House Amendment 1
H 4086 - Session 125 (2023-2024)
Residential builders

The Committee on Labor, Commerce and Industry proposes the following amendment (LC-4086.WAB0002H):

Amend the bill, as and if amended, by deleting SECTIONS 1 and 2.

Amend the bill further, SECTION 4, by striking Section 40-59-20(6) and inserting:

(6) "Residential builder" means one who constructs, superintends, or offers to construct or superintend the construction, repair, improvement, or reimprovement of a residential  one- or two-family dwellings meeting the scope of the adopted S.C. Residential Building Code or structures classified as Residential Group R-3 structures building or structure as outlined by the S.C. Building Code, or a new multifamily apartment building classified by the S.C. Building Code as Residential Group R-2 occupancies which is not over three floors in height and which does not have more than sixteen units in any single apartment building, when the cost of the undertaking exceeds five thousand dollars. This includes:

   (a) townhomes;

   (b) detached garages and other accessory structures that are not more than three stories above grade plane in height and are situated upon land that is zoned for residential construction, excluding structures regulated by the Modular Buildings Construction Act;

   (c) residential apartment buildings, regardless of the number of stories and more than sixteen units, if they do not alter or modify load bearing or fire rated floors and walls, and use commercially licensed subcontractors for all trade work; and

   (d) construction of a residential builder's own model home to the same applicable code requirements as other one-family dwelling units and two-family dwelling units.

Amend the bill further, SECTION 4, Section 40-59-20, by striking the undesignated paragraph Section 40-59-20(6)(d) and inserting:

 A licensed residential builder may use unlicensed workers for one- and two-family dwelling units including unlicensed subcontractors under his or her supervision but remains fully responsible for any building code violations resulting from the actions of unlicensed workers performing work for the licensed residential builder. Anyone who engages or offers to engage in such undertaking in this State is considered to have engaged in the business of residential building.

Amend the bill further, SECTION 4, by striking Section 40-59-20(8) and inserting:

(8) "Residential trade registrant" means an independent contractor who contracts with a licensed residential builder, licensed general contractor, or individual property owner to do construction work, repairs, improvements, or reimprovements that require special skills and involve the use of specialized construction trades or crafts that are not tested for licensure under  this chapter, when the undertakings exceed five hundred dollars and are not regulated by the provisions of Chapter 11. A residential trade registrant is not authorized to construct additions to residential buildings or structures without supervision by a residential builder or other appropriately licensed person or entity. A licensed residential trade registrant may use unlicensed workers under their supervision for all areas of which they are registered. The term "residential trade registrant" includes the following areas of contracting and other areas as the commission may recognize by regulation:

  (a) vinyl, aluminum, cementitious, brick, stucco, masonry, or other installers of cladding materials or systems;

  (b) insulation installers;

  (c) roofers;

  (d) floor covering installers;

  (e) masons;

  (f) dry wall installers;

  (g) carpenters;

  (h) stucco installers;

  (i) painters and wall paperers; and

  (j) elevator/platform lift installers.

Amend the bill further, SECTION 4, by striking Section 40-59-20(9) and inserting:

(9) "Story" means that portion of a building included between the upper surface of a floor and the upper surface of the floor or roof next above. For the purposes of determining the appropriate code to be used, when the first story built in a flood plain, a story must be "habitable space" as defined by the adopted S.C. Building Code. 

Amend the bill further, SECTION 6, by striking Section 40-59-30(B) and (C) and inserting:

(B)  Notwithstanding Section 29-5-10, or another provision of law, a person or firm who first has not procured a license or registered with the commission and is required to do so by law may not file a mechanics' lien or bring an action at law or in equity to enforce the provisions of a contract for residential building or residential specialty trade contracting which the person or firm entered into in violation of this chapter.

Amend the bill further, SECTION 7, by striking Section 40-59-50(G) and inserting:

 (G) A roster including the names and places of business of the residential builders and residential specialty contractors trade contractors and trade registrants licensed or registered by the commission during the preceding year mustmay be prepared annually by the commission and forwarded to and filed with the clerk of court for each county.

Amend the bill further, by deleting SECTION 8.

Amend the bill further, SECTION 12, by striking Section 40-59-220(C)(3) and (4) and inserting:

 (3)  The aggregate liability of the surety may not exceed the penal sum of this bond. This bond only may apply to transactions occurring on or after the effective date of this item and extensions by continuation certificate, reinstatement, reissue, or renewal of this bond shall not increase the liability of the surety.

Amend the bill further, SECTION 12, by striking Section 40-59-220(D) and (E) and inserting:

(D)  The commission shall issue a residential trade contractor's license if, as a result of examination, the commission finds that the applicant is qualified to engage in residential trade contracting in his specific field. When the cost of an undertaking performed by a residential trade contractor for an individual property owner exceeds five hundred dollars, the residential trade contractor must obtain an executed bond with a surety in an amount approved by the commission.

  (1)A claim on the bond of a trade contractor must be submitted to the commission as a prerequisite to any claim against a bond issued pursuant to this section; provided, however, that no such claim may be brought unless the homeowner has first complied with the requirements of the South Carolina Notice and Opportunity to Cure Construction Dwelling Defects Act.  

  (2)A homeowner who sustains loss or damage by reason of any act or omission covered by this bond may bring an action in his name on this bond for the recovery of costs of repair or costs of remediation sustained by the homeowner that are covered by the bond, up to the amount of the bond's penal sum. In any such action, the licensee or registrant is a necessary party. This action must be brought before the commission in the form of a formal complaint, and the commission has jurisdiction to determine the validity of the claim and to determine the costs of repair, remediation, or both, sustained by the homeowner. Claims are limited to the actual costs of repair, remediation, or both, and may not include an award of attorney's fees as damages. 

  (3) The aggregate liability of the surety may not exceed the penal sum of this bond. This bond only may apply to transactions occurring on or after the effective date of this item and extensions by continuation certificate, reinstatement, reissue, or renewal of this bond shall not increase the liability of the surety.

(E)   The commission shall issue a residential specialty contractor's license trade registration for which the applicant is qualified if, as a result of examination or approved reference, the commission finds that the applicant is qualified to engage in residential specialty contracting as a residential trade registrant in South Carolina. When the cost of an undertaking performed by a residential specialty contractortrade registrant for an individual property owner exceeds five hundredthousand dollars, the residential specialty contractortrade registrant must obtain an executed bond with a surety in an amount approved by the commission.

  (1)A claim on the bond of a residential trade registrant must be submitted to the commission as a prerequisite to any claim against a bond issued pursuant to this section; provided, however, that no such claim may be brought unless the homeowner has first complied with the requirements  of the South Carolina Notice and Opportunity to Cure Construction Dwelling Defects Act. 

  (2)A homeowner who sustains loss or damage by reason of any act or omission covered by this bond may bring an action in his name on this bond for the recovery of costs of repair or costs of remediation sustained by the homeowner that are covered by the bond, up to the amount of the bond's penal sum. In any such action, the licensee or registrant is a necessary party. This action must be brought before the commission in the form of a formal complaint, and the commission has jurisdiction to determine the validity of the claim and to determine the costs of repair, remediation, or both, sustained by the homeowner. Claims are limited to the actual costs of repair, remediation, or both, and may not include an award of attorney's fees as damages. 

  (3) The aggregate liability of the surety may not exceed the penal sum of this bond. This bond only may apply to transactions occurring on or after the effective date of this section, and extensions by continuation certificate, reinstatement, reissue, or renewal of this bond shall not increase the liability of the surety.

Amend the bill further, SECTION 13, by striking Section 40-59-230(B) and inserting:

(B) As a condition of license renewal, the commission may require by regulation a licensee to satisfactorily complete continuing education through a program approved by the commission . The commission shall institute a new tiered system for residential builders licenses.

  (1) A licensed residential builder (LRB) is the base license and requires no continuing education.

  (2) An accredited residential builder (ARB) requires a minimum of eight hours of approved educational requirements prior to receiving their initial ARB license and at the time of each renewal. The association shall provide to the commission written certification of those licensees who have successfully completed the requirements for the certification. The certification remains in effect as long as:

   (a) the licensee's license is in effect; and

   (b) the licensee completes at least eight hours of approved educational requirements, as certified by the association.

  (3) A licensee who successfully completes the educational requirements for Certified Master Builder, as established by the association, must be certified by the commission as a "South Carolina Master Builder". The association shall provide to the commission written certification of licensees who successfully complete the requirements for the certification. The certification must remain in effect as long as:

   (a) the licensee's license is in effect; and

   (b) the licensee completes at least twenty-four hours of approved educational requirements, as certified by the association, prior to receiving their initial master builder license and at the time of each renewal.

  (4) Approved educational requirements must be within the following categories:

   (a) business law and practices;

   (b) contracts;

   (c) building codes; and

   (d) safety.

  (5) The license level must appear on the license and must include the license number in order to be verified.

Amend the bill further, SECTION 14, by striking Section 40-59-240(D) and inserting:

(D) When the total cost of materials and labor for an undertaking performed by a residential  specialty contractor trade contractor and trade registrant for an individual property owner exceeds five hundred dollars, the residential specialty contractor trade contractor and trade registrant shall obtain an executed bond with a surety in an amount approved by the commission and shall furnish a signed original to the commission.

Amend the bill further, SECTION 15, by striking Section 40-59-250(A) and inserting:

 (A) A person applying to the commission for licensure as a residential builder, or registration as a residential specialty contractor residential trade contractor, or residential trade registrant must submit to a credit report. In addition to the information provided by the credit report, the commission may determine from the written application, the personal references provided by the applicant, written communications or complaints to the commission, and from any other reliable, documented sources whether an applicant for licensure as a residential builder, or an applicant for registration as a residential specialty contractor residential trade contractor, or residential trade registrant has a reputation for the prompt payment of labor and material bills and for the timely completion of other contracts into which the applicant may have entered.

Amend the bill further, SECTION 24, by striking Section 40-59-820(3)(d) and inserting:

 (d) failure to construct residential improvements in accordance with accepted trade standards for good and workmanlike construction at the time of construction. Compliance with the applicable codes in effect at the time of construction conclusively establishes construction in accordance with accepted trade standards for good and workmanlike construction, with respect to all matters specified in those codes. 

Amend the bill further, by deleting SECTIONS 25 and 26.