Bill 698

                    Current Status

Bill Number:               698
Ratification Number:       735
Act Number                 595
Introducing Body:          Senate
Subject:                   Relating to the licensing of residential
                           home builders

(A595, R735, S698)

AN ACT TO AMEND SECTION 40-59-10, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE LICENSING OF RESIDENTIAL HOME BUILDERS, SO AS TO REDESIGNATE THE TERM "RESIDENTIAL HOME BUILDER" TO "RESIDENTIAL BUILDER" AND FURTHER PROVIDE FOR THE DEFINITION OF A RESIDENTIAL BUILDER; TO AMEND THE 1976 CODE BY ADDING SECTION 40-59-15 SO AS TO DEFINE THE TERM "RESIDENTIAL SPECIALTY CONTRACTOR"; TO AMEND SECTIONS 40-59-20, 40-59-40, AND 40-59-50, RELATING TO THE RESIDENTIAL BUILDERS COMMISSION, SO AS TO FURTHER PROVIDE FOR THE MEMBERSHIP OF THE COMMISSION AND ITS POWERS, DUTIES, AND FUNCTIONS; TO AMEND SECTION 40-59-70, RELATING TO LICENSES REQUIRED OF RESIDENTIAL BUILDERS, SO AS TO REVISE THE LICENSING PROCEDURE, PROVIDE FOR THE MANNER IN WHICH LICENSING FEES ARE SET, AND TO DELETE CERTAIN LICENSING EXCEPTIONS; TO AMEND THE 1976 CODE BY ADDING SECTION 40-59-75 SO AS TO PROVIDE PROCEDURES FOR THE REGISTRATION OF RESIDENTIAL SPECIALTY CONTRACTORS; TO AMEND THE 1976 CODE BY ADDING SECTION 40-59-77 SO AS TO PROVIDE THAT THE RESIDENTIAL BUILDERS COMMISSION MUST BY REGULATION CLASSIFY AND DEFINE THE SCOPE OF OPERATIONS OF RESIDENTIAL SPECIALTY CONTRACTORS; TO AMEND SECTION 40-59-80, RELATING TO APPLICATIONS FOR AND THE ISSUANCE OF LICENSES, SO AS TO FURTHER PROVIDE FOR THE APPLICATION AND LICENSING PROCEDURES; TO AMEND SECTION 40-59-90, AS AMENDED, RELATING TO REVOCATION AND REISSUANCE OF LICENSES SO AS TO REVISE THIS REVOCATION AND REISSUANCE PROCEDURE; TO AMEND THE 1976 CODE BY ADDING SECTION 40-59-95 SO AS TO AUTHORIZE CERTAIN LEGAL PROCEDURES AGAINST PERSONS VIOLATING THE PROVISIONS OF THIS ACT AND TO PROVIDE PENALTIES FOR VIOLATION; TO AMEND SECTION 40-59-100, RELATING TO ROSTER OF LICENSES, SECTION 40-59-110, AS AMENDED, RELATING TO THE ANNUAL REPORT OF THE COMMISSION, SECTION 40-59-120, RELATING TO REGULATIONS OF THE COMMISSION, SECTION 40-59-130, RELATING TO PENALTIES FOR VIOLATIONS, AND SECTION 40-59-160, RELATING TO DUTIES OF BUILDING OFFICIALS, SO AS TO INCLUDE RESIDENTIAL SPECIALTY CONTRACTORS IN THESE PROVISIONS; TO AMEND SECTION 40-59-140, RELATING TO THE EXEMPTION OF GENERAL CONTRACTORS, SO AS TO ALSO EXEMPT MECHANICAL CONTRACTORS WHEN ENGAGED IN CONTRACTING IN THE CLASSIFICATION IN WHICH THEY ARE LICENSED TO PERFORM MECHANICAL CONTRACTING, AND TO AUTHORIZE THE COMMISSION TO CLASSIFY OR RECLASSIFY LICENSES IN EXISTENCE ON THE EFFECTIVE DATE OF THIS ACT.

Be it enacted by the General Assembly of the State of South Carolina:

Name and definitions changed

SECTION 1. Section 40-59-10 of the 1976 Code is amended to read:

"Section 40-59-10. For the purpose of this chapter, a `residential builder' is one who constructs a residential building or structure for sale or who, for a fixed price, commission, fee, or wage, undertakes or offers to undertake the construction or superintending of the construction of any building or structure which is not over three floors in height and which does not have more than sixteen units in the apartment complex, or the repair, improvement, or reimprovement thereof, to be used by another as a residence when the cost of the undertaking exceeds five thousand dollars. Nothing in this chapter prevents any person, or his agents, from performing these acts on his own residence or on his other real estate held for personal or rental, as opposed to speculative, purposes. Anyone who engages or offers to engage in such undertaking in this State is considered to have engaged in the business of residential building."

Residential specialty contractor defined

SECTION 2. The 1976 Code is amended by adding:

"Section 40-59-15. A residential specialty contractor is an independent contractor who is not a licensed residential builder, who contracts with a licensed residential builder, general contractor, or individual property owner to do any construction work, repairs, improvement, or reimprovement which requires special skills and involves the use of specialized construction trades or craft, when the undertakings exceed two hundred dollars and are not regulated by the provisions of Chapter 11 of this title.

Residential specialty contractors include:

(a) plumbers;

(b) electricians;

(c) heating and air conditioning installers and repairers;

(d) vinyl and aluminum siding installers;

(e) insulation installers;

(f) roofers;

(g) pest controllers;

(h) floor covering installers;

(i) masons;

(j) dry wall installers;

(k) carpenters;

(l) wallpaperers;

(m) painters."

Commission membership

SECTION 3. Section 40-59-20 of the 1976 Code is amended to read:

"Section 40-59-20. There is hereby created the South Carolina Residential Builders Commission, hereinafter referred to as the commission. The commission must be composed of seven persons who shall have been residents of the State for at least five years and two of whom must be consumers not engaged in the business of residential building, four of whom have been actively engaged in residential building for a period of at least five years prior to the date of their appointment, and one of whom has been actively engaged in residential specialty contracting for a period of at least five years prior to the date of his appointment. One member must be appointed from each congressional district and one must be appointed from the State at large. Members of the commission must be appointed by the Governor with the advice and consent of the Senate for a term of four years or until their successors are appointed and qualify. Any vacancy occurring by reason of death, resignation, removal for cause, or otherwise must be filled for the remainder of the unexpired term in the same manner as provided for the original appointments. The Governor may remove any member of the commission for misconduct, incompetency, or neglect of duty.

Each member of the commission shall, before entering upon the discharge of the duties of his office, take and file with the Secretary of State, in writing, an oath to perform properly the duties of his office as a member of the commission and to uphold the Constitution of this State and the United States."

Commission seal revised

SECTION 4. Section 40-59-40 of the 1976 Code is amended to read:

"Section 40-59-40. The commission, at its first meeting after appointment, shall organize by electing a chairman and a vice-chairman who shall serve for a term of one year and until their successors are appointed and qualify. The commission shall adopt bylaws for the purpose of governing the proceedings of the commission and shall adopt a commission seal on which shall appear the words `South Carolina Residential Builders Commission'."

Duties expanded

SECTION 5. Section 40-59-50 of the 1976 Code is amended to read:

"Section 40-59-50. The commission may employ a director to serve at the discretion of the commission. The duties of the director must be prescribed by the commission and shall include, but not be limited to, the following:

(a) keep a record of the proceedings of the commission;

(b) receive and account for all monies received by the commission;

(c) keep a register of all applicants for licenses showing for each the date of application, name, qualifications, place of business, place of residence, and whether the license was granted or refused; and

(d) keep a register of all residential specialty contractors doing business in this State showing for each the date of registration, name, place of business, place of residence, and office telephone number. A residential specialty contractor must notify the commission in writing within thirty days of any change in the information required to be on file with the commission.

The director shall execute a bond, payable to the commission, for the proper performance of his duties in that sum as the commission may require.

The commission may also employ clerical and stenographic assistance and other personnel as may be necessary to effectuate the provisions of this chapter. The compensation of all employees of the commission must be fixed by the commission and paid from the fees received by the commission pursuant to the provisions of this chapter."

Licensing, provisions revised

SECTION 6. Section 40-59-70 of the 1976 Code is amended to read:

"Section 40-59-70. (A) All residential builders are required to be licensed by the commission annually under the provisions of this chapter.

(B) The commission shall issue a license upon the applicant's payment of the examination fee and annual license fee, if the commission, as a result of examining the applicant, has determined that he is qualified to engage in residential building and has obtained an executed bond with a surety approved by the commission in the sum of fifteen thousand dollars, or proof of financial responsibility acceptable to the commission.

(C) Unless otherwise provided under the provisions of this chapter, the commission shall renew all licenses upon the applicant's submission to the commission of the renewal application, proof of financial responsibility or bond, and payment of the annual license fee.

The annual license fees for residential builders must be set by the commission based on its cost of operation. The annual fees may be increased or decreased by the commission but in no event may the commission set the annual fees at an amount which would not provide sufficient revenues to pay all the salaries, costs, and expenses incurred by the commission in enforcing the provisions of this chapter. All fees beginning with those for the period July 1, 1990, to June 30, 1991, must be set by regulation of the commission. The annual license fees are for the period of twelve months beginning July first of each year. All license fees collected by the commission must be paid into the State Treasury as provided by law for payment into the State Treasury of other taxes."

Registration of residential specialty contractors

SECTION 7. The 1976 Code is amended by adding:

"Section 40-59-75. (A) Any person who engages in residential specialty contracting within the meaning of this chapter must register with the commission and pay an annual registration fee. It is unlawful for any person to engage in residential specialty contracting without being registered with the commission.

(B) Any person desiring to use the title `certified residential specialty contractor' within the meaning of this chapter must meet the qualifications as prescribed by regulation of the commission. It is unlawful for any person not qualified and certified in the manner prescribed in this chapter to use the title `certified residential specialty contractor'. Annual renewal is required for a certificate to remain in effect. A person desiring to be certified as a residential specialty contractor shall make application on a form prescribed and furnished by the commission. The commission shall review the applications submitted to it and make determinations in each case it considers proper and has final disposition of all applications. In the event certification is denied, an applicant may appeal to the commission within sixty days of receipt of the denial for a review of his application.

(C) All assessments, certification, and registration fees must be set by regulation of the commission."

Classification of residential specialty contractors

SECTION 8. The 1976 Code is amended by adding:

"Section 40-59-77. (A) The commission shall, by regulation, classify residential specialty contractors in a manner consistent with established usage and procedure in the construction business, and may limit the field and scope of the operations of a certified residential specialty contractor to those in which he is to be certified. All residential specialty contractor certificates issued by the commission must be for one or more of the classifications adopted pursuant to this chapter.

(B) Residential specialty contractors must be qualified and experienced in the particular branches or fields of the contracting vocation in which they intend to, and do, engage. A certified residential specialty contractor may make application for classification and be classified in more than one classification if he meets the qualifications prescribed by the commission for the additional classification. The commission shall set a fee for application and a certification fee for each classification. Only one application fee is required no matter how many specialty classifications a residential specialty contractor applies for. The certification fee set by the commission may only cover the cost of testing for the specialty certification.

Residential specialty contractors certified by the commission are not exempt from complying with county and municipal business license ordinances or other regulatory ordinances. Any county or municipality may require a residential specialty contractor to be examined and licensed in accordance with standards adopted by the county or municipality."

Licensing requirements revised

SECTION 9. Section 40-59-80 of the 1976 Code is amended to read:

"Section 40-59-80. Any residential builder who desires to be licensed under the provisions of this chapter shall make and file with the commission thirty days prior to the next meeting of the commission a written application on such form as may be prescribed by the commission. The application must be accompanied by the payment of the annual license fee required by the commission and an examination fee as set by the commission. A prerequisite for the taking of an examination for a residential builder's license is a minimum of one year of actual experience under the supervision of a licensed residential builder who is engaged in residential building construction involving the trades or crafts for which the license is desired. The commission, in examining an applicant, shall consider the following qualifications of the applicant:

(a) experience;

(b) ability;

(c) character;

(d) financial condition;

(e) equipment;

(f) ability and willingness to conserve the public health and safety; and

(g) other pertinent information the commission may require.

If, as a result of the examination, the commission finds that the applicant is qualified to engage in residential building in South Carolina, and if the applicant submits an executed bond in the form and with a surety approved by the commission, or proof of financial responsibility acceptable to the commission, the commission shall issue the license for which the applicant is qualified. Any applicant rejected by the commission must be given the opportunity to be reexamined after he has paid an additional examination fee, except that if the applicant fails the examination three times he shall wait twelve months before being examined again.

A record must be made and preserved by the commission of each examination of an applicant and the findings of the commission pertaining to the examination. A certified copy of the record shall be furnished to any applicant requesting the record upon the payment of a fee to the commission that reasonably reflects the cost of furnishing the record to the applicant."

Revocation and reissuance procedure revised

SECTION 10. Section 40-59-90 of the 1976 Code, as last amended by Act 62 of 1989, is further amended to read:

"Section 40-59-90. The commission may revoke, suspend, or restrict for a period not to exceed one year the license of a residential builder, certificate of a residential specialty contractor, or registration of a residential specialty contractor who, in the opinion of the commission, has committed fraud or deceit in obtaining a license or certificate or in registering as required by the provisions of this chapter or has been guilty of gross negligence, incompetence, or misconduct in the practice of home building or residential specialty contracting. A person, including the commission, may prefer charges of fraud, deceit, negligence, incompetence, or misconduct against a residential builder licensed under this chapter or a residential specialty contractor certified or registered under this chapter. The charges must be made to the commission in writing and sworn to by the person so charging and must be submitted to the director of the commission.

The charges, unless dismissed without hearing by the commission as unfounded or trivial, must be heard by the commission in an open hearing within three months after the date on which they were preferred. A copy of the charges, together with notice of the time and place of the hearing, must be served legally on the residential builder or residential specialty contractor charged at least thirty days before the fixed date for the hearing. At the hearing the residential builder or residential specialty contractor charged may appear personally or be represented by counsel and may cross-examine witnesses against him and produce evidence and witnesses in his defense. If, after the hearing, a majority of the commission votes in favor of revoking, suspending, or restricting for a period not to exceed one year the license of the residential builder or the certificate or registration of the residential specialty contractor charged on the basis of fraud or deceit in obtaining his license or certificate or in registering with the commission or gross negligence, incompetence, or misconduct in the performance of home building or residential specialty contracting, the commission shall order the license of the residential builder, the certificate of the residential specialty contractor, or the registration of the residential specialty contractor revoked, suspended, or restricted for a period not to exceed one year. After the commission revokes, suspends, or restricts for a period not to exceed one year the license of the residential builder or the certificate or the registration of the residential specialty contractor, he has ten days to file with the commission written notice of his intention to appeal from the order of the commission. All appeals from the order of the commission are governed by the provisions of Article 3, Chapter 23 of Title 1 (the Administrative Procedures Act).

The commission may reissue a license to a residential builder or certificate to a residential specialty contractor whose license or certificate was previously revoked if a majority of the members of the commission vote in favor of the reissuance."

Legal proceedings authorized

SECTION 11. The 1976 Code is amended by adding:

"Section 40-59-95. (A) In addition to all other remedies provided by law, when it appears to the director, either upon complaint or otherwise, that any person or combination of persons has engaged, or is engaging, in any act of contracting, practice, or transaction which constitutes a violation of this chapter or any regulation or order of the commission, whether or not the person is properly licensed, certified, or registered with the commission, the director may either:

(1) serve upon the person not licensed, certified, or registered under the chapter, by certified mail or by personal service, a cease and desist order requiring the person to cease and desist immediately, upon receipt of the notice, from engaging in the act, practice, or transaction. If the person fails to comply with the order, the director may file an action in the court of common pleas for enforcement of the cease and desist order or file an action pursuant to item (2) of this subsection in the court of common pleas to restrain and enjoin the person from engaging in the act, practice, or transaction and for wilful violation of the order. If the court finds that the person wilfully failed to obey a valid cease and desist order, the court shall impose a civil penalty of not less than two hundred fifty dollars nor more than two thousand dollars for each violation. Any amount collected as a civil penalty must be remitted pursuant to subsection (B) of this section;

(2) apply through the Attorney General, the administrator of the Department of Consumer Affairs, the county attorney, or solicitor of the county in which the act, practice, or transaction is alleged to have been committed, to the court of common pleas of that county for an injunction restraining the person from engaging in the act, practice, or transaction or doing any act in furtherance of the act, practice, or transaction. Upon a proper showing, a temporary restraining order, a preliminary injunction, or a permanent injunction may be granted without bond. Process in the action may be served upon the defendant in any county of this State where he transacts business or is found.

(B) In actions brought under item (2) of subsection (A), each violation of this chapter or regulation or order of the director constitutes a separate offense and the court may impose a civil penalty not to exceed two thousand dollars for each violation which is in addition to all other penalties provided by law. Fifty percent of the penalty must be remitted to the general fund of the county where the case was tried and fifty percent must be deposited in the state general fund if the violation is prosecuted by the county attorney or solicitor. Seventy-five percent of the penalty must be deposited in the state general fund if the violation is prosecuted by the Attorney General or the administrator of the Department of Consumer Affairs, and twenty-five percent must be remitted to the prosecuting agency for expenses in trying the case."

Roster provisions revised

SECTION 12. Section 40-59-100 of the 1976 Code is amended to read:

"Section 40-59-100. A complete roster that shows all the names and places of business of the residential builders and residential specialty contractors licensed, certified, or registered by the commission during the preceding year must be prepared annually by the commission and forwarded to and filed with the clerks of court for the several counties."

Annual submissions revised

SECTION 13. Section 40-59-110 of the 1976 Code, as last amended by Act 62 of 1989, is further amended to read:

"Section 40-59-110. The commission shall annually submit to the Governor and the General Assembly a report of its transactions for the preceding year including a complete statement of the receipts and expenditures of the commission, a roster of all the residential builders licensed for that year, all the residential specialty contractors certified or registered for that year, and a list of the residential builders and residential specialty contractors whose license or certificate was revoked, suspended, or restricted by the commission during the preceding year. The commission shall also annually file with the Secretary of State a certified copy of the report at the same time the report is submitted to the Governor and the General Assembly."

Regulation provisions revised

SECTION 14. Section 40-59-120 of the 1976 Code is amended to read:

"Section 40-59-120. The commission may promulgate reasonable regulations as may be necessary to effectuate the provisions of this chapter."

Penalty provisions revised

SECTION 15. Section 40-59-130 of the 1976 Code is amended to read:

"Section 40-59-130. Any residential builder or residential specialty contractor who undertakes or attempts to undertake the business of residential building or residential specialty contracting without first having procured a valid license or certificate or registered with the commission as required in Section 40-59-50 which has neither expired nor been revoked, or who knowingly presents to, or files with, the commission false information for the purpose of obtaining a license or certificate or becoming registered is guilty of a misdemeanor and, upon conviction, must be fined not less than one hundred dollars or imprisoned for not less than thirty days.

A residential builder who does not have a license or residential specialty contractor who is not certified or registered as required may not bring any action either at law or in equity to enforce the provisions of any contract for residential building or residential specialty contracting which he entered into in violation of this chapter.

Whenever it appears to the commission that any residential builder or residential specialty contractor has violated, or is about to violate, the provisions of this chapter, the commission may in its own name petition the court of common pleas of the county wherein the violation occurred or is about to occur to issue a temporary restraining order enjoining the violation of this chapter, pending a full hearing to determine whether or not the injunction must be made permanent."

Exemption of mechanical contractors

SECTION 16. Section 40-59-140 of the 1976 Code is amended to read:

"Section 40-59-140. The provisions of this chapter do not apply to any person licensed as a general contractor under the provisions of Chapter 11 of Title 40 for the purpose of undertaking the construction, or superintending of construction, of any building, or the improvement, reimprovement, or repair of any building. No residential builder who is licensed pursuant to the provisions of this chapter is also required to be licensed as a general contractor or mechanical contractor under the provisions of Chapter 11 of Title 40 in order to engage in residential building as defined in Section 40-59-10. A mechanical contractor is exempt from the provisions of this chapter relating to residential specialty contractors when engaged in contracting in the classification in which he is licensed to perform mechanical contracting. The Residential Builders Commission is the sole licensing, certifying, and registration board for persons who engage solely in residential building as defined in Section 40-59-10 and in residential specialty contracting as defined in Section 40-59-15."

Duties changed

SECTION 17. Section 40-59-160 of the 1976 Code is amended to read:

"Section 40-59-160. It is the duty of the building official, or other authority charged with the duty of issuing building or similar permits, of any incorporated municipality or subdivision of the municipality or county to refuse to issue a permit for any undertaking which would classify the applicant as a residential builder or residential specialty contractor under the provisions of this chapter unless the applicant has furnished evidence that he is either licensed, certified, or registered as required by this chapter or exempt from the requirements of this chapter. It is also the duty of the building official, or other authority charged with the duty of issuing building or similar permits, to report to the state licensing board the name and address of any person who, in his opinion, has violated this chapter by accepting or contracting to accomplish work which would classify the person as a residential builder or residential specialty contractor under the provisions of this chapter."

Required date of registration

SECTION 18. Any person engaged in residential specialty contracting must be duly registered by the commission upon paying the required annual fee within six months from the effective date of this act.

Classification or reclassification of licenses

SECTION 19. The commission may classify or reclassify existing licenses valid on the effective date of this act into the classifications in which the majority of the licensee's contracting is embraced, which fact must be determined according to the information requested by and given to the commission by the licensee. The commission shall give the licensees the opportunity to qualify for, and be classified and certified in, additional classifications in which they intend to, or do, contract.

Commission membership appointments

SECTION 20. The member of the South Carolina Residential Builders Commission required to be engaged in residential specialty contracting pursuant to Section 40-59-20, as amended by this act, must be appointed upon the expiration of the terms of a member or members who are not engaged in residential specialty contracting. All present members of the commission shall serve until their current terms of office expire.

Time effective

SECTION 21. This act takes effect July 1, 1990.

Approved the 25th day of June, 1990.