.


338.45 Finding person unqualified;statement; rehearing.Sec. 5. When a person is found to be unqualifiedfor a license because of a lack of good moralcharacter, or similar criteria, the person shall befurnished by the board or agency with a state-ment to this effect. The statement shall containa complete record of the evidence upon whichthe determination was based. The person shall

be entitled, as of right, to a rehearing on the issuebefore the board if he or she has relevant evi-dence not previously considered, regarding hisor her qualifications.


338.46 Judicial review; statement; order.Sec. 6. A person, aggrieved by a licensing agencyor board determination regarding the person’spossession of goodmoral character, if unsatisfiedby his or her administrative appeal as provided insection 5, may bring an action in circuit court fora review of the record. If, in the opinion of thecircuit court, the record does not disclose a lackof good moral character, as defined in this act,the court shall so state and shall order the boardto issue the license, when all other licensing re-quirements are complied with.

History: 1974, Act 381, Eff. Apr. 1, 1975;Am. 1978, Act 294, Imd. Eff. July 10, 1978.

338.47 Power to discipline licensees notaffected.Sec. 7. This act does not affect the power of alicensing agency to discipline licensees under itsjurisdiction for prohibited acts of professionalmisconduct or dishonesty.

History: 1974, Act 381, Eff. Apr. 1, 1975.

BUILDING CONTRACT FUNDP.A. 259 OF 1931

AN ACT to protect the people of the state fromimposition and fraud in the building construc-tion industry and to provide penalties for the vi-olation of this act.


570.151 Building contract fund; statusas a trust fund.Sec. 1. In the building construction industry, thebuilding contract fund paid by any person to acontractor, or by such person or contractor to a

subcontractor, shall be considered by this actto be a trust fund, for the benefit of the personmaking the payment, contractors, laborers,subcontractors or materialmen, and the contrac-tor or subcontractor shall be considered thetrustee of all funds so paid to him for buildingconstruction purposes.

History: 1931, Act 259, Eff. Sept. 18, 1931;--CL 1948, 570.151;– Am. 1966, Act 104, Eff.Oct. 1, 1966.



570.152 Building contract fund;fraudulent detention or use by contractoror subcontractor, penalty.Sec. 2. Any contractor or subcontractor engagedin the building construction business, who, withintent to defraud, shall retain or use the proceedsor any part therefor, of any payment made tohim, for any other purpose than to first pay la-borers, subcontractors and materialmen, en-gaged by him to perform labor or furnishmaterial for the specific improvement, shall beguilty of a felony in appropriating such funds tohis own use while any amount for which he maybe liable or become liable under the terms of hiscontract for such labor or material remains un-paid, andmay be prosecuted upon the complaintof any persons so defrauded, and, upon convic-tion, shall be punished by a fine of not less than100 dollars or more than 5,000 dollars and/or

not less than 6 months nor more than 3 yearsimprisonment in a state prison at the discretionof the court.

History: 1931, Act 259, Eff. Sept. 18, 1931;--CL 1948, 570.152.

570.153 Building contract fund; evidenceof fraudulent detention or use.Sec. 3. The appropriation by a contractor, or anysubcontractor, of any moneys paid to him forbuilding operations before the payment by himof all moneys due or so to become due laborers,subcontractors, materialmen or others entitledto payment, shall be evidence of intent todefraud.

History: 1931, Act 259, Eff. Sept. 18, 1931;--CL 1948, 570.153.



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