Michigan Builders License Exam Study Guide –
Complete With Solutions
What is the first offense penalty for engaging in the practice of residential
building without a license? ✔️Ans - Not less than $5,000 and not more
than $25,000 and/or one year in prison. Subsequent violations can extend the
prison time to up to 2 years.
What is the penalty for engaging in the practice of residential builders license,
resulting in a death? ✔️Ans - Not less than $5,000 and not more than
$25,000 and/or four years in prison
On your individual builder's license application, what should you write as
your "business address"? ✔️Ans - Your personal address
What is the cost for the individual builder's license? ✔️Ans - $195
After receiving your residential builder's license, what are the only trades not
covered by your license? ✔️Ans - Plumbing, electrical, and HVAC
Who is the TESTING company for the State of Michigan? ✔️Ans - PSI
What is the name of the department that regulates your license? ✔️Ans -
LARA
What are the 2 parts of the Residential Builder Examination? ✔️Ans -
Business and Law examination/Practice and Trade examination
What is a good quick asset ratio? ✔️Ans - 1 to 1
Under the Carpentry section of the test, what does a "span table" tell us?
✔️Ans - What species and what grade of lumber a floor joist has to be to span
a certain distance
Which is NOT a reason that you need a residential business license?
It allows you to be able to file a lein on property
It allows you to pull a residential permit
It allows you to file a lawsuit if necessary
,It allows you to work on commercial properties ✔️Ans - It allows you to
work on commercial properties
Where does most fraud occur? ✔️Ans - In the residential market
As a builder, your license falls under the regulation of: ✔️Ans - Both rules
by the director and board as well as laws of the state of Michigan
What is the make up of the 9 members of the board? ✔️Ans - 4 residential
builders, 2 M + A contractors, and 3 members of the general public
Under the definition of occupational code, what does the word "limitation"
refer to? ✔️Ans - A condition, stricture, restraint or probation attached to
a license relative to the scope of practice
Who, upon completion of a hearing, shall assess a penalty or penalties?
✔️Ans - The Board
If you fail to renew your license or registration on or before the expiration
date, how many days do you have to resubmit with the proper payment and
late fee? ✔️Ans - 60 days
When the department is investigating a complaint and finds evidence of a
violation, what actions can be brought against the respondent? ✔️Ans - A
cease and desist order, a formal complaint, and/or a citation
How many days after the administrative law hearings examiner hears the
report, must a determination of penalties be made by the board? ✔️Ans -
60 days
What is a compliance conference? ✔️Ans - A meeting where ONLY the
respondent meets with the department to discuss the complaint against them
Which of the following terms means a premise used or intended to be used for
a residential purpose and related facilities appurtenant to the premises used
or intended to be used as an adjunct of residential occupancy? ✔️Ans -
Residential structure
,An employee other than the listed salesperson may make a sale when:
✔️Ans - It is occasional and incidental to the person's principal employment
The following are reasons that someone would be allowed to operate without
a residential business license: ✔️Ans - - They are an authorized
representative of the United States government
- They are the owner of a rental property with reference to the maintenance
and alteration of that rental property
- An owner of property with reference to a structure on the property for the
owner's own use and occupancy
Beginning the license cycle after December 21, 2007, the department shall
issue the license of a residential builder and residential maintenance and
alteration contractor for a period of how many years in duration? ✔️Ans -
3 years
After receiving your initial residential builder's license, how many hours of
continuing competency are required within the next 3 years? ✔️Ans - 21
hours
If a salesperson desires to change employment from one residential builder or
maintenance and alteration contractor to another: ✔️Ans - The license
shall be forwarded to the department, an application will be made for a
transfer, and a new license under the salesperson's new employer will be
issued
Regarding workmanship, how long does a client have to file a "verified
complaint"? ✔️Ans - 18 months from the completion of work
If a licensed residential builder or licensed residential maintenance and
alteration contractor wishes to change the control or direction of the business,
how long do they have to report that change to the department? ✔️Ans -
10 days
The department shall conduct a review upon notice that a licensee has
violated the asbestos abatement contractors licensing act. What are the
possible consequences for for this violation? ✔️Ans - The department may
suspend or revoke that person's license and fines may be issued
, When the board issues the findings of a verified complaint: ✔️Ans - - The
department shall post on its website any final order of the board and the date
it was issued
- The posting shall occur within 30 days after the final order is issued
- The department shall annually post on its website the number of final orders
to the board
According to the Administrative Rules, an application for a license shall
include: ✔️Ans - - The residence address of all individuals, partners,
officers and/or members, as requested by the department
- The address of the principal place of business in Michigan
Upon final order of license suspension or revocation, the licensee shall
surrender the license to the department within how many days of the date of
suspension or revocation? ✔️Ans - 10 days
According to Administrative rules, a licensee shall include the following in all
advertising: ✔️Ans - - The name on the license
- The license number
- The actual business address as shown on the license
According to purchase and sale agreements, the builder or contractor shall
make certain that the written agreements clearly state the terms of the
transaction, including: ✔️Ans - - Specifications and cost
- The type and quality of materials
- The type and amount of work to be done
The department, after investigation, may request a licensee to appear at such
_________ as is necessary to determine whether there is cause for complaint
which would require a hearing on, or dismissal of, the complaint. ✔️Ans -
Investigative conference
A respondent in a complaint may be represented by: ✔️Ans - An attorney
or his/her own self
What act was created to collect fees for the regulation of certain occupations
and professions, and for certain agencies and businesses; to create certain
funds; and to prescribe certain powers and duties of certain state agencies
and departments? ✔️Ans - State License Fee Act
Complete With Solutions
What is the first offense penalty for engaging in the practice of residential
building without a license? ✔️Ans - Not less than $5,000 and not more
than $25,000 and/or one year in prison. Subsequent violations can extend the
prison time to up to 2 years.
What is the penalty for engaging in the practice of residential builders license,
resulting in a death? ✔️Ans - Not less than $5,000 and not more than
$25,000 and/or four years in prison
On your individual builder's license application, what should you write as
your "business address"? ✔️Ans - Your personal address
What is the cost for the individual builder's license? ✔️Ans - $195
After receiving your residential builder's license, what are the only trades not
covered by your license? ✔️Ans - Plumbing, electrical, and HVAC
Who is the TESTING company for the State of Michigan? ✔️Ans - PSI
What is the name of the department that regulates your license? ✔️Ans -
LARA
What are the 2 parts of the Residential Builder Examination? ✔️Ans -
Business and Law examination/Practice and Trade examination
What is a good quick asset ratio? ✔️Ans - 1 to 1
Under the Carpentry section of the test, what does a "span table" tell us?
✔️Ans - What species and what grade of lumber a floor joist has to be to span
a certain distance
Which is NOT a reason that you need a residential business license?
It allows you to be able to file a lein on property
It allows you to pull a residential permit
It allows you to file a lawsuit if necessary
,It allows you to work on commercial properties ✔️Ans - It allows you to
work on commercial properties
Where does most fraud occur? ✔️Ans - In the residential market
As a builder, your license falls under the regulation of: ✔️Ans - Both rules
by the director and board as well as laws of the state of Michigan
What is the make up of the 9 members of the board? ✔️Ans - 4 residential
builders, 2 M + A contractors, and 3 members of the general public
Under the definition of occupational code, what does the word "limitation"
refer to? ✔️Ans - A condition, stricture, restraint or probation attached to
a license relative to the scope of practice
Who, upon completion of a hearing, shall assess a penalty or penalties?
✔️Ans - The Board
If you fail to renew your license or registration on or before the expiration
date, how many days do you have to resubmit with the proper payment and
late fee? ✔️Ans - 60 days
When the department is investigating a complaint and finds evidence of a
violation, what actions can be brought against the respondent? ✔️Ans - A
cease and desist order, a formal complaint, and/or a citation
How many days after the administrative law hearings examiner hears the
report, must a determination of penalties be made by the board? ✔️Ans -
60 days
What is a compliance conference? ✔️Ans - A meeting where ONLY the
respondent meets with the department to discuss the complaint against them
Which of the following terms means a premise used or intended to be used for
a residential purpose and related facilities appurtenant to the premises used
or intended to be used as an adjunct of residential occupancy? ✔️Ans -
Residential structure
,An employee other than the listed salesperson may make a sale when:
✔️Ans - It is occasional and incidental to the person's principal employment
The following are reasons that someone would be allowed to operate without
a residential business license: ✔️Ans - - They are an authorized
representative of the United States government
- They are the owner of a rental property with reference to the maintenance
and alteration of that rental property
- An owner of property with reference to a structure on the property for the
owner's own use and occupancy
Beginning the license cycle after December 21, 2007, the department shall
issue the license of a residential builder and residential maintenance and
alteration contractor for a period of how many years in duration? ✔️Ans -
3 years
After receiving your initial residential builder's license, how many hours of
continuing competency are required within the next 3 years? ✔️Ans - 21
hours
If a salesperson desires to change employment from one residential builder or
maintenance and alteration contractor to another: ✔️Ans - The license
shall be forwarded to the department, an application will be made for a
transfer, and a new license under the salesperson's new employer will be
issued
Regarding workmanship, how long does a client have to file a "verified
complaint"? ✔️Ans - 18 months from the completion of work
If a licensed residential builder or licensed residential maintenance and
alteration contractor wishes to change the control or direction of the business,
how long do they have to report that change to the department? ✔️Ans -
10 days
The department shall conduct a review upon notice that a licensee has
violated the asbestos abatement contractors licensing act. What are the
possible consequences for for this violation? ✔️Ans - The department may
suspend or revoke that person's license and fines may be issued
, When the board issues the findings of a verified complaint: ✔️Ans - - The
department shall post on its website any final order of the board and the date
it was issued
- The posting shall occur within 30 days after the final order is issued
- The department shall annually post on its website the number of final orders
to the board
According to the Administrative Rules, an application for a license shall
include: ✔️Ans - - The residence address of all individuals, partners,
officers and/or members, as requested by the department
- The address of the principal place of business in Michigan
Upon final order of license suspension or revocation, the licensee shall
surrender the license to the department within how many days of the date of
suspension or revocation? ✔️Ans - 10 days
According to Administrative rules, a licensee shall include the following in all
advertising: ✔️Ans - - The name on the license
- The license number
- The actual business address as shown on the license
According to purchase and sale agreements, the builder or contractor shall
make certain that the written agreements clearly state the terms of the
transaction, including: ✔️Ans - - Specifications and cost
- The type and quality of materials
- The type and amount of work to be done
The department, after investigation, may request a licensee to appear at such
_________ as is necessary to determine whether there is cause for complaint
which would require a hearing on, or dismissal of, the complaint. ✔️Ans -
Investigative conference
A respondent in a complaint may be represented by: ✔️Ans - An attorney
or his/her own self
What act was created to collect fees for the regulation of certain occupations
and professions, and for certain agencies and businesses; to create certain
funds; and to prescribe certain powers and duties of certain state agencies
and departments? ✔️Ans - State License Fee Act
