The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us) STATE OF MICHIGAN FRANK J. KELLEY, ATTORNEY GENERAL Opinion No. 5198 June 7, 1977 RESIDENTIAL BUILDERS AND MAINTENANCE AND ALTERATION CONTRACTORS COMMISSION: Authority to discipline licensed contractors. The residential Builders and Maintenance and Alteration Contractors Commission is not authorized to investigate complaints and initiate disciplinary action against licensees who perform work or acts in connection with commercial structures containing no residential units. William S. Ballenger, III Director Department of Licensing and Regulation Lansing, Michigan 48909 Your predecessor, Beverly J. Clark, requested my opinion regarding the authority of the Residential Builders and Maintenance and Alteration Contractors Commission to receive, investigate and initiate disciplinary action against licensees under 1965 PA 383, as amended, MCLA 338.1501 et seq; MSA 18.86(101) et seq, for failure to complete the performance of a contract to construct a commercial project. 1965 PA 383, Sec. 9(1)(a), supra, empowers the Commission to investigate and initiate disciplinary action against a licensee for abandonment without legal excuse of a construction project for 'a residential or a combination of residential and commercial building. . . .' 1965 PA 383, supra, requires licensure for any person who engages in the business of or acts in the capacity of a residential builder or a residential maintenance and alteration contractor and/or salesman, unless such person is particularly exempted. A residential builder is defined in Section 2(b) of the Act as follows: 'Sec. 2. (b) 'Residential builder' means a person engaged in the construction of residential structures or a combination of residential and commercial structures who, for a fixed sum, price, fee, percentage, valuable consideration, or other compensation, other than wages for his own personal labor only, undertakes with another or offers to undertake or purports to have the capacity to undertake with another for the erection, construction, replacement, repair, alteration, or an addition to, subtraction from, improvement, movement of, wrecking of, or demolition of, a residential structure or combination of residential and commercial structure, or a person who manufactures, assembles, constructs, deals in, or distributes residential or combination residential and commercial structures which are prefabricated, preassembled, precut, packaged, or shell housing, or a person who erects a residential structure or combination of residential and commercial structure except for his own use and occupancy on his own property.' A residential maintenance and alteration contractor is defined in Section 2(c) of the Act as follows: 'Sec. 2. (c) 'Residential maintenance and alteration contractor's means a person who, for a fixed sum, price, fee, percentage, valuable consideration, or other compensation, other than wages for his own personal labor only, undertakes with another for the repair, alteration, or an addition to, subtraction from, improvement of, movement of, wrecking or, 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 who engages in (1) purchase, (2) substantial rehabilitation or improvement, and (3) resale of residential structures, engaging in all the foregoing on the same structures more than twice in any one calendar year, except (a) for his own use or occupancy, or (b) the rehabilitation or improvement work as to any such residential type property and structures as may be contracted for, with or hired entirely to be done and performed for the owner by a licensed residential builder or licensed residential maintenance and alteration contractor as provided in this act or (c) work performed by a licensed construction tradesman employed by the owner to perform work for which the tradesman is licensed by the state. Licensure as a residential builder shall qualify any person within the terms of this subsection. The provisions of this act shall not be construed to prevent a duly licensed residential maintenance and alteration contractor from constructing an addition to an existing residential structure, or other structure accessory to an existing residential structure.' By 1974 PA 250 the Act was amended to include a definition for residential structure which is found in Section 2(f) as follows: 'Sec. 2. (f) 'Residential structure' includes, but is not limited to, premises used or intended to be used for residence purposes and related facilities appurtenant thereto, used or intended to be used, as an adjunct of residential occupancy.' Commercial contractors have never been licensed in Michigan. On the other hand, residential contractors have been subject to state licensure beginning in 1940 in cities of 250,000 population or more. Excluding amendments, residential builders statutes have been enacted on three separate occasions. 1939 PA 311 was the initial act which was substantially revised by the 1953 PA 208, which in turn was replaced by the present version in 1965 PA 383. The immediate predecessor residential contractors law, 1953 PA 208, which similarly defined residential builders and residential maintenance and alteration contractors, gave rise to two Michigan Supreme Court cases wherein the dichotomy between commercial and residential contractor was at issue. In Alexander v Neal, 364 Mich 485; 110 NW2d 797 (1961), plaintiff contractor sued for the cost of a new roof he built on defendants combined commercial-apartment building. Plaintiff's suit was barred by the trial court because of his failure to secure the required license under 1953 PA 208. However, plaintiff claimed error arguing defendant's building was not a home within protection of the Act. The Supreme Court held that a combination residential and commercial structure was within the purview of the statute. Later, in a direct constitutional challenge to 1953 PA 208, based in part upon an equal protection argument because the Act did not license and regulate builders of commercial buildings, the Supreme Court in Tracer v Bushre, 381 Mich 282; 160 NW2d 898 (1968) upheld the limitation of 1953 PA 208 to residential contractors by finding that the legislature had made a reasonable classification because of the greater potential for damage to the public in residential construction. The Court of Appeals has examined the question whether a particular mode of activity falls within the Act's definition of residential builder or maintenance and alteration contractor under 1965 PA 383, supra, in two cases. While not directly addressing the issue of commercial versus residential work, these decisions do emphasize what the Court of Appeals considered to be the salient prerequisite residential nature of construction which falls within the ambit of the Act. In Artman v College Heights Mobile Park, Inc., 20 Mich App 193, 199; 173 NW2d 833, 836 (1969) the Court held that an asphalt paving contractor working on a trailer coach park site required licensure. The Court stated that 'the important criterion for coverage by the statute is not the existence or type of structure, but rather the nature of its occupancy'. In a second trailer park case, King Arthur's Court v Badgley, 47 Mich App 222; 209 NW2d 488 (1973) the Court extended the Artman doctrine and held that an owner, operator and developer of a trailer park must also be licensed under the Act. Under the language of 1965 PA 383, supra, and the controlling decisions of the Michigan courts, it is my opinion that the Residential Builders and Maintenance and Alteration Contractors Commission may receive and investigate complaints and initiate disciplinary licensure action against any licensee who has engaged in any work or act subject to licensure upon a residential structure or combination residential and commercial structure. But, the Residential Builders and Maintenance and Alteration Contractors Commission is prohibited from taking any action against licensees who perform work or acts in connection with structures whose purposes are solely commercial in nature. Frank J. Kelley Attorney General