DEPARTMENT OF LABOR AND ECONOMIC GROWTH

                           DIRECTOR'S OFFICE

     RESIDENTIAL BUILDERS AND MAINTENANCE AND ALTERATION CONTRACTORS

(By authority conferred on the  director  of  the  department  of  labor  and 
economic growth by section 308 of 1980 Act 299, MCL  339.308,  and  Executive 
Reorganization Orders No. 1996-2, MCL 445.2001 and 2003-1, MCL 445.2011)


                              PART 1. GENERAL


R 338.1511   Definitions.
  Rule 11. As used in these rules:
  (1) "Act" means 1980 PA 299, MCL 339.101, known as the occupational code.
  (b) "Board" means the  state  residential  builders  and  maintenance   and 
alteration contractors board.
  (c) "Builder" means a residential builder as defined by the act.
  (d) "Contractor" means a residential maintenance and alteration  contractor 
as defined by the act.
  (e) "Department" means the department of labor and economic growth.
  (f) "Director" means the director of labor and economic growth.

  History:  1979 AC; 2006 AACS.


R 338.1512   Rescinded.

  History:  1979 AC; 1998-2000 AACS.


R 338.1519   Rescission.
  Rule 19. R 451.501 to R 451.538 of  the   Michigan   Administrative   Code, 
appearing on pages 4594 to 4597 of the 1979  Michigan  Administrative   Code, 
are rescinded.

  History:  1990 AACS.


                       PART 2.  LICENSES AND BONDS


R 338.1521   Applications for licenses
  Rule 21. (1) An application for a  license  shall  include  the   residence 
address of all individuals, partners, officers and/or members,  as  requested 
by the department, and the address of the  principal  place  of  business  in 
Michigan.  A nonresident applicant for licensure shall maintain  a  place  of 
business in Michigan, and the application shall include the  address  of  the 
Michigan place of business and the address of the applicant's principal place 
of business outside of  Michigan.   A  nonresident  applicant  shall  file  a 
consent to service with the application. A foreign corporation or  a  foreign 
limited liability company  shall  submit  evidence  of  qualification  to  do 
business in Michigan.
  (2) Applicants shall furnish documentation as determined acceptable by  the 
department to verify the applicant's current business  structure.   Documents 
include, but are not limited to, the following:
  (a) For an application for an individual license using an assumed name,   a 
copy of the current filed assumed name certificate issued by the county clerk.
  (b) For an application for a partnership license, a copy  of  the   current 
filed certificate of co-partnership issued by the county clerk.
  (c) For an application for a limited liability company, a  filed  copy   of 
the  filed  articles  of  organization,  certificate  of  assumed  name,   if 
applicable, and current certificate of good standing.
  (d) For an application for a corporation  license  a  filed  copy  of   the 
articles of incorporation, certificate of assumed name,  if  applicable,  and 
current certificate of good standing.
  (e) Any other documentation requested by the department to  determine   the 
applicant's business structure and current authorization to  do  business  in 
Michigan.
  (3) A foreign company shall submit evidence of  current  authority  to   do 
business in Michigan.
  (4) If an applicant is a Michigan  corporation,  but  is  a  wholly   owned 
subsidiary of a foreign corporation not admitted to do business in  Michigan, 
then the parent company shall file an affidavit of  assumption  of  liability 
and a consent to jurisdiction. The director shall  be  the  proper  party  to 
receive service of process and  shall  immediately  forward  a  copy  of  the 
process to the corporation's last known address.
  (5) At the request of the department, an applicant shall submit  a   credit 
report furnished by a credit reporting service which  is  acceptable  to  the 
department.  The applicant may be required to  direct  the  credit  reporting 
service to send the credit report directly to  the  department,  which  shall 
determine the adequacy or sufficiency of the report.
  (6) At the request of the department or board, an applicant  shall   submit 
within 60 days of a written request, either of the following:
  (a) A cash or surety bond acceptable to the department.
  (b) A financial statement showing the current financial condition  of   the 
applicant, for a  builder's  or  contractor's  license,  in  accordance  with 
established accounting practices which shall be completed in detail, properly 
signed, and submitted.
  (7) If an  applicant  fails  to  complete  all  application   requirements, 
including  information  requested  by  the  department,  and   any   required 
examination, within 1 year from date  of  first  making  application  to  the 
department, then the application shall be void and the application processing 
fee shall be forfeited.
  (8) A contractor who desires to add additional trade or  trades  to   those 
indicated on the contractor's license shall do all of the following:
  (a) Pass an examination for the additional trade or trades.
  (b) Submit an application form to add the trade or trades to the   existing 
license.
  (c) Furnish a current credit report upon request by the department.
  (d) Upon receipt of the new license, the licensee  shall  return  the   old 
identification card and wall license.
  (9) A passing score on an examination, or on a portion of  an   examination 
if the examination is given in separate parts, shall be valid for 1 year from 
the date the examination or portion of the examination was passed.

  History:  1954 ACS 49, Eff. Feb. 14, 1967; 1979 AC; 2006 AACS.


R 338.1521a  Requirements for examination.
  Rule 21a.  As a condition for approval to take the residential  builder  or 
maintenance and alteration contractor examination, applicants  for  licensure 
shall meet all other licensing requirements, including successful  completion 
of the prelicensure education requirements.

  History: 2008 AACS.

R  338.1522  Rescinded.

  History:  1979 AC; 1990 AACS.


R  338.1523  Rescinded.

  History:  1979 AC; 1990 AACS.


R  338.1523a   Rescinded.

  History:  1979 AC; 1998-2000 AACS.


R 338.1524   Licenses; issuance or denial.
  Rule  24.  (1)  The  department  shall  issue  a  license   including    an 
identification  card  after  an  applicant  has  successfully  completed  all 
requirements
  (2) The physical office location shall be printed on the license.
  (3) The department may deny an application for  a  license  for  good   and 
sufficient cause. The notice of denial shall advise the applicant of  reasons 
for denial and of his or her right to submit a petition  for  review  of  the 
denial.

  History:  1979 AC; 2006 AACS.


R 338.1525   Salesperson's   license;   identification   card;     discharge; 
termination or transfer of salesperson; temporary license for salesperson  or 
salesperson license applicant.
  Rule 25. (1) A salesperson shall be licensed  under  a  person  holding   a 
license as a builder or contractor, but shall not be licensed under more than 
1 builder or contractor during the same period of time.
  (2) An application for a salesperson license shall  be  submitted  by   the 
employing builder or contractor.  An applicant for a salesperson license  who 
is currently licensed as a residential builder or maintenance and  alteration 
contractor, or has been licensed as a residential builder or maintenance  and 
alteration contractor within the past 3 years, shall not be required to  take 
the salesperson examination.
  (3)  Upon  approval,  the  department  shall  issue  a  license   and    an 
identification  card  containing  the  name  and  business  address  of   the 
salesperson. The card shall be carried by the salesperson and shall be  shown 
as identification to every prospective  customer.  A  salesperson  shall  not 
commence work until the builder or contractor under whom the  salesperson  is 
licensed receives the salesperson's license and identification card from  the 
department.
  (4) When a salesperson licensed under this act is discharged or   otherwise 
terminates employment with the builder or contractor under whom he or she  is 
licensed, the builder or contractor shall return the  salesperson's  license, 
and the salesperson shall return the identification card  to  the  department 
within 5 days from the date of discharge or termination.
  (5) When a licensed salesperson transfers employment from the  builder   or 
contractor under which he or she is presently licensed to a new employer, the 
new employer shall submit to the department an application  for  transfer  of 
the salesperson's license to the new employer.

  History:  1979 AC; 2006 AACS.


R 338.1526   Termination of licenses.
  Rule 26. (1) If a bond is cancelled, a license predicated upon such a  bond 
shall be suspended effective upon the date of cancellation, if  the  licensee 
has not replaced the surety or cash bond.
  (2) Upon final order of license suspension  or  revocation,  the   licensee 
shall surrender the license to the department within 10 days of the  date  of 
suspension or revocation. If the  license  of  a  builder  or  contractor  is 
suspended or revoked, the licenses of salespersons issued under  the  license 
of that builder or contractor shall lapse, and licenses shall be  surrendered 
at the same time. Any salesperson may have his or her license transferred  to 
another licensed builder or contractor before  the  expiration  date  of  the 
salesperson's license.
  (3) If the qualifying officer of a corporation, association,   partnership, 
limited liability company or organization consisting of more than 1 person is 
a party to events that led to suspension or revocation, any license issued to 
any other organization where the individual is the qualifying  officer  shall 
be suspended or revoked and any license issued to the qualifying  officer  in 
an individual capacity shall be suspended or revoked.
  (4) A qualifying officer of a  company  shall  notify  the  department   in 
writing within 10 days of ceasing to be the  qualifying  officer,  and  shall 
return the wall license and pocket card of the company.
  (5) When a qualifying officer ceases to act as the qualifying officer,  and 
the company intends to continue to operate,  the  remaining  officer,  owner, 
member or partner of the company  shall  submit  a  written  request  to  the 
department to allow the company time to obtain a new qualifying officer.

  History:  1979 AC; 2006 AACS.

                      PART 3. OPERATIONS OF LICENSEES


R 338.1531   Place of business.
  Rule 31. (1) A builder or contractor shall maintain a place of business  in 
this state, which is an actual, established physical location from which  the 
builder or contractor  conducts  business  and  where  applicable  books  and 
records are maintained. A  post  office  box,  secretarial  service,  mailbox 
rental, receiving service, resident agent  address,  or  telephone  answering 
service alone is not sufficient.
  (2) A builder or contractor shall display the license and the licenses   of 
all salespersons in a conspicuous position in the builder's  or  contractor's 
place of business.

  History:  1979 AC; 2006 AACS.


R 338.1532   Advertising.
  Rule 32. (1) Advertising shall not misrepresent material facts.
  (2) A licensee  shall  include  the  name,  license  number,   and   actual 
business address, as shown on the license, in all advertising. The use  of  a 
telephone or post office box number alone is prohibited. When  sales  of  new 
homes are being made by a licensed builder, through a  licensed  real  estate 
broker, advertisements may indicate the broker's name or both  the  names  of 
the builder and broker.
  (3) A licensee shall not solicit any contract for home improvements  by   a 
promise to the purchaser or the prospective purchaser of a bonus, whether  of 
merchandise or cash, which is contingent upon the purchaser's or  prospective 
purchaser's using or displaying a dwelling to a  third  person  or  upon  the 
licensee's obtaining an order or orders for merchandise  or  service  from  a 
third person.
  (4) A licensee making or attempting to  make  sales  through  the  use   of 
displays, models or model installations, shall accurately portray  the  goods 
and services being offered so as to not mislead or deceive the public.

  History:  1979 AC; 2006 AACS.


R 338.1533   Purchase and sales agreements.
  Rule 33. (1) All agreements  and  changes  to  the  agreements  between   a 
builder, or contractor, and the customer shall be in writing  and  signed  by 
the parties.  Copies of all agreements and changes to agreements shall be  in 
writing, and provided to the customer.
  (2) The  builder  or  contractor  shall  make  certain  that  the   written 
agreements  clearly  state  the   terms   of   the   transaction,   including 
specifications,  and  when  construction  is   involved,   both   plans   and 
specifications, including cost, the type and amount of work to be  done,  and 
the type and quality of materials to be used.
  (3) If a purchase or sales agreement is  for  a  new  structure  which   is 
either substantially completed or in substantial conformance  with  a  model, 
plans  and  specifications  need  not  be  furnished  if  the  structure   is 
specifically identified or related to the model and any changes, additions to 
or subtractions from the model  are  specifically  agreed  to  and  noted  in 
writing.

  History:  1979 AC; 2006 AACS.


R 338.1534   Books and records.
  Rule 34. A builder or contractor  shall  keep  and  maintain  a   complete, 
accurate set of books and  records  which  disclose  the  licensee's  current 
financial condition. The books and records shall be open to inspection by the 
department or any person duly authorized by it for good and sufficient  cause 
during regular business hours after reasonable notice and for stated reasons.

  History:  1979 AC; 2006 AACS.


R 338.1535   Financial statements.
  Rule 35. Upon notice by the department, a licensee shall submit within   30 
days sworn financial  statement  showing  the  licensee's  current  financial 
status. The notice for a financial statement may be based upon an unsatisfied 
judgment, a lien filed against the licensee or  the  department's  reasonable 
belief that the licensee does  not  have  the  financial  resources  to  meet 
contractual obligations.  The department's notice shall be in writing and may 
be served personally on the  licensee  or  by  certified  mail  sent  to  the 
licensee's last known business address on file with the department. A request 
for an extension of time shall be in writing and may be granted for good  and 
sufficient cause.

  History:  1979 AC; 2006 AACS.


R 338.1536   Brokerage.
  Rule 36. Acceptance or performance of a contract procured by a  salesperson 
not licensed under a builder or contractor, or acceptance or performance of a 
contract, other than the sale  of  real  property,  procured  by  anyone  not 
licensed under the act, is prohibited.

  History:  1979 AC; 2006 AACS.


                      PART 5. COMPLAINTS AND HEARINGS


R 338.1551   Complaints; filing.
  Rule 51. (1) A complaint shall be submitted in a  form  specified  by   the 
department.
  (2) Upon receipt of a valid and written complaint,  the  department   shall 
assign a complaint number, acknowledge the complaint and forward  a  copy  of 
the complaint to the licensee. The licensee shall  reply  to  the  department 
within 15 days from receipt of the complaint and shall confirm  or  deny  the 
justification of the complaint. A complaint acknowledged as  justified  shall 
be corrected within a reasonable time. If a complaint or  a  portion  of  the 
complaint is not acknowledged by the licensee as being  justified,  then  the 
department shall notify the complainant of the area of disagreement.
  (3) If the complaint or the information submitted by the complaining  party 
is incomplete or disputed by the licensee, the  department  may  require  the 
complaining  party  to  furnish  additional  information.  The  report  shall 
indicate what steps, if any, have been taken by the complaining party  before 
any other governmental agency or any other  pertinent  information  regarding 
the subject matter of the complaint. Before the department takes any  further 
action it shall obtain a report from local building officials or proper local 
authorities, and if the department cannot obtain  a  report  from  the  local 
building official or proper local authorities, then a  person  authorized  by 
the department shall make an inspection to  determine  if  the  complaint  is 
justified.
  (4) If a complaint is justified by the local building inspector  or  by   a 
person authorized by the department  to  make  inspections,  the  builder  or 
contractor shall correct the complaint within a reasonable time.  Failure  or 
refusal by the licensee to correct a structural  matter  that  is  materially 
deficient, dangerous, or hazardous to the owners  shall  be  presumed  to  be 
dishonest or unfair dealing.
  (5) Standards of construction  shall  be  in  accordance  with  the   local 
building code, or in the absence of a code in accordance  with  the  building 
code of the nearest political subdivision having a building code.

  History:  1979 AC; 2006 AACS.


R 338.1552   Investigative conferences.
  Rule 52. The department, after investigation, may request  a  licensee   to 
appear at such investigative  conference  as  is   necessary   to   determine 
whether there is cause for complaint which would require a  hearing  on,   or 
dismissal of, the complaint. Notice of a request for a conference shall be in 
writing and mailed to the address appearing on  the  license  not  less  than 
10 days before the conference and  shall  set  the  time  and  place  of  the 
conference. The notice shall be recorded  in  the  file  at   the   time   of 
mailing. Persons  interested  shall  have  the  right  to   appear   and   be 
represented by counsel. Failure by an individual   licensee   or   qualifying 
officer of a licensee to appear for the conference  may  be   a   basis   for 
suspension, revocation or denial of a license. The department  may  grant  an 
adjournment if requested by any party to the complaint if  the   request   is 
made at least 5 days prior to the date assigned for the conference.

  History:  1979 AC.


R 338.1553   Disposition of complaints; resolution or settlement.
  Rule 53. (1)  A  complaint  may  be  resolved  or  settled   prior   to   a 
conference and the complaint  may  be  closed  by  the   department.   If   a 
complaint is resolved or settled by agreement, the  licensee   shall   notify 
the department in writing thereof. The department shall   then   notify   the 
complainant that it has received information that the  complaint   has   been 
resolved or settled. If the complainant takes issue   with   the   licensee's 
contention  the  department  may  investigate    further.    Resolution    or 
settlement of a complaint shall not  be  construed  as  a   waiver   by   the 
department of its statutory right to take disciplinary action.
  (2) The department may dismiss a complaint  on  its  own   motion   if   it 
determines that the complaint  has  been  resolved,   settled,   is   without 
merit, or that there is insufficient evidence of a violation of  the  act.
  (3) If the department, after investigation of a complaint,  has  reason  to 
believe that a licensee is in violation of the statute or   the   rules,   it 
may recommend to the director that a hearing be held to show  cause  why  the 
license should not be suspended or revoked.

  History:  1979 AC.


R 338.1554   Rescinded.

  History:  1979 AC; 1990 AACS.


R 338.1555   Preservation of contract rights.
  Rule 55.  The affirmative defense for failure to utilize  a   contractually 
provided alternative dispute resolution procedure authorized in 2001 PA  113, 
MCL 339.2412(2) shall only be available in actions brought under  a  contract 
entered into and executed after July 31, 2001. 

  History: 2002 AACS. 


                              PART 6.  EDUCATION


R 338.1560  Instructor qualifications.
  Rule 60.  An instructor of prelicensure or  continuing  competency  courses 
shall possess either of the following qualifications:
  (a) Be qualified pursuant to the requirements of MCL 339.2404b(4).
  (b) Be qualified by  experience,  education,  or  both,  to  supervise  and 
instruct a prelicensure or continuing competency course required pursuant  to 
MCL 339.2404b, including at least 1 of the following:
  (i) Properly licensed, certified or approved instructor at a  high  school, 
intermediate school district, community college, university,  the  bureau  of 
construction   codes,   the   Michigan   occupational   safety   and   health 
administration, other government agency, or a proprietary school licensed  by 
the department.
  (ii) Currently  licensed  as  a  residential  builder  or  maintenance  and 
alteration contractor with at least 3 years  of  experience  in  the  subject 
matter being taught.  
  (iii)  Possess equivalent qualifications approved by the department.

  History: 2008 AACS.


R 338.1562 School, institution, sponsor or instructor responsibilities.
  Rule 62. (1) The school, institution, sponsor, or instructor, as determined 
appropriate by the department, shall do all of the following:
  (a) Submit to the department the qualifications of each  instructor  to  be 
used in an approved course not fewer than 60 days before  the  instructor  is 
scheduled to begin instruction.  The department may waive  this  deadline  at 
its discretion.
  (b) Report student course completion to the department in a form and manner 
as prescribed by the department.  
  (c) Retain all course attendance records for a period of 5 years.
  (2) Instructors shall be responsible for all of the following:
  (a) Compliance with  all  laws  and  rules  relating  to  prelicensure  and 
continuing competency courses pursuant to the act.
  (b) Providing students with current and accurate information.
  (c) Maintaining an environment conducive to learning.
  (d) Assuring and certifying attendance of students enrolled in courses.
  (e) Providing assistance to students and responding to  questions  relating 
to course materials.

  History: 2008 AACS.