1.4 Company Licenses, Qualifying Officers, Salespersons & Reporting Changes
Key Takeaways
An entity must designate an officer, partner, member, or managing agent as its qualifying officer, and that person must pass the exam and hold an individual license.
If the qualifying officer leaves, the entity's license is suspended unless LARA, on request, allows a reasonable time to qualify a replacement.
A qualifying officer must notify LARA in writing within 10 days of ceasing to serve and return the company's wall license and pocket card.
A licensee must report a change of name, address, or members within 30 days, and must report a change in business control within 10 days.
A salesperson may be licensed under only one builder or contractor at a time, and the employer submits the salesperson's application.
Licensing a Business Entity
A company cannot sit for an exam. Under MCL 339.2405(1), when a corporation, partnership, association, LLC, or other entity applies, it designates one of its officers, partners, or members, or its managing agent as the qualifying officer. The qualifying officer:
- takes and passes the exam and meets all other requirements;
- must also obtain and maintain a license as an individual;
- is responsible for exercising the supervision or control of the building or construction operations needed to secure full compliance with Article 24 and its rules.
LARA will not license the entity unless each partner, trustee, director, officer, or member, and each person who controls the entity, is at least 18 and meets all licensing requirements other than knowledge and experience. A licensee on inactive status cannot serve as a qualifying officer.
MCL 339.2404a requires the licensee to include in each contract information about its individual license and any license it holds as a qualifying officer of another entity. The customer should be able to see exactly who is accountable.
When Licenses Rise and Fall Together
Article 24 links the company's license to the licenses of the people behind it:
- If the license or application of a qualifying officer, partner, officer, member, or controlling person is suspended, revoked, or denied, the entity's license is suspended until the board determines the problem is removed (MCL 339.2405(2)).
- If an individual's license is suspended, revoked, or denied, every other Article 24 license issued to or applied for by that individual meets the same fate. If the entity's license is suspended or revoked, the qualifying officer's other licenses are too (MCL 339.2405(3)).
- R 338.1526(3) applies the same result when the qualifying officer was a party to the events behind a suspension or revocation.
When the Qualifying Officer Leaves
Under MCL 339.2405(4), if the qualifying officer ceases to serve, the license is suspended. However, on request, the department may let the license remain in force for a reasonable time so the company can qualify a new officer. R 338.1526 sets out the procedure:
- The departing qualifying officer notifies LARA in writing within 10 days and returns the company's wall license and pocket card.
- A remaining officer, owner, member, or partner submits a written request for time to obtain a new qualifying officer.
A company that keeps signing contracts after its qualifying officer quits, without making this request, is operating on a suspended license. The legal consequences are the same as for unlicensed practice.
Other Company Obligations
| Obligation | Rule |
|---|---|
| Place of business | Must maintain a place of business in Michigan, with a branch office license for each additional location (MCL 339.2404(4)) |
| Change of name, address, or members | Report to LARA within 30 days (MCL 339.2409) |
| Change in control or direction of the business | Notify LARA within 10 days of changes in partners, directors, officers, or trustees (MCL 339.2411(2)(g)) |
| Surrender after discipline | Surrender the license within 10 days of a final suspension or revocation order (R 338.1526(2)) |
| Nonresident applicant | File a notarized irrevocable consent to service of process. A foreign corporation must be authorized to do business in Michigan (MCL 339.2406) |
The Salesperson License
A salesperson is an employee or agent, other than a qualifying officer, who for pay sells, negotiates, or solicits contracts for a residential builder's or M&A contractor's goods and services (MCL 339.2401(d)). LARA's salesperson guidance includes commissioned canvassers, a licensed builder who refers a customer to another builder for a referral fee, home-center staff who sell and contract for installation, and people working in model homes. Someone who makes only occasional sales incidental to other work is not a salesperson.
The salesperson rules include:
- A salesperson is licensed in the employ of only one builder or contractor at a time (MCL 339.2407; R 338.1525).
- The employer submits the application (MCL 339.2407(2)).
- LARA issues a license and an identification card. The salesperson carries the card and shows it to every prospective customer. The salesperson may not start work until the employer receives the license and card (R 338.1525(3)).
- When a salesperson leaves, the employer returns the license and the salesperson returns the card to LARA within 5 days. A new employer applies for a transfer (R 338.1525(4)–(5)).
- A person who is licensed, or was licensed within the past 3 years, as a builder or M&A contractor can be licensed as a salesperson without taking the salesperson exam.
- The PSI salesperson exam has 45 questions, requires 32 correct, and allows 90 minutes. The fee is $85, and candidates do not need prelicensure education or prior state approval to test.
Salesperson misconduct is also grounds for discipline. Violations include failing to pay over money received to the employer immediately, and accepting a commission or bonus from anyone other than the employing licensee (MCL 339.2411(2)(i) and (k)). R 338.1536 prohibits a licensee from accepting or performing a contract procured by a salesperson who is not licensed under a builder or contractor.
Exam Traps
- "Qualifying agent" is not the Michigan term. The statute says qualifying officer.
- The suspension after a qualifying officer leaves is not permanent. LARA may allow a reasonable time on written request.
- A canvasser who knocks on doors and signs roofing contracts needs a salesperson license, even if paid only by commission.
The sole qualifying officer of an LLC with an M&A roofing license resigns. What should happen next under MCL 339.2405(4) and R 338.1526?
Nothing, because the LLC license continues until the next renewal
The departing officer notifies LARA in writing within 10 days, and the company may request in writing a reasonable time to qualify a new officer
The license converts to a provisional license for 180 days without any filing
The LLC may keep operating if another member signs an affidavit of competence
A commissioned canvasser wants to sell roofing jobs for two different licensed M&A contractors at the same time. What does Michigan law allow?
Two salesperson licenses, one for each contractor
No license, because canvassers are paid by commission rather than wages
A salesperson license under only one builder or contractor at a time
A single license that can list up to three employers
A licensed roofing corporation replaces two of its three directors after a buyout. How quickly must it notify LARA of the change in control?
Within 10 days of the change
Within 30 days of the change
At the next license renewal
Within 60 days, together with a new financial statement
Sections you finish are checked off in the contents.