Minnesota Session Laws - 1994, Regular Session

                            CHAPTER 404-H.F.No. 2035 
                  An act relating to commerce; residential building 
                  contractors and remodelers; clarifying legislative 
                  intent to require maintenance of bonds until license 
                  renewal; requiring recovery fund fee proration in 
                  certain circumstances; amending Minnesota Statutes 
                  1993 Supplement, section 326.975, subdivision 1. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1993 Supplement, section 
        326.975, subdivision 1, is amended to read: 
           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 19, 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 April 1, 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. 
           Sec. 2.  [326.945] [RESIDENTIAL BUILDING CONTRACTORS AND 
        REMODELERS; 
        BOND MAINTENANCE UNTIL LICENSE RENEWAL.] 
           Subdivision 1.  [RESIDENTIAL BUILDING CONTRACTORS AND 
        REMODELERS LICENSED AS OF JUNE 30, 1993.] A residential building 
        contractor or remodeler licensed under Minnesota Statutes, 
        section 326.84 who had a license in effect as of June 30, 1993 
        must, until the license is renewed, continuously maintain the 
        license bond which was posted with the commissioner under 
        Minnesota Statutes, section 326.94 when the person was initially 
        licensed.  
           Subd. 2.  [RESIDENTIAL BUILDING CONTRACTORS AND REMODELERS 
        LICENSED ON OR AFTER JULY 1, 1993.] A residential building 
        contractor or remodeler who obtains a license on or after July 
        1, 1993, but before April 1, 1994, 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, and must 
        continuously maintain the license bond until the license is 
        renewed.  The required license bond must be in the following 
        amount: 
           (1) $5,000 for a residential building contractor or 
        remodeler with annual gross receipts of $1,000,000 or less; 
           (2) $10,000 for a residential building contractor or 
        remodeler with annual gross receipts of more than $1,000,000 but 
        less than $5,000,000; or 
           (3) $15,000 for a residential building contractor or 
        remodeler with annual gross receipts of $5,000,000 or more. 
           Subd. 3.  [RESIDENTIAL BUILDING CONTRACTORS AND REMODELERS; 
        RECOVERY FUND FEE PRORATED.] A residential building contractor 
        or remodeler licensed under Minnesota Statutes, section 326.84, 
        who does not maintain a license bond under Minnesota Statutes, 
        section 326.94, shall pay a one-twelfth share of the 
        contractor's recovery fund fee set in Minnesota Statutes, 
        section 326.975, subdivision 1, paragraph (a), clause (1), in 
        lieu of the license bond for each month or any portion of a 
        month the licensee is not bonded prior to license renewal. 
           Sec. 3.  [EFFECTIVE DATE.] 
           Section 2, subdivisions 1 and 2, are effective retroactive 
        to July 1, 1993.  Sections 1 and 2, subdivision 3, are effective 
        April 1, 1994. 
           Presented to the governor April 8, 1994 
           Signed by the governor April 11, 1994, 2:34 p.m.