Recovery Fund: How to Collect
How To Collect From The Recovery Fund
The recovery fund was established to cover claims against licensed contractors made by any owner of residential real property which is occupied or intended to be occupied by the owner as a residence. Unlike the regular license bond, the recovery fund is not subject to claims by suppliers, subcontractors, laborers or others.
A homeowner may recover a maximum of $30,000 per residence. Only actual damages can be recovered. A total of $200,000 in claims will be paid for any particular residential contractor. This means that once $200,000 in claims has been dispersed, the fund would pay no more claims against that contractor's license.
Civil Lawsuit Procedure For Recovery
A civil action against the contractor for a recovery fund claim must be brought in either Justice of the Peace Court or Superior Court. The lawsuit cannot be commenced later than two (2) years from the date of the commission of the act by the contractor that is the cause of the injury or two (2) years from the date of occupancy.
Plaintiff must pursue all bonds that are in effect, and this can be accomplished in the same lawsuit. Upon filing the lawsuit, written notice must be given to the Registrar, who may intervene at any time.
The claimant must provide copies of contracts, cancelled checks, front and back, and three estimates of the cost for completing the work. After supporting documents are received, an inspector will schedule a meeting at the house to view the items in question. When all this information is collected, we will calculate the reasonableness of the damages requested and decide whether or not to intervene.
A homeowner must file a copy of the judgment with the Registrar along with at least twenty (20) days written notice of the intent to apply to the court for an order directing payment from the fund. If everything is complete, the court will issue a payment order. The homeowner then needs to file with the Registrar a court
certified copy of the payment order. At that point the claim will be sent to administration for processing. A check is usually issued within three (3) weeks.
PLEASE NOTE, If the contractor has filed for bankruptcy, you must first petition the Bankruptcy Court for relief from the automatic stay order imposed upon all potential claimants. Once granted you may then file your civil lawsuit as outlined above.
Although this process may seem somewhat involved, our experience is that the majority of claims are against insolvent contractors, and there will usually not be a contractor actively fighting the lawsuit, making it much easier to satisfy these requirements.
When payment is made from the recovery fund the contractor's license is automatically suspended by operation of law until the money is repaid to the fund.
Administrative Procedure For Recovery
If the contractor's license has been revoked or has been suspended, on your complaint, as a result of an order to remedy a violation, you may be eligible to apply directly to the fund and eliminate the civil process.
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claim form must be completed and filed with our office along with three (3) complete itemized written bids from properly licensed residential contractors for repairs or completion of the work originally contracted for, copies of contracts and cancelled checks, front and back. A copy of the escrow settlement should be included with claims covering new residential construction.
THIS ENTIRE PROCESS TAKES AT LEAST 16 WEEKS BEFORE ACTUAL DISTRIBUTION OF FUNDS.
BANKRUPTCY CASES MUST FOLLOW THE CIVIL LAWSUIT PROCEDURE UNLESS THE FEDERAL BANKRUPTCY COURT SPECIFICALLY GRANT RELIEF FROM THE AUTOMATIC STAY ORDER ALLOWING ACCESS TO THE RECOVERY FUND UNDER
A.R.S. §32-1154.E..
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