Skip to main content Skip to office menu Skip to footer
Capital IconMinnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  
    Laws of Minnesota 1993 

                        CHAPTER 245-H.F.No. 948 
           An act relating to commerce; modifying the definition 
          of business license; regulating residential building 
          contractors and remodelers; providing licensing 
          requirements; prescribing the powers and duties of the 
          commissioner; establishing a contractor's recovery 
          fund; appropriating money; amending Minnesota Statutes 
          1992, sections 116J.70, subdivision 2a; 326.83, 
          subdivisions 4, 6, 7, 8, 10, and by adding 
          subdivisions; 326.84, subdivisions 1 and 3; 326.85, 
          subdivision 1; 326.86; 326.87, subdivision 2; 326.88; 
          326.89, subdivisions 2, 3, and by adding subdivisions; 
          326.90; 326.91, subdivisions 1 and 2; 326.92, 
          subdivisions 1 and 3; 326.93, subdivision 1; 326.94; 
          326.97, subdivision 1, and by adding a subdivision; 
          326.99; and 326.991; proposing coding for new law in 
          Minnesota Statutes, chapter 326; repealing Minnesota 
          Statutes 1992, section 326.84, subdivision 2. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1992, section 116J.70, 
subdivision 2a, is amended to read: 
    Subd. 2a.  [LICENSE; EXCEPTIONS.] "Business license" or 
"license" does not include the following:  
    (1) any occupational license or registration issued by a 
licensing board listed in section 214.01 or any occupational 
registration issued by the commissioner of health pursuant to 
section 214.13; 
    (2) any license issued by a county, home rule charter city, 
statutory city, township, or other political subdivision; 
    (3) any license required to practice the following 
occupation regulated by the following sections:  
    (a) abstracters regulated pursuant to chapter 386; 
    (b) accountants regulated pursuant to chapter 326; 
    (c) adjusters regulated pursuant to chapter 72B; 
    (d) architects regulated pursuant to chapter 326; 
    (e) assessors regulated pursuant to chapter 270; 
    (f) attorneys regulated pursuant to chapter 481; 
    (g) auctioneers regulated pursuant to chapter 330; 
    (h) barbers regulated pursuant to chapter 154; 
    (i) beauticians regulated pursuant to chapter 155A; 
     (j) boiler operators regulated pursuant to chapter 183; 
      (k) chiropractors regulated pursuant to chapter 148; 
      (l) collection agencies regulated pursuant to chapter 332; 
      (m) cosmetologists regulated pursuant to chapter 155A; 
      (n) dentists, registered dental assistants, and dental 
hygienists regulated pursuant to chapter 150A; 
      (o) detectives regulated pursuant to chapter 326; 
      (p) electricians regulated pursuant to chapter 326; 
      (q) embalmers regulated pursuant to chapter 149; 
      (r) engineers regulated pursuant to chapter 326; 
      (s) insurance brokers and salespersons regulated pursuant 
to chapter 60A; 
     (t) certified interior designers regulated pursuant to 
chapter 326; 
     (u) midwives regulated pursuant to chapter 148; 
     (v) morticians regulated pursuant to chapter 149; 
     (w) nursing home administrators regulated pursuant to 
chapter 144A; 
     (x) optometrists regulated pursuant to chapter 148; 
     (y) osteopathic physicians regulated pursuant to chapter 
147; 
     (z) pharmacists regulated pursuant to chapter 151; 
     (aa) physical therapists regulated pursuant to chapter 148; 
     (bb) physicians and surgeons regulated pursuant to chapter 
147; 
     (cc) plumbers regulated pursuant to chapter 326; 
     (dd) podiatrists regulated pursuant to chapter 153; 
     (ee) practical nurses regulated pursuant to chapter 148; 
    (ff) professional fund raisers regulated pursuant to 
chapter 309; 
     (gg) psychologists regulated pursuant to chapter 148; 
    (hh) real estate brokers, salespersons, and others 
regulated pursuant to chapters 82 and 83; 
    (ii) registered nurses regulated pursuant to chapter 148; 
    (jj) securities brokers, dealers, agents, and investment 
advisers regulated pursuant to chapter 80A; 
    (kk) steamfitters regulated pursuant to chapter 326; 
    (ll) teachers and supervisory and support personnel 
regulated pursuant to chapter 125; 
    (mm) veterinarians regulated pursuant to chapter 156; 
    (nn) water conditioning contractors and installers 
regulated pursuant to chapter 326; 
    (oo) water well contractors regulated pursuant to chapter 
156A; 
    (pp) water and waste treatment operators regulated pursuant 
to chapter 115; 
    (qq) motor carriers regulated pursuant to chapter 221; 
    (rr) professional corporations regulated pursuant to 
chapter 319A; 
     (ss) real estate appraisers regulated pursuant to chapter 
82B; 
    (tt) residential building contractors, residential 
remodelers, and specialty contractors regulated pursuant to 
chapter 326; 
    (4) any driver's license required pursuant to chapter 171; 
    (5) any aircraft license required pursuant to chapter 360; 
    (6) any watercraft license required pursuant to chapter 
86B; 
    (7) any license, permit, registration, certification, or 
other approval pertaining to a regulatory or management program 
related to the protection, conservation, or use of or 
interference with the resources of land, air, or water, which is 
required to be obtained from a state agency or instrumentality; 
and 
    (8) any pollution control rule or standard established by 
the pollution control agency or any health rule or standard 
established by the commissioner of health or any licensing rule 
or standard established by the commissioner of human services.  
    Sec. 2.  Minnesota Statutes 1992, section 326.83, 
subdivision 4, is amended to read: 
    Subd. 4.  [LICENSEE.] "Licensee" means a residential 
building contractor, or residential remodeler, or specialty 
contractor licensed under sections 326.83 to 326.98 326.991. 
    Sec. 3.  Minnesota Statutes 1992, section 326.83, 
subdivision 6, is amended to read: 
    Subd. 6.  [PUBLIC MEMBER.] "Public member" means a person 
who is not, and never was, a residential builder, building 
contractor, residential remodeler, or specialty contractor or 
the spouse of such person, or a person who has no, or never has 
had a, material financial interest in acting as a residential 
building contractor, residential remodeler, or specialty 
contractor or a directly related activity. 
    Sec. 4.  Minnesota Statutes 1992, section 326.83, 
subdivision 7, is amended to read: 
    Subd. 7.  [RESIDENTIAL REMODELER.] "Residential remodeler" 
means a person in the business of contracting or offering to 
contract with an owner to improve existing residential real 
estate by providing two or more special skills as defined in 
this section.  A remodeler has two or more special skills. 
    Sec. 5.  Minnesota Statutes 1992, section 326.83, 
subdivision 8, is amended to read: 
    Subd. 8.  [RESIDENTIAL BUILDING CONTRACTOR.] "Residential 
building contractor" means a person in the business of building 
residential real estate, or of contracting or offering to 
contract with an owner to improve build residential real estate, 
by providing two or more special skills as defined in this 
section.  A residential building contractor may also contract or 
offer to contract with an owner to improve existing residential 
real estate. 
    Sec. 6.  Minnesota Statutes 1992, section 326.83, 
subdivision 10, is amended to read: 
    Subd. 10.  [SPECIALTY CONTRACTOR.] "Specialty contractor" 
means a person other than a residential building contractor, 
remodeler, or material supplier in the business of contracting 
or offering to contract to make part of an improvement to build 
or improve residential real estate, including roofing by 
providing one special skill as defined in this section. 
    Sec. 7.  Minnesota Statutes 1992, section 326.83, is 
amended by adding a subdivision to read: 
    Subd. 11.  [SPECIAL SKILL.] "Special skill" means one of 
the following eight categories: 
    (a) [EXCAVATION.] Excavation includes work in any of the 
following areas: 
    (1) excavation; 
    (2) trenching; 
    (3) grading; and 
    (4) site grading.  
    (b) [MASONRY AND CONCRETE.] Masonry and concrete includes 
work in any of the following areas: 
    (1) drain systems; 
    (2) poured walls; 
    (3) slabs and poured-in-place footings; 
    (4) masonry walls; 
    (5) masonry fireplaces; 
    (6) masonry veneer; and 
    (7) water resistance and waterproofing. 
    (c) [CARPENTRY.] Carpentry includes work in any of the 
following areas: 
    (1) rough framing; 
    (2) finish carpentry; 
    (3) siding; 
    (4) doors, windows, and skylights; 
    (5) exterior covering; 
    (6) porches and decks; 
    (7) wood foundations; 
    (8) insulation and vapor barrier; 
    (9) drywall installation, excluding taping and finishing; 
    (10) cabinet and counter top installation; 
    (11) wood floors; 
    (12) installation of roofing materials, excluding roofing; 
and 
    (13) soffit, fascia, and trim. 
    (d) [INTERIOR FINISHING.] Interior finishing includes work 
in any of the following areas: 
    (1) floor covering; 
    (2) wood floors; 
    (3) cabinet and counter top installation; 
    (4) insulation and vapor barriers; 
    (5) interior or exterior painting; 
    (6) ceramic, marble, and quarry tile; 
    (7) ornamental guardrail and installation of prefabricated 
stairs; and 
    (8) wallpapering. 
    (e) [EXTERIOR FINISHING.] Exterior finishing includes work 
in any of the following areas: 
    (1) siding; 
    (2) doors, skylights, and windows; 
    (3) soffit, fascia, and trim; 
    (4) exterior plaster and stucco; 
    (5) painting; and 
    (6) rain carrying systems, including gutters and down 
spouts. 
    (f) [DRYWALL AND PLASTER.] Drywall and plaster includes 
work in any of the following areas: 
    (1) installation; 
    (2) taping; 
    (3) finishing; 
    (4) interior plaster; 
    (5) painting; and 
    (6) wallpapering. 
    (g) [ROOFING.] Roofing includes work in any of the 
following areas: 
    (1) roof coverings; 
    (2) roof sheathing; 
    (3) roof weatherproofing and insulation; and 
    (4) repair of roof support system, but not construction of 
new roof support system. 
    (h) [GENERAL INSTALLATION SPECIALTIES.] Installation 
includes work in any of the following areas: 
    (1) garage doors and openers; 
    (2) pools, spas, and hot tubs; 
    (3) fireplaces and wood stoves; 
    (4) asphalt paving and seal coating; 
    (5) exterior plaster and stucco; and 
    (6) ornamental guardrail and prefabricated stairs. 
    Sec. 8.  Minnesota Statutes 1992, section 326.83, is 
amended by adding a subdivision to read: 
    Subd. 5b.  [PERSON.] "Person" means a natural person, firm, 
partnership, limited liability company, corporation, or 
association, and the officers, directors, employees, or agents 
of that person. 
    Sec. 9.  Minnesota Statutes 1992, section 326.83, is 
amended by adding a subdivision to read: 
    Subd. 6a.  [QUALIFYING PERSON.] "Qualifying person" means 
the individual who fulfills the examination and education 
requirements for licensure on behalf of the licensee. 
    Sec. 10.  Minnesota Statutes 1992, section 326.83, is 
amended by adding a subdivision to read: 
    Subd. 3a.  [GROSS ANNUAL RECEIPTS.] "Gross annual receipts" 
means the total amount derived from residential contracting or 
remodeling activities, and must not be reduced by cost of goods 
sold, expenses, losses, or any other amount. 
    Sec. 11.  Minnesota Statutes 1992, section 326.83, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [AFFILIATE.] An "affiliate" of another person 
means any person directly or indirectly controlling, controlled 
by, or under common control with the other person. 
    Sec. 12.  Minnesota Statutes 1992, section 326.83, is 
amended by adding a subdivision to read: 
    Subd. 5a.  [OWNER.] Except in section 326.91, subdivision 
1, "owner" means a person who has any legal or equitable 
interest in real property.  For purposes of sections 326.83 to 
326.991, "owner" does not include a residential building 
contractor or residential remodeler who constructs or improves 
its own property for purposes of speculation.  A residential 
building contractor or residential remodeler will be presumed to 
be building or improving for purposes of speculation if it 
constructs or improves more than one property within any 
12-month period. 
    Sec. 13.  Minnesota Statutes 1992, section 326.83, is 
amended by adding a subdivision to read: 
    Subd. 3b.  [LESSEE.] "Lessee" means one who rents 
residential real estate pursuant to a written lease agreement of 
at least one year's duration.  
    Sec. 14.  Minnesota Statutes 1992, section 326.84, 
subdivision 1, is amended to read: 
    Subdivision 1.  [PERSONS REQUIRED TO BE LICENSED.] A person 
who meets the definition of a residential remodeler as defined 
in section 326.83, subdivision 7, or a residential building 
contractor as defined in section 326.83, subdivision 8, must be 
licensed as a residential building contractor or residential 
remodeler. 
    Subd. 1a.  [PERSONS WHO MAY BE LICENSED.] A person who 
meets the definition of a specialty contractor as defined in 
section 326.83, subdivision 10, may be licensed as a residential 
building contractor or residential remodeler unless required to 
be licensed by the state as a specialty contractor. 
    Subd. 1b.  [PROHIBITION.] Except as provided in subdivision 
3, no person may engage in the work of a persons required to be 
licensed by subdivision 1 may act or hold themselves out as 
residential building contractor, remodeler, or specialty 
contractor contractors or residential remodelers for 
compensation without a valid license issued by the 
commissioner.  The commissioner shall recommend which types of 
one-skill competency or single special skill groups must be 
licensed as specialty contractors and report to the legislature 
by January 31, 1992, with the recommended types of specialty 
groups, the licensing procedures, and potential continuing 
education requirements.  
    Subd. 1c.  [LICENSING CRITERIA.] The examination and 
education requirements for licensure under sections 326.84 to 
326.991 must be fulfilled by a qualifying person designated by 
the potential licensee.  If the qualifying person is a managing 
employee, the qualifying person must be an employee who is 
regularly employed by the licensee and is actively engaged in 
the business of residential contracting or residential 
remodeling on behalf of the licensee.  For a sole 
proprietorship, the qualifying person must be the proprietor or 
managing employee.  For a partnership, the qualifying person 
must be a general partner or managing employee.  For a limited 
liability company, the qualifying person must be a chief manager 
or managing employee.  For a corporation, the qualifying person 
must be a chief executive officer or managing employee.  A 
qualifying person for a corporation may act as a qualifying 
person for one additional corporation if one of the following 
conditions exists:  
    (1) there is a common ownership of at least 25 percent of 
each licensed corporation for which the person acts in a 
qualifying capacity; or 
    (2) one corporation is a subsidiary of another corporation 
for which the same person acts in a qualifying capacity.  
"Subsidiary," as used in this section, means a corporation of 
which at least 25 percent is owned by the parent corporation.  
    Sec. 15.  Minnesota Statutes 1992, section 326.84, 
subdivision 3, is amended to read: 
    Subd. 3.  [EXCEPTIONS EXEMPTIONS.] The license requirement 
does not apply to: 
    (1) an employee of a licensee performing work for the 
licensee; 
    (2) a material person, manufacturer, or retailer furnishing 
finished products, materials, or articles of merchandise who 
does not install or attach the items; 
    (3) an owner or owners of residential real estate who 
improve the residential real estate or who build or improve a 
structure on the residential real estate and who do the work 
themselves or jointly with the owner's own employees or agents.  
This exemption does not apply to a person who engages in a 
pattern of building or improving real estate for purposes of 
resale.  Such a pattern is presumed to exist if the person sells 
more than one property so built or improved within any 12-month 
period; 
    (4) an architect or engineer engaging in professional 
practice as defined in this chapter; 
    (5) a person engaging in any project by one or more 
contracts, for which the aggregate contract price, including 
labor, materials, installation, and all other items, is less 
than $2,500.  The $2,500 limit may be exceeded by the unlicensed 
person if the person's whose total gross annual receipts from 
projects regulated under this section do not exceed $15,000; 
    (6) a mechanical contractor, plumber, or electrician; 
    (7) a person doing excavation for the installation of an 
on-site sewage treatment system; 
    (8) all specialty contractors that were required to be 
licensed by the state before the effective date of Laws 1991, 
chapter 306, sections 7 to 22; and a plumber, electrician, or 
other person whose profession is otherwise subject to statewide 
licensing, when engaged in the activity which is the subject of 
licensure; 
    (9) (8) specialty contractors that are not required to be 
licensed, as determined by the legislature. who provide only one 
special skill as defined in section 326.83; 
    (9) a school district, or a technical college governed 
under chapter 136C; and 
    (10) manufactured housing installers. 
    To qualify for the exemption in clause (5), a person must 
obtain a certificate of exemption from licensing from the 
commissioner. 
    A certificate of exemption will be issued upon the 
applicant's filing with the commissioner, an affidavit stating 
that the applicant does not expect to exceed $15,000 in gross 
annual receipts derived from contracting activities during the 
calendar year for which the exemption is requested. 
    To renew the exemption in clause (5), the applicant must 
file an affidavit stating that the applicant did not exceed 
$15,000 in gross annual receipts during the past calendar year, 
and the applicant does not expect to exceed $15,000 in gross 
annual receipts during the calendar year for which the exemption 
is requested. 
    If a person, operating under the exemption in clause (5), 
exceeds $15,000 in gross receipts during any calendar year, the 
person must immediately surrender the exemption certificate and 
apply for the appropriate license.  The person must remain 
licensed until such time as the person's gross annual receipts 
during a calendar year fall below $15,000.  The person may then 
apply for this exemption for the next calendar year. 
    Sec. 16.  Minnesota Statutes 1992, section 326.85, 
subdivision 1, is amended to read: 
    Subdivision 1.  [BUILDERS STATE ADVISORY COUNCIL.] The 
commissioner shall appoint seven eight persons to the builders 
state advisory council.  At least three members of the council 
must reside in greater Minnesota, as defined in section 116O.02, 
subdivision 5.  At least one member of the council must be a 
residential building contractor, one a residential remodeler, 
one a specialty contractor, one a representative of the 
commissioner, one a local building official, and one a public 
member and one a representative of organized labor designated by 
the AFL-CIO, this member shall not be subject to the membership 
term limits under section 15.059.  
    Sec. 17.  Minnesota Statutes 1992, section 326.86, is 
amended to read: 
    326.86 [FEES.] 
    Subdivision 1.  [LICENSING FEE.] The licensing fee for 
residential building contractors and remodelers persons licensed 
pursuant to sections 326.83 to 326.991 is $60 for the license 
period ending March 31, 1993, and $75 for each per year 
thereafter.  The commissioner may adjust the fees under section 
16A.128 to recover the costs of administration and enforcement.  
The commissioner shall establish licensing fees for specialty 
contractors under section 16A.128.  The fees must be limited to 
the cost of license administration and enforcement and must be 
deposited in the state treasury and credited to the general 
fund.  A fee of $25 will be charged for a duplicate license or 
an amended license reflecting a change of business name, 
address, or qualifying person. 
    Subd. 2.  [LOCAL SURCHARGE.] A local government unit may 
place a surcharge in an amount no greater than $5 on each 
building permit that requires a licensed residential building 
contractor, residential remodeler, or specialty contractor for 
the purpose of license verification.  The local government may 
verify a license by telephone or facsimile machine. 
    Sec. 18.  Minnesota Statutes 1992, section 326.87, 
subdivision 2, is amended to read: 
    Subd. 2.  [HOURS.] A licensee qualifying person of a 
general residential contractor or remodeler licensee must 
provide proof of completion of 15 seven hours for each two-year 
license period.  Continuing real estate hours and continuing 
general residential contractor or remodeler hours must be 
granted for the same course if it meets the guidelines for an 
approved course in each license program of continuing education 
per year.  To the extent the commissioner considers it 
appropriate, courses or parts of courses may be considered to 
satisfy both continuing education requirements under this 
section and continuing real estate education requirements. 
    Sec. 19.  [326.875] [NOTICE OF CHANGE.] 
    Written notice must be given to the commissioner by each 
licensee of any change in personal name, trade name, qualifying 
person, address or business location not later than 15 business 
days after the change.  The commissioner shall issue an amended 
license, if required, for the unexpired period. 
    Sec. 20.  Minnesota Statutes 1992, section 326.88, is 
amended to read: 
    326.88 [TEMPORARY LICENSES LOSS OF QUALIFYING PERSON.] 
    A temporary license must be issued to residential building 
contractors, remodelers, or specialty contractors if the person 
who obtained a license under section 326.84, subdivision 2, 
clause (2) or (3), leaves the partnership or corporation because 
of death, disability, retirement, or position change.  A 
temporary license expires after one year and may not be renewed. 
Upon the departure or disqualification of a licensee's 
qualifying person because of death, disability, retirement, 
position change, or other reason, the licensee must notify the 
commissioner within 15 business days.  The licensee shall have 
120 days from the departure of the qualifying person to obtain a 
new qualifying person.  Failure to secure a new qualifying 
person within 120 days will result in the automatic termination 
of the license. 
    Sec. 21.  Minnesota Statutes 1992, section 326.89, 
subdivision 2, is amended to read: 
    Subd. 2.  [CONTENTS.] The application must include the 
following information regarding the applicant: 
    (1) Minnesota workers' compensation insurance account 
number certificate; 
    (2) employment insurance account number; 
    (3) certificate of liability insurance; 
    (4) type of license requested; 
    (4) (5) name and address of the applicant if the applicant 
is a sole proprietorship; name and address of each partner if 
the applicant is a partnership; or name and address of each of 
the corporate officers, directors, and all shareholders holding 
more than five percent of the outstanding stock in the 
corporation;: 
    (i) name and address of the applicant's qualifying person, 
if other than applicant; and 
    (ii) if the applicant is a sole proprietorship, the name 
and address of the sole proprietor; if applicant is a 
partnership, the name and address of each partner; if the 
applicant is a limited liability company, the name and address 
of each governor and manager; if applicant is a corporation, the 
name and address of each of the corporate officers, directors, 
and all shareholders holding more than ten percent of the 
outstanding stock in the corporation; 
    (5) (6) whether the applicant, any employee, or qualifying 
person has ever been licensed in this or any other state and has 
had a professional or vocational license refused, suspended, or 
revoked, or has been the subject of any administrative action; 
    (6) (7) whether the applicant, qualifying person, or any of 
its the applicant's corporate or partnership directors, limited 
liability company governors, officers, limited or general 
partners, managers, or all shareholders holding more than five 
ten percent of the outstanding stock share of the corporation 
that have been issued, or all members holding more than ten 
percent of the voting power of the membership interests that 
have been issued, has been convicted of a crime that either 
related directly to the business for which the license is sought 
or involved fraud, misrepresentation, or misuse of funds; has 
suffered a judgment in a civil action involving fraud, 
misrepresentation, negligence, or breach of contract, or 
conversion within the ten years prior to the submission of the 
application; or has had any government license or permit 
suspended or revoked as a result of an action brought by a 
federal, state, or local governmental unit or agency in this or 
any other state; 
    (7) the applicant's education and experience as they relate 
to the requested type of license; and 
    (8) the applicant's and qualifying person's business 
history for the past five years and whether the applicant, any 
employee, or qualifying person has ever filed for bankruptcy or 
protection from creditors or has any unsatisfied judgments 
against the applicant., employee, or qualifying person; 
    (9) where the applicant is a firm, partnership, sole 
proprietorship, limited liability company, corporation, or 
association, whether there has been a sale or transfer of the 
business or other change in ownership, control, or name in the 
last five years and the details thereof, and the names and 
addresses of all prior, predecessor, subsidiary, affiliated, 
parent, or related entities, and whether each such entity, or 
its owners, officers, directors, members or shareholders holding 
more than ten percent of the stock, or an employee has ever 
taken or been subject to an action that is subject to clause 
(6), (7), or (8) in the last ten years; and 
    (10) whether the qualifying person is the qualifying person 
for more than one licensee. 
    For purposes of this subdivision, "applicant" includes 
employees who exercise management or policy control over the 
residential contracting and remodeling activities in the state 
of Minnesota, including affiliates, partners, directors, 
governors, officers, limited or general partners, managers, all 
shareholders holding more than ten percent of the shares that 
have been issued, a shareholder holding more than ten percent of 
the voting power of the shares that have been issued, or all 
members holding more than ten percent of the membership 
interests that have been issued or more than ten percent of the 
voting power of the membership interests that have been issued. 
    The commissioner may require further information as the 
commissioner deems appropriate to administer the provisions and 
further the purposes of this chapter.  
    Sec. 22.  Minnesota Statutes 1992, section 326.89, 
subdivision 3, is amended to read: 
    Subd. 3.  [EXAMINATION.] All individual applicants Each 
qualifying person must satisfactorily complete a written 
examination for the type of license requested.  The commissioner 
may establish the examination qualifications, including related 
education experience and education, the examination procedure, 
and the examination for each licensing group.  The examination 
must include at a minimum the following areas: 
    (1) appropriate knowledge of technical terms commonly used 
and the knowledge of reference materials and code books to be 
used for technical information; and 
    (2) understanding of the general principles of business 
management and other pertinent state laws. 
    Each examination must be designed for the specified type of 
license requested.  The council shall advise the commissioner on 
the grading, monitoring, and updating of examinations. 
    Sec. 23.  Minnesota Statutes 1992, section 326.89, is 
amended by adding a subdivision to read: 
    Subd. 3a.  [ELIGIBILITY.] Any person may take the license 
examination.  After satisfactorily completing the examination, 
an individual may be designated as the qualifying person for a 
licensee at any time, if the individual has also fulfilled the 
continuing education requirements set forth in section 326.87 in 
the manner required for the qualifying person of a licensee. 
    Sec. 24.  Minnesota Statutes 1992, section 326.89, is 
amended by adding a subdivision to read: 
    Subd. 6.  [ADDITIONAL LICENSING REQUIREMENTS.] As an 
alternative to denying an application for licensure pursuant to 
section 326.91, subdivision 1, the commissioner may, as a 
condition of licensure and based upon information received 
pursuant to section 326.89, subdivision 2, clauses (6) to (8), 
or a finding pursuant to section 326.91, subdivision 1, clauses 
(1) to (9), impose additional insurance, bonding, reporting, 
record keeping, and other requirements on the applicant as are 
reasonable to protect the public. 
     Sec. 25.  Minnesota Statutes 1992, section 326.90, is 
amended to read: 
    326.90 [LOCAL LICENSES.] 
    Subdivision 1.  [LOCAL LICENSE PROHIBITED.] Except as 
provided in section sections 326.991 and 326.90, subdivision 2, 
a political subdivision may not require a residential building 
contractor, remodeler, or specialty contractor person licensed 
under sections 326.83 to 326.991 to also be licensed under any 
ordinance, law, rule, or regulation of the political 
subdivision.  This section does not prohibit charges for 
building permits or other charges not directly related to 
licensure. 
    Subd. 2.  [EXCEPTION.] This section does not prohibit a 
political subdivision from requiring licensure or certification 
under any ordinance, law, rule, or regulation of the political 
subdivision for persons who engage in the installation of an 
on-site sewage treatment system. 
    Sec. 26.  Minnesota Statutes 1992, section 326.91, 
subdivision 1, is amended to read: 
    Subdivision 1.  [CAUSE.] The commissioner may by order 
deny, suspend, or revoke any license or may censure a licensee, 
and may impose a civil penalty as provided for in section 
45.027, subdivision 6, if the commissioner finds that the order 
is in the public interest, and that the applicant or, licensee, 
or affiliate of an applicant or licensee, or other agent, owner, 
partner, director, governor, shareholder, member, officer, 
qualifying person, or managing employee of the applicant or 
licensee or any person occupying a similar status or performing 
similar functions:  
    (1) has filed an application for a license which is 
incomplete in any material respect or contains any statement 
which, in light of the circumstances under which it is made, is 
false or misleading with respect to any material fact; 
    (2) has engaged in a fraudulent, deceptive, or dishonest 
practice; 
    (3) is permanently or temporarily enjoined by any court of 
competent jurisdiction from engaging in or continuing any 
conduct or practice involving any aspect of the business; 
    (4) has failed to reasonably supervise employees, agents, 
subcontractors, or salespersons, or has performed negligently or 
in breach of contract, so as to cause injury or harm to the 
public; 
    (5) has violated or failed to comply with any provision of 
sections 326.83 to 326.98 or any rule or order under sections 
326.83 to 326.98; 
    (6) has been shown to be incompetent, untrustworthy, or 
financially irresponsible; 
    (7) has been convicted of a violation of the state building 
code; 
    (8) has failed to use the proceeds of any payment made to 
the licensee for the construction of, or any improvement to, 
residential real estate, as defined in section 326.83, 
subdivision 9, for the payment of labor, skill, material, and 
machinery contributed to the construction or improvement, 
knowing that the cost of any labor performed, or skill, 
material, or machinery furnished for the improvement remains 
unpaid; or 
    (9) has not furnished to the person making payment either a 
valid lien waiver as to any unpaid labor performed, or skill, 
material, or machinery furnished for an improvement, or a 
payment bond in the basic amount of the contract price for the 
improvement conditioned for the prompt payment to any person or 
persons entitled to payment; 
    (10) has engaged in conduct which was the basis for a 
contractor's recovery fund payment pursuant to section 326.975, 
which payment has not been reimbursed; 
    (11) has engaged in bad faith, unreasonable delays, or 
frivolous claims in defense of a civil lawsuit arising out of 
their activities as a licensee under this chapter; or 
    (12) has had a judgment entered against them for failure to 
make payments to employees or subcontractors. 
    Sec. 27.  Minnesota Statutes 1992, section 326.91, 
subdivision 2, is amended to read: 
    Subd. 2.  [ADMINISTRATIVE ACTION.] Section 45.027 applies 
to any action taken by the commissioner in connection with the 
administration of sections 326.83 to 326.98 326.991. 
    Nothing in this section prevents the commissioner from 
denying, suspending, revoking, or restricting a license, or from 
censuring a licensee based on acts or omissions not specifically 
enumerated in this subdivision. 
    Sec. 28.  Minnesota Statutes 1992, section 326.92, 
subdivision 1, is amended to read: 
    Subdivision 1.  [MISDEMEANOR.] A person required to be 
licensed under sections 326.83 to 326.98 326.991 who performs 
unlicensed work as a residential building contractor, remodeler, 
or specialty contractor is guilty of a misdemeanor. 
    Sec. 29.  Minnesota Statutes 1992, section 326.92, 
subdivision 3, is amended to read: 
    Subd. 3.  [COMMISSIONER ACTION.] The commissioner may bring 
actions, including cease and desist actions, against an 
unlicensed or licensed residential building contractor, 
remodeler, or specialty contractor any person licensed or 
required to be licensed under sections 326.83 to 326.991 to 
protect the public health, safety, and welfare. 
     Sec. 30.  [326.921] [BUILDING PERMIT CONDITIONED ON 
LICENSURE.] 
    A political subdivision shall not issue a building permit 
to an unlicensed person who is required to be licensed under 
sections 326.83 to 326.991.  The political subdivision shall 
report the person applying for a building permit to the 
commissioner who may bring an action against the person. 
    Sec. 31.  Minnesota Statutes 1992, section 326.93, 
subdivision 1, is amended to read: 
    Subdivision 1.  [LICENSE.] A nonresident of Minnesota may 
be licensed as a residential building contractor, or residential 
remodeler, or specialty contractor upon compliance with all the 
provisions of sections 326.83 to 326.98 326.991. 
    Sec. 32.  Minnesota Statutes 1992, section 326.94, is 
amended to read: 
     326.94 [BOND; INSURANCE.] 
    Subdivision 1.  [BOND.] (a) Residential building 
contractors, remodelers, and specialty contractors licensed 
under section 326.84 Licensed manufactured home installers and 
licensed roofers must post a license bond with the commissioner, 
conditioned that the applicant shall faithfully perform the 
duties and in all things comply with all laws, ordinances, and 
rules pertaining to the license or permit applied for and all 
contracts entered into.  The annual bond must be continuous and 
maintained for so long as the licensee remains licensed.  The 
aggregate liability of the surety on the bond to any and all 
persons, regardless of the number of claims made against the 
bond, may not exceed the amount of the bond.  The bond may be 
canceled as to future liability by the surety upon 30 days 
written notice mailed to the commissioner by regular mail. 
    (b) The commissioner shall establish by rule a bond scale 
based on the gross annual receipts of the licensee.  The 
residential building contractor and remodeler licensees A 
licensed roofer must post a bond of at least $5,000.  A 
specialty contractor licensee must post a bond of at least 
$2,500.  The bond amounts for specialty contractor licensees 
must be based upon the same classifications as a residential 
building contractor and remodeler licensee. 
    Subd. 2.  [INSURANCE.] Residential building contractors, 
remodelers, and specialty contractors Licensees must have public 
liability insurance with limits of at least $100,000 per 
occurrence and, which must include at least $10,000 property 
damage insurance coverage.  The commissioner may increase the 
minimum amount of insurance required based on the type of 
license and the annual gross receipts of the licensee for any 
licensee or class of licensees if the commissioner considers it 
to be in the public interest and necessary to protect the 
interests of Minnesota consumers. 
    Sec. 33.  [326.951] [DISCLOSURES.] 
    If a licensee sells or offers to sell residential property, 
constructed by the licensee, which is or has been occupied by 
the licensee, the licensee must, prior to entering into a 
binding purchase agreement, provide to the buyer a written 
disclosure which states that any claims that arise as a result 
of the licensee's construction of the property:  (1) will not be 
covered under the statutory warranty established by chapter 
327A, and (2) if the licensee has occupied the residential 
property for one year or more, will not be eligible for 
reimbursement from the contractor's recovery fund. 
    Sec. 34.  Minnesota Statutes 1992, section 326.97, 
subdivision 1, is amended to read: 
    Subdivision 1.  [APPROVAL RENEWAL.] Licensees whose 
applications have been properly and timely filed and who have 
not received notice of denial of renewal are considered to have 
been approved for renewal and may continue to transact business 
whether or not the renewed license has been received.  
Application for renewal of a license is required every two years 
after the initial issuance.  Applications are timely if received 
or postmarked by December 15 March 1 of the year prior to the 
renewal year.  Applications must be made on a form approved by 
the commissioner. 
    Sec. 35.  Minnesota Statutes 1992, section 326.97, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [ANNUAL RENEWAL.] Any license issued or renewed 
after August 1, 1993, must be renewed annually. 
    Sec. 36.  [326.975] [CONTRACTOR'S RECOVERY FUND.] 
    Subdivision 1.  [GENERALLY.] (a) In addition to any other 
fees, each applicant for a license under sections 326.83 to 
326.98 shall pay a fee to the contractor's recovery fund.  The 
contractor's recovery fund is created in the state treasury and 
must be administered by the commissioner in the manner and 
subject to all the requirements and limitations provided by 
section 82.34 with the following exceptions: 
    (1) each licensee who renews a license shall pay in 
addition to the appropriate renewal fee an additional fee which 
shall be credited to the contractor's recovery fund.  The amount 
of the fee shall be based on the licensee's gross annual 
receipts for the licensee's most recent fiscal year preceding 
the renewal, on the following scale: 
          Fee           Gross Receipts
          $100          under $1,000,000
          $150          $1,000,000 to $5,000,000
          $200          over $5,000,000
Any person who receives a new license shall pay a fee based on 
the same scale; 
    (2) the sole purpose of this fund is to compensate any 
aggrieved owner or lessee of residential property who obtains a 
final judgment in any court of competent jurisdiction against a 
licensee licensed under section 326.84, on grounds of 
fraudulent, deceptive, or dishonest practices, conversion of 
funds, or failure of performance arising directly out of any 
transaction when the judgment debtor was licensed and performed 
any of the activities enumerated under section 326.83, 
subdivision 11, on the owner's residential property or on 
residential property rented by the lessee, or on new residential 
construction which was never occupied prior to purchase by the 
owner, or which was occupied by the licensee for less than one 
year prior to purchase by the owner, and which cause of action 
arose on or after March 31, 1994; and 
    (3) nothing may obligate the fund for more than $50,000 per 
claimant, nor more than $50,000 per licensee. 
    (b) Should the commissioner pay from the contractor's 
recovery fund any amount in settlement of a claim or toward 
satisfaction of a judgment against a licensee, the license shall 
be automatically suspended upon the effective date of an order 
by the court authorizing payment from the fund.  No licensee 
shall be granted reinstatement until the licensee has repaid in 
full, plus interest at the rate of 12 percent a year, twice the 
amount paid from the fund on the licensee's account, and has 
obtained a surety bond issued by an insurer authorized to 
transact business in this state in the amount of at least 
$40,000. 
    Subd. 2.  [ACCELERATED CLAIMS PAYMENT.] Recovery fund 
claims that do not exceed the jurisdiction limits for 
conciliation court matters as specified in section 487.30 shall 
be paid on an accelerated basis if all of the following 
requirements have been satisfied: 
    (a) When any aggrieved person obtains a judgment in any 
court of competent jurisdiction, regardless of whether the 
judgment has been discharged by a bankruptcy court against a 
residential building contractor or residential remodeler on 
grounds specified in subdivision 1, paragraph (a), clause (2), 
the aggrieved person may file a verified application with the 
commissioner for payment out of the fund of the amount of actual 
and direct out-of-pocket loss in the transaction, but excluding 
any attorney fees, interest on the loss and on any judgment 
obtained as a result of the loss, up to the conciliation court 
jurisdiction limits, of the amount unpaid upon the judgment.  
For purposes of this section, persons who are joint tenants or 
tenants in common are deemed to be a single claimant. 
    (b) The commissioner has sent the licensee a copy of the 
verified application by first-class mail to the licensee's 
address as it appears in the records of the department of 
commerce with a notice that the claim will be paid 15 days from 
the date of the notice unless the licensee notifies the 
commissioner prior to that date of the commencement of an appeal 
of the judgment, if the time for appeal has not expired, and 
that payment of the claim will result in automatic suspension of 
the licensee's license. 
    (c) If the licensee does not notify the commissioner of the 
commencement of an appeal, the commissioner shall pay the claim 
at the end of the 15-day period. 
    (d) If an appeal is commenced, the payment of the claim is 
stayed until the conclusion of the appeal. 
    (e) The commissioner may pay claims which total no more 
than $15,000 against the licensee under this accelerated 
process.  The commissioner may prorate the amount of claims paid 
under this subdivision if claims in excess of $15,000 against 
the licensee are submitted.  Any unpaid portions of such claims 
shall be satisfied in the manner set forth in subdivision 1. 
     Subd. 3.  [APPROPRIATION.] Money in the contractor's 
recovery fund is appropriated to the commissioner for the 
purposes of this section. 
    Sec. 37.  Minnesota Statutes 1992, section 326.99, is 
amended to read: 
    326.99 [INITIAL TEMPORARY LICENSES.] 
    Residential building contractors and residential remodelers 
must obtain a temporary license, which is effective as of 
January 1, 1992.  The commissioner may stagger the temporary 
licenses so that approximately one-half of the licenses will 
expire on March 31, 1993, and the other one-half on March 31, 
1994.  For residential building contractors and remodelers whose 
initial temporary license expires March 31, 1993, the 
commissioner upon receipt of a written request and upon payment 
of the appropriate license renewal fee by the licensee shall 
extend the examination deadline until March 31, 1994.  In 1994, 
in addition to the established examination sites, and at no 
additional costs to the examination candidate, the examination 
must be made available at least once at five additional sites 
throughout the state.  The additional examination sites must be 
located whenever possible at public schools or technical 
colleges. 
    Sec. 38.  Minnesota Statutes 1992, section 326.991, is 
amended to read: 
    326.991 [EXEMPTION EXCEPTION.] 
    Subdivision 1.  The license requirement under section 
326.84 does not apply to a residential building 
contractor, residential remodeler, or specialty contractor 
licensed by the city of St. Paul or the city of Minneapolis and 
who is performing work within the legal boundaries of one of 
those municipalities.  The two cities shall adopt and administer 
the tests for the residential building contractors and 
remodelers established in section 326.89 within six months of 
the effective date of the rules establishing the examinations.  
    This subdivision expires March 31, 2000. 
    Subd. 2.  The commissioner may by rule establish a 
procedure for contract with the city of Minneapolis and the city 
of St. Paul to administer this licensing program on a contract 
basis. 
    Sec. 39.  [MANUFACTURED HOME INSTALLERS.] 
    Manufactured home installers as defined in Minnesota 
Statutes, section 326.83, subdivision 4b, are not subject to 
Minnesota Statutes, section 326.975. 
    Sec. 40.  [REPEALER.] 
    Minnesota Statutes 1992, section 326.84, subdivision 2, is 
repealed.  
    Sec. 41.  [EFFECTIVE DATE.] 
    Section 15 is effective August 1, 1993, but the certificate 
of exemption requirement for those persons claiming an exemption 
pursuant to clause (5) of section 15 shall not be effective 
until March 31, 1994. 
    Presented to the governor May 14, 1993 
    Signed by the governor May 17, 1993, 4:44 p.m.