HOUSE BILL No. 4387 February 26, 1997, Introduced by Rep. Brewer and referred to the Committee on Regulatory Affairs. A bill to amend 1980 PA 299, entitled "Occupational code," by amending section 303a (MCL 339.303a), as amended by 1995 PA 183, and by adding article 28; and to repeal acts and parts of acts. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 303a. The terms provided for in this act shall com- 2 mence on the following dates: 3 Accountancy July 1 4 Architects April 1 5 Athletic board of control April 1 6 AUCTIONEERS JANUARY 1 7 Barbers October 1 02112'97 LBO 2 1 Collection agencies July 1 2 Community planners July 1 3 Cosmetology January 1 4 Employment agencies October 1 5 Foresters April 1 6 Hearing aid dealers October 1 7 Land surveyors April 1 8 Landscape architects July 1 9 Marriage counselors October 1 10 Mortuary science July 1 11 Nursing home administrators January 1 12 Professional engineers April 1 13 Real estate appraisers July 1 14 Real estate brokers and salespersons July 1 15 Residential builders April 1 16 Social workers October 1 17 ARTICLE 28 18 SEC. 2801. AS USED IN THIS ARTICLE: 19 (A) "AUCTION" MEANS THE SALE OR OFFER FOR SALE BY BIDDING OF 20 REAL OR PERSONAL PROPERTY AT A PUBLIC OR PRIVATE LOCATION. 21 (B) "AUCTIONEER" MEANS AN INDIVIDUAL WHO, FOR COMPENSATION, 22 IS ENGAGED IN THE BUSINESS OF OR OFFERS TO ENGAGE IN THE CONDUCT 23 OF AN AUCTION. 24 SEC. 2803. THERE IS CREATED A BOARD OF AUCTIONEERS. 25 SEC. 2805. (1) AN INDIVIDUAL SHALL NOT ENGAGE IN THE BUSI- 26 NESS OF THE CONDUCT OF OR OFFERING TO CONDUCT AN AUCTION UNLESS 27 LICENSED OR EXEMPT FROM LICENSURE UNDER THIS ARTICLE. 02112'97 3 1 (2) A CORPORATION, PARTNERSHIP, LIMITED LIABILITY COMPANY, 2 ASSOCIATION, OR OTHER LEGAL ENTITY MAY APPLY FOR LICENSURE UNDER 3 THIS ARTICLE IF NOT LESS THAN 1 OF ITS OFFICERS, PARTNERS, MEM- 4 BERS, OR MANAGING AGENTS IS DESIGNATED AS A QUALIFYING MEMBER. 5 THE DEPARTMENT SHALL ISSUE A LICENSE TO THE QUALIFYING MEMBER 6 UPON THAT INDIVIDUAL'S FULFILLMENT OF THE REQUIREMENTS OF THIS 7 ARTICLE. THE QUALIFYING MEMBER IS RESPONSIBLE FOR EXERCISING THE 8 SUPERVISION AND CONTROL OF THE ACTIVITIES REGULATED BY THIS ARTI- 9 CLE SO AS TO ASSURE FULL COMPLIANCE WITH THIS ARTICLE AND ANY 10 RULES PROMULGATED UNDER THIS ARTICLE. 11 (3) THE DEPARTMENT SHALL SUSPEND, REVOKE, OR DENY THE 12 LICENSE OF A CORPORATION, PARTNERSHIP, LIMITED LIABILITY COMPANY, 13 ASSOCIATION, OR OTHER LEGAL ENTITY WHEN THE LICENSE OF THE QUALI- 14 FYING MEMBER IS SUSPENDED, REVOKED, OR DENIED. 15 (4) IF THE QUALIFYING MEMBER OF A LICENSEE STOPS BEING ITS 16 QUALIFYING MEMBER, SUCH CIRCUMSTANCE OPERATES AS AN AUTOMATIC 17 SUSPENSION OF THE ENTITY'S LICENSE. UPON REQUEST, THE DEPARTMENT 18 MAY PERMIT THE LICENSE TO REMAIN IN FORCE FOR A REASONABLE PERIOD 19 OF TIME IN ORDER TO ALLOW THE QUALIFYING OF A NEW QUALIFYING 20 MEMBER. 21 (5) A PERSON SHALL NOT ADVERTISE OR USE THE TERM "AUCTION", 22 "AUCTIONEER", OR ANY OTHER TERM OF SIMILAR MEANING THAT CONNOTES 23 THAT THE PERSON IS LICENSED UNDER THIS ARTICLE UNLESS THAT PERSON 24 OBTAINS A LICENSE UNDER THIS ARTICLE OR IS SPECIFICALLY EXEMPT 25 FROM LICENSURE UNDER THIS ARTICLE. 26 SEC. 2807. THE FOLLOWING PERSONS ARE EXEMPT FROM LICENSURE 27 UNDER THIS ARTICLE: 02112'97 4 1 (A) A PERSON SELLING BY AUCTION HIS OR HER OWN REAL OR 2 PERSONAL PROPERTY WHERE THAT OWNER DOES NOT ACQUIRE THE REAL OR 3 PERSONAL PROPERTY SOLELY FOR THE PURPOSE OF RESALE BY AUCTION. 4 (B) A PERSON SELLING BY AUCTION REAL OR PERSONAL PROPERTY 5 FOR THE BENEFIT OF A CHARITABLE, RELIGIOUS, OR CIVIC ORGANIZATION 6 WHERE THE AUCTIONEER DOES NOT RECEIVE COMPENSATION. 7 (C) AN AGENT OR EMPLOYEE OF A COURT OF COMPETENT JURISDIC- 8 TION SELLING BY AUCTION REAL OR PERSONAL PROPERTY PURSUANT TO A 9 COURT ORDER; A LAW ENFORCEMENT AGENCY SELLING BY AUCTION ABAN- 10 DONED OR SEIZED PROPERTY; OR A GOVERNMENTAL UNIT SELLING BY AUC- 11 TION REAL OR PERSONAL PROPERTY AS THE RESULT OF A TAX SALE OR AS 12 SURPLUS OR SALVAGE PERSONAL PROPERTY. 13 (D) A PERSON LICENSED UNDER ARTICLE 25 SELLING REAL PROPERTY 14 BY AUCTION IF NOT MORE THAN 5 OF SUCH SALES OCCUR PER CALENDAR 15 YEAR. THESE SALES MAY INCLUDE THE TOTAL CONTENTS OF A PIECE OF 16 REAL PROPERTY. 17 (E) A PERSON LICENSED UNDER 1937 PA 284, MCL 287.121 TO 18 287.131, SELLING BY AUCTION LIVESTOCK. 19 (F) A DEALER LICENSED UNDER THE MICHIGAN VEHICLE CODE, 1949 20 PA 300, MCL 257.1 TO 257.923, SELLING BY AUCTION MOTOR VEHICLES. 21 (G) A DEALER OR MANUFACTURER SELLING BY AUCTION BOATS OR 22 WATERCRAFT REQUIRED TO HAVE A CERTIFICATE OF TITLE UNDER PART 801 23 (MARINE SAFETY) OF THE NATURAL RESOURCES AND ENVIRONMENTAL PRO- 24 TECTION ACT, 1994 PA 451, MCL 324.80101 TO 324.80199. 25 SEC. 2809. THE DEPARTMENT SHALL ISSUE A LICENSE AS AN AUC- 26 TIONEER TO AN INDIVIDUAL WHO MEETS ALL OF THE FOLLOWING 27 CONDITIONS: 02112'97 5 1 (A) HAS ACTIVELY PARTICIPATED IN THE CONDUCTING OF NOT LESS 2 THAN 5 AUCTIONS. THE EXPERIENCE SHALL BE VERIFIED BY AN AFFIDA- 3 VIT OF AN AUCTIONEER AND SHALL PROVIDE THE NAMES AND ADDRESSES OF 4 THE PARTIES ON WHOSE BEHALF THE AUCTION WAS HELD AND THE DATES OF 5 THE AUCTION. 6 (B) HAS COMPLETED AN EXAMINATION AS DESCRIBED IN 7 SECTION 2815 IN THE CASE OF INITIAL LICENSURE AND HAS COMPLIED 8 WITH THE CONTINUING EDUCATION REQUIREMENTS OF SECTION 2817 IN THE 9 CASE OF A RENEWAL OF A LICENSE IF CONTINUING EDUCATION IS 10 REQUIRED. 11 (C) IS OF GOOD MORAL CHARACTER. 12 SEC. 2811. MONEY PAID BY ANY PERSON TO A LICENSEE IS CON- 13 SIDERED TO BE HELD IN TRUST FOR THE BENEFIT OF THE PERSON MAKING 14 THE PAYMENT AND THE LICENSEE IS CONSIDERED THE TRUSTEE FOR THE 15 MONEY. 16 SEC. 2813. (1) AN AUCTIONEER SHALL MAINTAIN A REGULAR PLACE 17 OF BUSINESS IN THIS STATE. IF MORE THAN 1 PLACE OF BUSINESS IS 18 MAINTAINED, THE DEPARTMENT SHALL ISSUE A DUPLICATE LICENSE AT NO 19 ADDITIONAL COST. 20 (2) A LICENSED AUCTIONEER SHALL NOT CONDUCT AN AUCTION 21 UNLESS A WRITTEN CONTRACT IS EXECUTED BETWEEN THE PERSON DESIRING 22 AUCTION SERVICES AND THE LICENSED AUCTIONEER. A LICENSEE SHALL 23 KEEP A COPY OF THE CONTRACT AS PART OF HIS OR HER RECORDS AND, 24 UPON REQUEST, MAKE THEM AVAILABLE TO THE DEPARTMENT FOR INSPEC- 25 TION DURING NORMAL BUSINESS HOURS. 26 (3) A LICENSEE UNDER THIS ARTICLE SHALL MAINTAIN WRITTEN 27 RECORDS OF EACH AUCTION SALE FOR A PERIOD OF NOT LESS THAN 1 YEAR 02112'97 6 1 FROM THE DATE OF THE AUCTION SALE. THE RECORDS SHALL INCLUDE, 2 BUT NOT BE LIMITED TO, ALL OF THE FOLLOWING: 3 (A) CONSIGNMENT RECEIPTS. 4 (B) BIDDER REGISTRATIONS. 5 (C) DOCUMENTS RELATING TO FINAL SETTLEMENTS WITH 6 CONSIGNORS. 7 (4) A LICENSEE UNDER THIS ARTICLE SHALL MAINTAIN RECORDS ON 8 ALL CURRENT EMPLOYEES AND ON PAST EMPLOYEES FOR NOT LESS THAN 3 9 YEARS AFTER A PAST EMPLOYEE LEAVES THE EMPLOYMENT OF THE LICENS- 10 EE, WHICH RECORDS SHALL INCLUDE THE EMPLOYEE'S NAME, ADDRESS, 11 SOCIAL SECURITY NUMBER, AND DATE OF BIRTH. 12 (5) A LICENSEE UNDER THIS ARTICLE SHALL CONSPICUOUSLY POST 13 AT THE REGULAR PLACE OF BUSINESS A COPY OF THE LICENSE ISSUED 14 UNDER THIS ARTICLE. 15 (6) A LICENSEE UNDER THIS ARTICLE SHALL ESTABLISH A CUSTO- 16 DIAL ACCOUNT IN THE MANNER DESCRIBED IN THIS SECTION. THE 17 LICENSEE SHALL DEPOSIT INTO THE CUSTODIAL ACCOUNT ALL CHECKS, 18 DRAFTS, NEGOTIABLE INSTRUMENTS, AND CASH TENDERED BY A BUYER FOR 19 THE PAYMENT OF AN ITEM SOLD BY AUCTION. THE LICENSEE SHALL MAKE 20 A DISBURSEMENT RELATIVE TO A SALE BY AUCTION THROUGH THAT CUSTO- 21 DIAL ACCOUNT IN THE TIME PERIOD AND MANNER DESCRIBED IN THIS 22 SECTION. 23 (7) A LICENSEE SHALL NOT PERMIT AN ADVANCE PAYMENT OF MONEY 24 BY A CUSTOMER TO BE DEPOSITED IN THE LICENSEE'S BUSINESS OR PER- 25 SONAL ACCOUNT OR TO BE COMMINGLED IN ANY WAY WITH FUNDS BELONGING 26 TO THE LICENSEE, EXCEPT AS PROVIDED IN THIS SECTION. THE 27 LICENSEE SHALL DEPOSIT CUSTOMER MONEY INTO A SEPARATE CUSTODIAL 02112'97 7 1 ACCOUNT UNTIL THE TRANSACTION INVOLVED IS CONSUMMATED OR 2 TERMINATED WITHIN 2 BANKING DAYS AFTER THE AUCTION TRANSACTION, 3 BUT NOT LATER THAN 5 DAYS AFTER ITS RECEIPT. 4 (8) THE SEPARATE CUSTODIAL ACCOUNT IS SUBJECT TO THE FOLLOW- 5 ING REQUIREMENTS: 6 (A) SHALL BE A NONINTEREST BEARING ACCOUNT MAINTAINED IN A 7 FEDERALLY INSURED BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT 8 UNION, OR DEPOSITORY RECOGNIZED BY THE DEPARTMENT. 9 (B) SHALL DESIGNATE THE LICENSEE AS THE CUSTODIAN OR 10 TRUSTEE. 11 (C) SHALL PROVIDE FOR WITHDRAWAL OF MONEY WITHOUT PREVIOUS 12 NOTICE AND SHALL NOT BE ENCUMBERED IN ANY MANNER. 13 (D) SHALL NOT CONTAIN ANY MONEY OF THE LICENSEE EXCEPT FOR 14 SUCH AMOUNTS AS ARE NECESSARY TO PAY SERVICE CHARGES ON THE 15 ACCOUNT OR TO MAINTAIN THE ACCOUNT WHEN CUSTOMER MONEY IS NOT ON 16 DEPOSIT. 17 (9) DISBURSEMENTS FROM THE SEPARATE CUSTODIAL ACCOUNT SHALL 18 BE MADE ONLY FOR THE FOLLOWING PURPOSES: 19 (A) PAYMENT AS A RESULT OF THE SALE OF AN ITEM BY THE 20 LICENSEE. 21 (B) REFUND OF AN AMOUNT TO THE CUSTOMER UPON TERMINATION OF 22 THE TRANSACTION. 23 (C) PAYMENT TO THE LICENSEE OF A COMMISSION FOLLOWING THE 24 CONSUMMATION OF A TRANSACTION UPON WHICH A COMMISSION IS PAYABLE 25 TO THE LICENSEE. 02112'97 8 1 (10) THE LICENSEE SHALL KEEP RECORDS OF MONEY DEPOSITED IN 2 THE SEPARATE CUSTODIAL ACCOUNT. THE RECORDS SHALL SHOW ALL OF 3 THE FOLLOWING: 4 (A) THE DATE OF THE RECEIPT OF MONEY FROM A CUSTOMER AND THE 5 NAME OF THE CUSTOMER ON WHOSE BEHALF THE MONEY WAS PAID. 6 (B) THE PURPOSE FOR WHICH THE MONEY WAS PAID. 7 (C) THE DATE THE MONEY WAS DEPOSITED IN THE CUSTODIAL 8 ACCOUNT. 9 (D) THE DATE OF WITHDRAWAL OF THE MONEY, THE PURPOSE OF THE 10 WITHDRAWAL, AND THE NAME OF THE PERSON TO WHOM THE MONEY WAS PAID 11 UPON WITHDRAWAL. 12 (E) ANY OTHER PERTINENT INFORMATION REGARDING THE 13 TRANSACTION. 14 (11) THE DEPARTMENT AND THE BOARD MAY, UPON NOTICE GIVEN TO 15 A LICENSEE, INSPECT THE RECORDS REQUIRED TO BE KEPT PURSUANT TO 16 THIS SECTION. 17 SEC. 2815. (1) THE DEPARTMENT AND THE BOARD SHALL DEVELOP 18 AN EXAMINATION FOR APPLICANTS FOR LICENSURE UNDER THIS ARTICLE IN 19 THE MANNER PROVIDED FOR IN SECTION 316. 20 (2) THE EXAMINATION DESCRIBED IN SUBSECTION (1) SHALL 21 INCLUDE, BUT NOT BE LIMITED TO, THE FOLLOWING SUBJECT MATTER 22 AREAS: 23 (A) THE PROVISIONS OF THIS ARTICLE. 24 (B) ETHICS AND ETHICAL PRACTICES AS THEY RELATE TO THE BUSI- 25 NESS OF CONDUCTING AUCTIONS. 26 (C) ELEMENTARY MATHEMATICS. 02112'97 9 1 (D) ELEMENTARY PRINCIPLES OF LAND ECONOMICS. 2 (E) ELEMENTARY PRINCIPLES OF THE LAW REGARDING BULK SALES, 3 DEEDS, MORTGAGES, CONTRACTS OF SALE, AGENCY, LEASES, AUCTIONS, 4 AND BROKERAGE. 5 (3) THE DEPARTMENT SHALL ADMINISTER THE EXAMINATIONS ON AT 6 LEAST A QUARTERLY BASIS. THE DEPARTMENT MAY ADMINISTER THE EXAM- 7 INATIONS MORE OFTEN THAN ON A QUARTERLY BASIS IF THE BOARD DETER- 8 MINES THAT CIRCUMSTANCES EXIST THAT WARRANT THE FURTHER ADMINIS- 9 TRATION OF THE EXAMINATION. 10 SEC. 2817. THE DIRECTOR MAY PROMULGATE RULES SETTING STAN- 11 DARDS FOR MANDATORY PROGRAM CONTINUING EDUCATION. THE RULES 12 SHALL PROVIDE FOR NOT LESS THAN 4 CLOCK HOURS OF CONTINUING EDU- 13 CATION PER YEAR. 14 SEC. 2819. (1) THE DEPARTMENT SHALL ISSUE A LICENSE WITHOUT 15 EXAMINATION TO A NONRESIDENT INDIVIDUAL WHO, AT THE TIME OF 16 APPLICATION, IS LICENSED, REGISTERED, CERTIFIED, OR OTHERWISE 17 REGULATED BY ANOTHER STATE IF THE REQUIREMENTS OF THAT STATE, AS 18 DETERMINED BY THE BOARD, ARE SUBSTANTIALLY THE EQUIVALENT OF THE 19 REQUIREMENTS OF THIS ARTICLE AND IF THE OTHER STATE OFFERS LICEN- 20 SURE, CERTIFICATION, OR REGISTRATION ON A BASIS SIMILAR TO THIS 21 SECTION TO LICENSEES UNDER THIS ARTICLE. 22 (2) A NONRESIDENT SHALL FILE AN IRREVOCABLE CONSENT TO SERV- 23 ICE OF PROCESS WHICH CONSENT SHALL BE SIGNED BY THE LICENSEE. A 24 PROCESS OR PLEADING SERVED UPON THE DEPARTMENT SHALL BE SUFFI- 25 CIENT SERVICE UPON THE LICENSEE. A PROCESS OR PLEADING SERVED 26 UPON THE DEPARTMENT UNDER THIS SECTION SHALL BE IN DUPLICATE. 27 THE DEPARTMENT SHALL IMMEDIATELY SERVE BY FIRST-CLASS MAIL A COPY 02112'97 10 1 OF THE PROCESS OR PLEADING TO THE LICENSEE'S LAST KNOWN ADDRESS 2 AS DETERMINED BY THE RECORDS OF THE DEPARTMENT. 3 SEC. 2821. THE DEPARTMENT SHALL LICENSE AS AN AUCTIONEER, 4 AFTER VERIFICATION OF THE EXPERIENCE REQUIREMENTS IMPOSED IN THIS 5 SECTION, AN INDIVIDUAL WHO APPLIES NOT MORE THAN 2 YEARS AFTER 6 THE EFFECTIVE DATE OF THIS ARTICLE AND SUBMITS AN AFFIDAVIT 7 ATTESTING TO EXPERIENCE IN THE PRACTICE OF THE CONDUCT OF AUC- 8 TIONS FOR NOT LESS THAN 3 YEARS BEFORE THE EFFECTIVE DATE OF THIS 9 ARTICLE, WHICH EXPERIENCE SHALL HAVE INCLUDED THE CONDUCT OF NOT 10 LESS THAN 12 AUCTIONS. 11 SEC. 2823. A LICENSEE WHO COMMITS ANY OF THE FOLLOWING ACTS 12 IS SUBJECT TO THE PENALTIES CONTAINED IN ARTICLE 6: 13 (A) FAILS TO ENTER INTO A WRITTEN CONTRACT WITH A SELLER OR 14 CONSIGNOR BEFORE PLACING OR AUTHORIZING ANY ADVERTISING FOR AN 15 AUCTION. 16 (B) FAILS TO REDUCE TO WRITING OR FAILS TO ISSUE ANY APPRO- 17 PRIATE DOCUMENTATION RELATIVE TO AN AUCTION-RELATED TRANSACTION. 18 (C) FAILS TO APPROPRIATELY USE OR ISSUE PAYMENT FROM A CUS- 19 TODIAL FUND. 20 (D) PERMITS AN UNLICENSED AUCTIONEER TO CONDUCT AN AUCTION. 21 (E) IS INVOLVED IN CAPPING, SHILLING, OR STEERING RELATIVE 22 TO AN AUCTION. 23 (F) HAS AN UNDISCLOSED FINANCIAL INTEREST IN AN AUCTION CON- 24 DUCTED BY THE LICENSEE. 25 (G) KNOWINGLY MISREPRESENTS THE NATURE OR VALUE OF AN ITEM 26 BEING AUCTIONED. 02112'97 11 1 (H) VIOLATES THE REQUIREMENTS OF THIS ARTICLE OR A RULE 2 PROMULGATED UNDER THIS ARTICLE. 3 Enacting section 1. The following acts and parts of acts 4 are repealed: 5 (a) 1955 PA 224, MCL 446.51 to 446.60. 6 (b) 1846 RS 21, MCL 446.26 to 446.35. 7 Enacting section 2. This amendatory act does not take 8 effect unless all of the following bills of the 89th Legislature 9 are enacted into law: 10 (a) Senate Bill No. ________ or House Bill No. ________ 11 (request no. 02112'97 a). 12 (b) Senate Bill No. ________ or House Bill No. ________ 13 (request no. 02112'97 b). 14 (c) Senate Bill No. ________ or House Bill No. ________ 15 (request no. 02112'97 c). 02112'97 Final page. LBO