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. 5611

December 19, 1979

RESIDENTIAL BUILDERS LICENSING ACT:

Repairs or alterations to areas of an apartment house leased to a tenant

LANDLORD AND TENANT:

Need for licensure as residential builder to repair or alter area of an apartment house leased to a tenant

The owner of an apartment building may not undertake to perform repairs or alterations of the premises used and occupied by a lessee without obtaining a license pursuant to 1965 PA 383 unless the price for labor and materials for the particular project is less than $200.00.

Mr. Thomas J. O'Toole

City Attorney

City of Muskegon

Muskegon, Michigan 49443

You have requested my opinion as to whether the owner of apartment house may make repairs or alterations to the areas of an apartment house leased to tenants without obtaining a license as a residential builder or residential maintenance and alteration contractor.

Persons engaged in the repair or alteration of residential structures are required to be licensed pursuant to the provisions of the residential builders, maintenance and alteration contractors licensing act, 1965 PA 383, as last amended by 1978 PA 315, MCLA 338.1501 et seq; MSA 18.86(101) et seq, which was enacted to safeguard and protect homeowners and persons undertaking to be homeowners. This act and its predecessor (1) have consistently been held to be home-owner consumer protection measures, Tracer v Buschre, 381 Mich 282, 160 NW2d 898 (1968), Artman v College Heights Mobile Park, Inc, 20 Mich App 193; 173 NW2d 833 (1969).

Basically, the act provides that a person who performs repairs and alterations to residential or a combination of residential and commercial property falls within its compass. 1965 PA 383, supra, Sec. 2(c) defines a 'residential builder' to mean:

'(i) 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 that person's 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 residential and commercial structure.

'(iii) A person who erects a residential structure or combination residential and commercial structure except for that person's own use and occupancy on property of that person. [Emphasis added]

1965 PA 383, supra, Sec. 2(d) defines a 'residential maintenance and alterations contractor' to mean:

'. . . a person who, for a fixed sum, price, fee, percentage, valuable consideration, or other compensation, other than wages for that person's personal labor only, undertakes with another for the repair, alteration, or an addition to, subtraction from, improvement of, movement of, wrecking of or demolition of a residential structure or combination residential and commercial structure, or building of a garage, or laying of concrete on residential property; or who engages in purchase, substantial rehabilitation or improvement, an resale of residential structures, engaging in all the foregoing on the same structure more than twice in 1 calendar year, except (i) for that person's own use or occupancy, (ii) the rehabilitation or improvement work as 'to 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, . . ..' [Emphasis added]

In addition, 1965 PA 383, supra, Sec. 3(b) states that the act shall not apply to '[o]wners of property, with reference to structures thereon for their own use and occupancy.' [Emphasis added]. This exemption from licensing requirements was interpreted in Green v Ingersoll, 89 Mich App 228, 235; ---- NW2d ---- (1979) as follows:

'. . . it is clear that the Legislature intended to exempt only those builders who actually build residential structures on their own property for the purpose of personally using and occupying the structures.' (emphasis in original)

It is therefore clear that, while unlicensed persons may make repairs on residential structures which are used and occupied by them, they may not, make repairs on residential structures which are used and occupied by another. (2) To respond to your question, therefore, it must be determined, first, whether a landlord has the use and occupancy of the premises leased to the tenant and, second, whether a landlord receives compensation for performing repairs or alterations to the premises.

With respect to the use and occupancy of the premises by the landlord, in Royal Oak Wholesale Company v Ford, 1 Mich App 463, 466; 136 NW2d 765 (1965), the Court stated:

'. . . In Minnis v Newbro-Gallogly Co (1913), 174 Mich 635 at 639, the Supreme Court said:

"A lease is a conveyance by the owner of an estate to another of a portion of his interest for a term less than his own, for a valuable consideration, granting thereby to the lessee the possession, use, and enjoyment of the portion conveyed during the period stipulated.'

'In Grinnell Bros. v Asiuliewicz (1927), 241 Mich 186 at 188, the Supreme Court said:

"There goes with every rental of premises the right of beneficial enjoyment by the tenant for the purpose for which the premises are rented, at least to the extent disclosed to the lessor at the making of the lease. Such enjoyment the landlord may not destroy or seriously interfere with in use by himself or permitted use by others of any part of the premises occupied in conjunction therewith."

It may also be noted that the Michigan appellate courts have applied the act to residential structures other than single-family homes. Thus, in Alexander v Neal, 364 Mich 485; 110 NW2d 797 (1963) (3), the act was extended to apartments; in Artman v College Heights Mobile Park, Inc., 20 Mich App 193; 173 NW2d 833 (1969), to mobile homes; and in Charles Featherly Construction Co. v Property Development Group, Inc., 400 Mich 198; 253 NW2d 643 (1977) to condominiums.

In Charles Featherly Construction Co, supra, the court state at 400 Mich at 203-205:

'. . . Featherly argues that the introductory phrase in Sec. 1, '[i]n order to 'safeguard and protect home owners and persons undertaking to become home owners,' supports such an exception. We are asked to read the term 'home owner' as meaning individual homeowner, and then use this new term as the basis for an implied exception to Sec. 16.

'Today, one cannot seriously argue that the ultimate purchaser of a condominium is not a homeowner. The high and rising cost of separate single family dwellings and the unavailability of reasonable maintenance services for their upkeep have led progressively more people to buy condominiums as their homes. As homeowners, they need the act's protection as much as or more than the owner of separate dwelling structure. However, the ultimate purchasers of condominium units have little or no contact with builders like the plaintiff and as a result are not in a position to protect themselves.

'Plaintiff would have us rule that only the ultimate purchaser may avoid legal action pursuant to Sec. 16's prohibition. The act, however, addresses itself to the protection of various kinds of homeowners, including business entities which are ordinarily the only ones financially able to develop multi-unit residential projects and the only ones in a position to insure compliance with the act.

'We believe the Legislature intended owners of entire residential developments, like the defendants, to be protected by the act.'

In practice, a landlord of an apartment house is responsible for maintenance and repairs and, in fact, 1968 PA 295, Sec. 1, MCLA, 554.139(1); MSA 26.1109(1), states:

'In every lease or license of residential premises, the lessor or licensor covenants:

'(b) To keep the premises in reasonable repair during the term of the lease or license, and to comply with the applicable health and safety laws of the state and of the local units of government where the 'premises are located, except when the disrepair or violation of the applicable health or safety laws has been caused by the tenants wilful or irresponsible conduct or lack of conduct.'

As previously noted, in deciding whether the landlord of an apartment house may perform repairs to areas occupied by tenants or must have a licensed contractor perform them, it is also necessary to consider the requirements of 1965 PA 383, supra, Secs. 2(c), 2(d) that there be 'valuable consideration, or other compensation' received by the contractor for performing his work.

Since the landlord receives rent from the tenant which includes the cost of maintenance and repairs, a portion of the rental must be deemed to be compensation to the landlord for having repairs performed on the premises. Thus, that portion of the rent which the landlord has added for maintenance and repairs is 'valuable consideration, or other compensation' received by the landlord as payment for repairs undertaken.

It is, therefore, my opinion that, inasmuch as the tenant, and not the landlord, has 'use and occupancy' of the areas of an apartment leased to a tenant and inasmuch as the landlord receives valuable consideration for performing maintenance and repairs of the premises used and occupied by the tenant, an owner of an apartment building may not undertake to perform repairs or alterations of the premises used and occupied by a lessee without obtaining a license pursuant to 1965 PA 383, supra, unless the price for labor and materials for the particular project is less than $200.00.

Frank J. Kelley

Attorney General

(1) 1953 PA 208; MCLA 338.971 et seq; MSA 18.86(1) et seq was repealed by 1965 PA 383, supra, Sec. 19.

(2) 1965 PA 383, supra, Sec. 3(e) also exempts from the licensure requirement work performed by a person for another where the aggregate contract price for labor and materials is less than $200.00; thus a person need not be licensed to perform minor repairs such as fixing a light switch, changing a faucet or installing a doorknob.

(3) Although Alexander involved 1953 PA 208 which was replaced by 1965 PA 383, supra, Sec. 19, the definitions of 'residential builder' and 'residential maintenance and alteration contractor' therein was substantially the same as that of 1965 PA 383, supra, Sec. 2(c), (d). See Featherly Construction Co v Property Development Group, Inc, 400 Mich at 205-206, supra.