1.6 Complaints, Investigations, Hearings, Arbitration & Penalties

Filing a Complaint

Anyone may file a complaint: a homeowner, the attorney general, LARA, the board, or another person (MCL 339.501). For builders and M&A contractors, the complaint must be filed within 18 months after the latest of these events (MCL 339.2411(1)):

• M&A contract: completion, occupancy, or purchase.
• Project needing an occupancy permit: issuance of the certificate of occupancy (or temporary certificate), or closing.

The complaint must be on LARA's form (R 338.1551(1)). LARA acknowledges it within 15 days (MCL 339.502) and forwards a copy to the licensee. The licensee must reply within 15 days and confirm or deny that the complaint is justified (R 338.1551(2)). LARA may ask the complainant for more information. It may also get a report from the local building official or have its own inspector check whether the complaint is justified.

Investigation and Conferences

The investigative unit reports to the director within 30 days after the complaint is received. The director may extend that time for good cause (MCL 339.504(1)). If the investigation shows no violation, the complaint is closed and both sides are told why. If it shows a violation, the department may issue any of the following:

• a formal complaint;
• a cease and desist order. The respondent may request a hearing within 30 days, and the attorney general may seek a court injunction if the order is violated (MCL 339.506);
• a notice of summary suspension, when an affidavit shows an imminent threat to public health, safety, or welfare. The licensee may petition to dissolve it, and a hearing is scheduled right away (MCL 339.505);
• a citation, with a fine of not more than $100 per violation. The respondent has 30 days to accept or contest it. An accepted citation has the force of a final order, but it is removed from the record if no further discipline occurs within 5 years (MCL 339.553, 339.555).

At any time, LARA may bring both sides together for an informal conference to settle the matter (MCL 339.504(4)). Under R 338.1552, an investigative conference requires written notice at least 10 days in advance. An adjournment request must be made at least 5 days before. Failing to appear can be a basis for suspension, revocation, or denial.

Formal Complaints and Hearings

After a formal complaint is served, the respondent has 15 days to choose one of three paths (MCL 339.508). If the respondent does not choose, the matter goes to a contested case hearing.

After the hearing, the board sets the penalty within 60 days of receiving the administrative law judge's report. If the board misses that deadline, the director may issue the final order (MCL 339.514). A board member who investigated the complaint or attended the informal conference may not vote on the final decision. A respondent who fails to appear or defend receives a default order granting the relief requested (MCL 339.2411(5)).

Workmanship Complaints and Independent Arbitration

MCL 339.2411(4) changes the usual process when a complaint alleges workmanship below the Michigan Residential Code:

1. The homeowner describes the facts in writing and sends a copy to the licensee at the same time.
2. The licensee is presumed innocent until the administrative law judge finds otherwise. The licensee bears the burden of refuting the evidence and explaining why deficiencies were not corrected.
3. When a building inspection report from a state or local building official verifies the complaint, LARA must send the verified complaint to the licensee by certified mail within 30 days. If it misses that deadline, it cannot assess a fine, but it can still seek restitution or suspension.
4. Alternative dispute resolution (ADR). A licensee may write an ADR procedure into its contracts. A neutral third party conducts it, and the licensee starts it by giving the complainant at least 30 days' certified-mail notice. If the contract has an ADR clause that has not been used, LARA may not begin a proceeding. The exceptions: the licensee did not comply with the ADR decision, the procedure was not completed within 90 days after the complaint was filed, or a qualifying procedure was not available to the complainant.
5. The homeowner must show that the licensee was told when the house was accessible for repairs and did not make the repairs within 60 days. LARA can skip this step when it must act right away to protect the structure or the occupants.
6. If the owner and licensee agreed in the contract on workmanship performance guidelines, LARA considers them, as long as they are consistent with the construction code.

In court, a homeowner's failure to use a contract's ADR procedure is an affirmative defense for the licensee (MCL 339.2412(2)).

Penalties

Under MCL 339.602, a violator may receive one or more of these penalties:

A licensee disciplined for violating Article 24 must also complete 3 to 21 extra continuing competency hours in the next cycle.

Unlicensed Practice

For unlicensed residential builders and M&A contractors, MCL 339.601(6) sets stricter penalties than for most other occupations:

Other consequences add to these penalties:

• No suit for payment. A person may not sue to collect compensation for work that requires an Article 24 license without alleging and proving they were licensed while doing the work (MCL 339.2412(1)).
• No lien. An unlicensed person may not take any action to impose a lien on real property for that work (MCL 339.2412(3)).
• Civil fine. A prosecuting attorney or the attorney general may sue an unlicensed person for a civil fine of $5,000 to $25,000, in addition to damages or restitution (MCL 339.2412(4)).
• Restitution and injunctions. A court that finds a violation must order restitution. An affected person, such as a customer or a licensed competitor, may seek an injunction and recover actual costs and attorney fees (MCL 339.601(8)–(9)).