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SB-0632, As Passed Senate, June 8, 2006

SUBSTITUTE FOR

SENATE BILL NO. 632

A bill to amend 1980 PA 299, entitled

"Occupational code,"

by amending sections 601, 602, 605, 2402, 2404, 2405, and 2411 (MCL

339.601, 339.602, 339.605, 339.2402, 339.2404, 339.2405, and

339.2411), sections 601 and 602 as amended by 2005 PA 278, section

2404 as amended by 1988 PA 463, and section 2411 as amended by 2001

PA 113, and by adding sections 2404b and 2411a.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 601. (1) A person shall not engage in or attempt to

engage in the practice of an occupation regulated under this act or

use a title designated in this act unless the person possesses a

license or registration issued by the department for the

occupation.

(2) A school, institution, or person shall not operate or

attempt to operate a barber college, school of cosmetology, or real

estate school unless the school, institution, or person is licensed

or approved by the department.

(3) Subject to section 411, a person whose license or

registration is suspended, revoked, or lapsed, as determined by the

records of the department, is considered unlicensed or

unregistered.

(4) ~~(3) A~~ Except as otherwise provided for in section 735, a

person, school, or institution that violates subsection (1) or (2)

is guilty of a misdemeanor, punishable by a fine of not more than

$500.00, or imprisonment for not more than 90 days, or both.

(5) ~~(4) A~~ Except as otherwise provided for in section 735, a

person, school, or institution that violates subsection (1) or (2)

a second or any subsequent time is guilty of a misdemeanor,

punishable, except as provided in section 735, by a fine of not

more than $1,000.00, or imprisonment for not more than 1 year, or

both.

(6) Notwithstanding subsections (4) and (5), a person not

licensed under article 24 as a residential builder or a residential

maintenance and alteration contractor who violates subsection (1)

or (2) is guilty as follows:

(a) In the case of a first offense, a misdemeanor punishable

by a fine of not less than $5,000.00 or more than $25,000.00, or

imprisonment for not more than 1 year, or both.

(b) In the case of a second offense, a misdemeanor punishable

by a fine of not less than $5,000.00 or more than $25,000.00, or

imprisonment for not more than 2 years, or both.

punishable by a fine of not less than $5,000.00 or more than

$25,000.00, or imprisonment for not more than 4 years, or both.

(7) Any violation of this act shall include a requirement that

restitution be made, based upon proofs submitted to and findings

made by the trier of fact as provided by law.

(8) ~~(5)~~ Notwithstanding the existence and pursuit of any

other remedy, an affected person may maintain injunctive action to

restrain or prevent a person from violating subsection (1) or (2).

If successful in obtaining injunctive relief, the affected person

shall be entitled to actual costs and attorney fees.

(9) ~~(6)~~ This act does not apply to a person engaging in or

practicing the following:

(a) Interior design.

(b) Building design.

state plumbing act, 2002 PA 733, MCL 338.3511 to 338.3569.

(d) Any activity for which the person is licensed under the

Forbes mechanical contractors act, 1984 PA 192, MCL 338.971 to

338.988.

(e) Any activity for which the person is licensed under the

electrical administrative act, 1956 PA 217, MCL 338.881 to 338.892.

(10) ~~(7)~~ As used in subsection ~~(5)~~ (8), "affected person"

means a person directly affected by the actions of a person

suspected of violating subsection (1) or (2) and includes, but is

not limited to, a licensee or registrant, a board established

pursuant to this act, the department, a person who has utilized the

services of the person engaging in or attempting to engage in an

occupation regulated under this act or using a title designated by

this act without being licensed or registered by the department, or

a private association composed primarily of members of the

occupation in which the person is engaging in or attempting to

engage in or in which the person is using a title designated under

this act without being registered or licensed by the department.

(11) ~~(8)~~ An investigation may be conducted under article 5

to enforce this section. A person who violates this section shall

be subject to this section and ~~section~~ sections 506, 602, and

606.

(12) The department, the attorney general, or a county

prosecutor may utilize forfeiture as a remedy in the manner

provided for in section 606.

(13) ~~(9)~~ The remedies under this section are independent and

cumulative. The use of 1 remedy by a person shall not bar the use

of other lawful remedies by that person or the use of a lawful

remedy by another person.

(14) ~~(10)~~ An interior designer may perform services in

connection with the design of interior spaces including preparation

of documents relative to finishes, systems furniture, furnishings,

fixtures, equipment, and interior partitions that do not affect the

building mechanical, structural, electrical, or fire safety

systems.

(15) Upon entering a conviction under subsection (4) or (5), a

court entering the conviction shall notify, by mail, facsimile

transmission, or email, the bureau of commercial services at the

department.

Sec. 602. A person, school, or institution that violates this

act or a rule or order promulgated or issued under this act shall

be assessed 1 or more of the following penalties:

(a) Placement of a limitation on a license or certificate of

registration for an occupation regulated under articles 8 to 25.

(b) Suspension of a license or certificate of registration.

renewal of a license or certificate of registration.

(d) Revocation of a license or certificate of registration.

(e) An In the case of a person licensed or registered under

this act and except as otherwise provided for by this act, an

administrative fine to be paid to the department, not to exceed

$10,000.00.

(f) Censure.

(g) Probation.

(h) A requirement that restitution be made, based upon proofs

submitted to and findings made by the hearing examiner after a

contested case.

Sec. 605. (1) The department may bring any appropriate action,

including mediation or other alternative dispute resolution, in the

name of the people of this state to carry out this act and to

enforce this act.

(2) If the attorney general considers it necessary, the

attorney general shall intervene in and prosecute all cases arising

under this act.

(3) This section does not prohibit the department from

bringing any civil, criminal, or administrative action for the

enforcement of section 601.

(4) The department has standing to bring an administrative

action or to directly bring an action in a court of competent

jurisdiction regarding unlicensed practice of an occupation.

Sec. 2402. (1) A residential builders' and maintenance and

alteration contractors' board is created. ~~Four~~ Of the 9-member

board, 4 members shall be licensed residential builders, and 2

members shall be licensed maintenance and alteration contractors.

(2) Of the members representing the general public, at least 1

member shall be registered under the building officials and

inspectors registration act, 1986 PA 54, MCL 338.2301 to 338.2313.

Sec. 2404. (1) The department may require an applicant,

licensee, or each partner, trustee, director, officer, member, or

shareholder to submit evidence of good moral character and

financial stability. Before the issuance of a license, an applicant

shall submit ~~any~~ the following:

(a) Any amount required to be paid under the construction lien

act, ~~Act No. 497 of the Public Acts of 1980, being sections~~

~~570.1101 to 570.1305 of the Michigan Compiled Laws~~ 1980 PA 497,

MCL 570.1101 to 570.1305.

(b) A copy of an operator's license or state personal

identification card, to be used by the department only for proof of

identity of the applicant.

completion of continuing education to the extent required.

(2) The department shall require an applicant for a license to

pass an examination establishing that the applicant has a fair

knowledge of the obligations of a residential builder or

residential maintenance and alteration contractor to the public and

the applicant's principal, and the statutes relating to the

applicant's licensure.

(3) The department, upon application, may issue a residential

maintenance and alteration contractor's license to an applicant

who, upon examination, qualifies for a license, which shall

authorize the licensee according to the applicant's qualifications,

crafts, and trades to engage in the activities of a residential

maintenance and alteration contractor. A license shall include the

following crafts and trades: carpentry; concrete; swimming pool

installation; waterproofing a basement; excavation; insulation

work; masonry work; painting and decorating; roofing; siding and

gutters; screen or storm sash installation; tile and marble work;

and house wrecking. The license shall specify the particular craft

or trade for which the licensee has qualified. This subsection

shall not prohibit a specialty contractor from taking and executing

a contract involving the use of 2 or more crafts or trades if the

performance of the work in the craft or trade, other than in which

the person is licensed, is incidental and supplemental to the

performance of work in the craft for which the specialty contractor

is licensed.

(4) A residential builder or residential maintenance and

alteration contractor shall maintain a place of business in this

state. If a residential builder or residential maintenance and

alteration contractor maintains more than 1 place of business

within this state, a branch office license shall be issued to the

builder or contractor for each place of business so maintained.

(5) Beginning the license cycle after the effective date of

the amendatory act that added this subsection, the department shall

issue the license of a residential builder and residential

maintenance and alteration contractor for a period of 3 years in

duration.

Sec. 2404b. (1) Beginning the effective date of the amendatory

act that added this section, applicants for initial licensure

either as a residential builder or as a residential maintenance and

alteration contractor shall successfully complete a prelicensure

course of study as prescribed by this subsection. Licensees holding

a residential builder or a residential maintenance and alteration

contractor license on the effective date of the amendatory act that

added this subsection that are renewing a license in the capacity

of an individual or qualifying officer, or both, are exempt from

the requirement of successfully completing prelicensure courses

described in this subsection. The department shall require an

applicant not exempted by this subsection to successfully complete

60 hours of approved prelicensure courses consisting of at least 6

hours of courses in each of the following areas of competency:

(a) Business management, estimating, and job costing.

(b) Design and building science.

(d) Marketing and sales.

(e) Project management and scheduling.

(f) The current Michigan residential code and construction

safety standards promulgated under the Michigan occupational safety

and health act, 1974 PA 154, MCL 408.1001 to 408.1094.

(2) Beginning the calendar year after the effective date of

the amendatory act that added this section, a person initially

licensed under this article as a residential builder or a

residential maintenance and alteration contractor shall

successfully complete not less than 3 hours of continuing education

per calendar year, during the first 6 calendar years of licensure,

and 21 hours per 3-year time period since the issuance of his or

her license. At least 1 hour of courses in codes, safety, and legal

issues shall be successfully completed each calendar year. A

licensee who has held a license for more than 6 years or who has

not been determined by the department in a final order to have

violated this act or a rule adopted under this act shall

successfully complete at least 3 hours of continuing education per

license cycle to include 1 hour of codes, 1 hour of safety, and 1

hour of legal issues.

(3) In the case of an initial licensee on or after the

effective date of the amendatory act that added this subsection who

has not been determined by the department in a final order to have

violated this act or a rule adopted under this act during his or

her first 6 years of licensure, he or she shall successfully

complete at least 3 hours of continuing education per license cycle

to include 1 hour of codes, 1 hour of safety, and 1 hour of legal

issues. In the case of a licensee who has been determined by the

department in a final order to have violated this act or a rule

adopted under this act and who has held a license for more than 6

years, he or she shall successfully complete, during the next

complete license cycle, up to 18 hours of continuing education

during that next license cycle as determined appropriate by the

department, at least 3 hours of that continuing education to

include 1 hour of codes, 1 hour of safety, and 1 hour of legal

issues.

(4) The education courses described in section 3, pages 3-6

through 3-58 of the January 2005 edition of the publication "NAHB

University of Housing, Blueprint for Success", published by the

national association of home builders, are considered approved, are

considered appropriate for fulfilling the prelicensure and

continuing education requirements of subsections (1), (2), and (3),

and are incorporated by reference. The department may approve any

courses it considers to be the equivalent of those courses

incorporated by reference by this subsection. The department shall

approve any updates to the courses described in this subsection or

equivalent courses unless it determines that the courses do not

meet the quality and standards of the courses incorporated by

reference by this subsection. Any construction code update courses

approved by the bureau of construction codes and fire safety and

workplace safety courses approved or sponsored by the department

are also considered appropriate for fulfilling the continuing

education requirements of this subsection. The department may, by

rule, amend, supplement, update, substitute, or determine

equivalency regarding any courses described in this subsection.

(5) The prelicensure and continuing education courses

described in subsection (4) shall be taught and presented by

instructors approved by the department. Except as otherwise

provided by this section or rule of the department, instructors of

prelicensure and continuing education shall meet the standards of

section 4, pages 4-5 through 4-9 of the January 2005 edition of the

publication "NAHB University of Housing, Blueprint for Success",

published by the national association of home builders, and

incorporated by reference. The department may waive the requirement

of membership in a local, state, or national trade association

contained in the standards incorporated by reference in this

subsection. By rule, the department may amend, supplement, update,

substitute, or determine equivalency regarding the standards in

this subsection and shall establish instructor qualifications for

courses not incorporated by reference in subsection (4).

(6) The subject matter of the prelicensure and continuing

education courses may be offered by a high school, intermediate

school district, community college, university, trade association,

or other entity approved by the department as meeting the subject

matter qualifications described in subsection (4) and the

instructional qualifications described in subsection (5). The

department shall accept hours or equivalent credits for any courses

offered by a high school, intermediate school district, community

college, university, trade association, or other entity offering

the prelicensure and continuing education courses that are approved

by the department.

(7) The department shall promulgate rules to provide for the

following:

(a) Prepresentation approval of continuing education courses

offered by a high school, intermediate school district, community

college, university, trade association, or other entity that meet

or exceed the course content of the continuing education courses

described in subsection (4).

(b) Postpresentation approval for courses offered at seminars

and conventions by trade associations, research institutes, risk

management entities, manufacturers, suppliers, governmental

agencies, consulting agencies, or other entities. This subdivision

does not prohibit applications for the prepresentation approval of

courses described in this subdivision.

(8) Each licensee may select approved courses in his her

subject matter area or specialty. Service as a lecturer or

discussion leader in an approved course shall be counted toward the

continuing education requirements of this section.

Sec. 2405. (1) If a license is applied for by a corporation,

partnership, or association, limited liability company, or other

entity, the applicant shall designate 1 of its officers, partners,

members, or managing agent as a qualifying officer who, upon taking

and passing the examination, and upon meeting all other

requirements of this article, ~~shall be~~ is entitled to a license

to act for the corporation, partnership, or association, limited

liability company, or other entity. The qualifying officer shall

also obtain and maintain a license under this article as an

individual. The qualifying officer shall be responsible for

exercising the supervision or control of the building or

construction operations necessary to secure full compliance with

this article and the rules promulgated under this article. A

license shall not be issued to a corporation, partnership, or

association, limited liability company, or other entity unless each

partner, trustee, director, officer, member, and a person

exercising control is at least 18 years of age, and meets the

requirements for a license under this article other than those

relating to knowledge and experience. If an individual licensee is

also a qualifying officer, the individual's name and license number

shall be listed on any license issued to the individual as a

qualifying officer. In the case of a license issued under this

subsection, each officer, 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 license or state personal

identification card to the department for use by the department

only for identification purposes.

(2) The license of a corporation, partnership, association,

limited liability company, or other ~~association~~ entity shall be

suspended when a license or license application of a qualifying

officer, partner, trustee, director, officer, member, or a person

exercising control of the corporation, partnership, association,

limited liability company, or other ~~association~~ entity is

suspended, revoked, or denied. The suspension shall remain in force

until the board determines that the disability created by the

suspension, revocation, or denial has been removed.

(3) A suspension, revocation, or denial of a license of an

individual shall suspend, revoke, or deny any other license held or

applied for by that individual issued under this article. A

suspension, revocation, or denial of a license by the department

~~may~~ shall suspend, revoke, or deny any other license held or

applied for under this article by the qualifying officer of a

corporation, partnership, association, limited liability company,

or other ~~association~~ entity whose license is suspended, revoked,

or denied.

(4) If the qualifying officer of a licensee ceases to be its

qualifying officer, the license is suspended. However, upon

request, the department may permit the license to remain in force

for a reasonable time to permit the qualification of a new

qualifying officer.

Sec. 2411. (1) A complaint filed under this section or article

5, or both, shall be made within 18 months after ~~completion,~~

~~occupancy, or purchase, whichever occurs later, of~~ the latest of

the following regarding a residential structure or a combination of

residential and commercial structure . as follows:

(a) In the case of a maintenance and alteration contract:

(i) Completion.

(ii) Occupancy.

(iii) Purchase.

(b) In the case of a project requiring an occupancy permit:

(i) Issuance of the certificate of occupancy or temporary

certificate of occupancy.

(ii) Closing.

(2) A licensee or applicant who commits 1 or more of the

following shall be subject to the penalties set forth in article 6:

(a) Abandonment without legal excuse of a contract,

construction project, or operation engaged in or undertaken by the

licensee.

(b) Diversion of funds or property received for prosecution or

completion of a specific construction project or operation, or for

a specified purpose in the prosecution or completion of a

construction project or operation, and the funds or property

application or use for any other construction project or operation,

obligation, or purposes.

person's possession which belongs to others.

(d) A willful departure from or disregard of plans or

specifications in a material respect and prejudicial to another,

without consent of the owner or an authorized representative and

without the consent of the person entitled to have the particular

construction project or operation completed in accordance with the

plans and specifications.

(e) A willful violation of the building laws of the state or

of a political subdivision of the state.

(f) In a residential maintenance and alteration contract,

failure to furnish to a lender the purchaser's signed completion

certificate executed upon completion of the work to be performed

under the contract.

(g) If a licensed residential builder or licensed residential

maintenance and alteration contractor, failure to notify the

department within 10 days of a change in the control or direction

of the business of the licensee resulting from a change in the

licensee's partners, directors, officers, or trustees, or a change

in the control or direction of the business of the licensee

resulting from any other occurrence or event.

(h) Failure to deliver to the purchaser the entire agreement

of the parties including finance and any other charge arising out

of or incidental to the agreement when the agreement involves

repair, alteration, or addition to, subtraction from, improvement

of, wrecking of, or demolition of a residential structure or

combination of residential and commercial structure, or building of

a garage, or laying of concrete on residential property, or

manufacture, assembly, construction, sale, or distribution of a

residential or combination residential and commercial structure

which is prefabricated, preassembled, precut, packaged, or shell

housing.

(i) If a salesperson, failure to pay over immediately upon

receipt money received by the salesperson, in connection with a

transaction governed by this article to the residential builder or

residential maintenance and alteration contractor under whom the

salesperson is licensed.

(j) Aiding or abetting an unlicensed person to evade this

article, or knowingly combining or conspiring with, or acting as

agent, partner, or associate for an unlicensed person, or allowing

one's license to be used by an unlicensed person, or acting as or

being an ostensible licensed residential builder or licensed

residential maintenance and alteration contractor for an

undisclosed person who does or shall control or direct, or who may

have the right to control or direct, directly or indirectly, the

operations of a licensee.

(k) Acceptance of a commission, bonus, or other valuable

consideration by a salesperson for the sale of goods or the

performance of service specified in the article from a person other

than the residential builder or residential maintenance and

alteration contractor under whom the person is licensed.

(l) Becoming insolvent, filing a bankruptcy action, becoming

subject to a receivership, assigning for the benefit of creditors,

failing to satisfy judgments or liens, or failing to pay an

obligation as it becomes due in the ordinary course of business.

(m) ~~Poor workmanship or workmanship~~ Workmanship not meeting

the standards of the ~~custom or trade verified by a building code~~

~~enforcement official~~ Michigan residential code as promulgated

under the Stille-DeRossett-Hale single state construction code act,

1972 PA 230, MCL 125.1501 to 125.1531.

(3) The department shall suspend or revoke the license of a

person licensed under this article whose failure to pay a lien

claimant results in a payment being made from the homeowner

construction lien recovery fund pursuant to the construction lien

act, 1980 PA 497, MCL 570.1101 to 570.1305, regardless of whether

the person was performing services as a licensee under this

article; under the electrical administrative act, 1956 PA 217, MCL

338.881 to 338.892; or under ~~1929 PA 266, MCL 338.901 to 338.917~~

the state plumbing act, 2002 PA 733, MCL 338.3511 to 338.3569. The

department shall not renew a license or issue a new license until

the licensee has repaid in full to the fund the amount paid out

plus the costs of litigation and interest at the rate set by

section 6013 of the revised judicature act of 1961, 1961 PA 236,

MCL 600.6013.

(4) The department shall conduct a review upon notice that the

licensee has violated the asbestos abatement contractors licensing

act, 1986 PA 135, MCL 338.3101 to 338.3319. The department may

suspend or revoke that person's license for a knowing violation of

the asbestos abatement contractors licensing act, 1986 PA 135, MCL

338.3101 to 338.3319.

(5) Notwithstanding article 5, the following apply to

administrative proceedings regarding workmanship under subsection

(2)(m):

(a) A complaint submitted by an owner shall describe in

writing to the department the factual basis for the allegation. The

homeowner shall send a copy of the initial complaint to the

licensee concurrent with the submission of the complaint to the

department.

(b) The department shall presume the innocence of the licensee

throughout the proceeding until the administrative law hearing

examiner finds otherwise in a determination of findings of fact and

conclusions of law under article 5. The licensee has the burden of

refuting evidence submitted by a person during the administrative

hearing. The licensee also has the burden of proof regarding the

reason deficiencies were not corrected.

department by a state or local building enforcement official

authorized to do so under the Stille-DeRossett-Hale single state

construction code act, 1972 PA 230, MCL 125.1501 to 125.1531, which

report verifies or confirms the substance of the complaint, the

department shall send by certified mail a copy of the verified

complaint to ~~both the complainant and~~ the licensee. Failure of

the department to send a copy of the verified complaint within 30

days of receipt of the building inspection report prevents the

department from assessing a fine against the licensee under article

6 but does not prevent the department from pursuing restitution,

license suspension, or other remedies provided under this act.

(d) A licensee may contractually provide for an alternative

dispute resolution procedure to resolve complaints filed with the

department. The procedure shall be conducted by a neutral third

party for determining the rights and responsibilities of the

parties and shall be initiated by the licensee, who shall provide

notice of the initiation of the procedure to the complainant by

certified mail not less than 30 days before the commencement of

that procedure. The procedure shall be conducted at a location

mutually agreed to by the parties.

(e) The department shall not initiate a proceeding against a

licensee under this subsection in the case of a licensee who

contractually provides for an alternative dispute resolution

procedure that has not been utilized and completed unless it is

determined that the licensee has not complied with a decision or

order issued as a result of that alternative dispute resolution

procedure, that alternative dispute resolution procedure was not

fully completed within 90 days after the filing of the complaint

with the department, or an alternative dispute resolution procedure

meeting the requirements of subdivision (D) is not available to the

complainant.

(f) The complainant shall demonstrate that notice has been

provided to the licensee describing reasonable times and dates that

the residential structure was accessible for any needed repairs and

proof acceptable to the department that the repairs were not made

within 60 days after the sending of the notice. This subdivision

does not apply where the department determines a necessity to

safeguard the structure or to protect the occupant's health and

safety and, in such case, the department may utilize any remedy

available under section 504(3)(a) through (d).

(g) In the case where the owner and licensee have agreed

contractually on mutually acceptable performance guidelines

relating to workmanship, the department shall consider those

guidelines in its evaluation of a complaint. The guidelines shall

be consistent with the Stille-DeRossett-Hale single state

construction code act, 1972 PA 230, MCL 125.1501 to 125.1531.

(6) In any case where the licensee or respondent fails to

appear, participate, or defend any action, the board shall issue an

order granting by default the relief requested, based upon proofs

submitted to and findings made, by the hearing examiner after a

contested case.

(7) ~~(6)~~ As used in this section, "verified complaint" means

a complaint in which all or a portion of the allegations have been

confirmed by ~~the building inspection report~~ an affidavit of the

state or local building official.

Sec. 2411a. (1) The department shall post on its website any

final order of the board and the date it was issued. The posting

shall occur within 30 days after the final order is issued.

(2) The department shall annually post on its website the

number of final orders of the board.

Enacting section 1. This amendatory act does not take effect

unless all of the following bills of the 93rd Legislature are

enacted into law:

(a) Senate Bill No. 631.

(b) Senate Bill No. 826.