Recovery Fund: How to Collect
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CONTENTS
Civil Lawsuit Procedure for Recovery Administrative Procedure for Recovery Collecting from a Contractor's License Bond About Liens
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.
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.
A 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..
A 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..
How to Collect from a Contractor's License Bond
When a contractor becomes licensed by the State of Arizona, the licensee must post a license bond ranging from $1,000 to $90,000. This money may be posted in the form of cash, a certificate of deposit or a surety bond. The first thing to do is to find out the type of bond held by the contractor and to make sure it has not already been exhausted. You can call any ROC Office and ask for bond information on the particular contractor or visit our website.
If the contractor has posted a surety bond, the surety company has the right to pay a written claim prior to court action, but some will require you to get a judgment against the contractor and the surety company. To collect from a surety bond you must file a written claim with the surety company. If the surety company will not pay the claim, you will have to bring a lawsuit against both the contractor and the surety company. You may need to seek legal counsel for assistance in filing a lawsuit. The Registrar of Contractors does not participate in the preparation of your civil action to collect from a surety bond. We recommend that you review the statutes governing bonds and the recovery fund beginning with A.R.S. §32-1131. Copies of the ROC statutes are available at any of our offices or on this website.
If the contractor has posted a cash bond or a certificate of deposit, only the contractor has to be sued. You must send written notice to the Registrar of Contractors of any lawsuit you may file to collect from a contractor's cash bond or certificate of deposit. This will prevent the bond from being refunded to the contractor pending resolution of the claim. Civil judgments must specify that claim can be paid from the cash bond or certificate of deposit assigned to the Registrar of Contractors. If multiple judgments are received, cash bonds are disbursed in the order the judgements are received. It is possible that a contractor's bond could be depleted before you make recovery. It is always advisable to act promptly if a problem occurs.
Lawsuits against license bonds must be started within two years after the commission of the act on which the claim is based. If payment is made from a license bond, the contractor's license is automatically suspended by the operation of law until the full bond amount is replaced.
If the contractor has posted a surety bond, the surety company has the right to pay a written claim prior to court action, but some will require you to get a judgment against the contractor and the surety company. To collect from a surety bond you must file a written claim with the surety company. If the surety company will not pay the claim, you will have to bring a lawsuit against both the contractor and the surety company. You may need to seek legal counsel for assistance in filing a lawsuit. The Registrar of Contractors does not participate in the preparation of your civil action to collect from a surety bond. We recommend that you review the statutes governing bonds and the recovery fund beginning with A.R.S. §32-1131. Copies of the ROC statutes are available at any of our offices or on this website.
If the contractor has posted a cash bond or a certificate of deposit, only the contractor has to be sued. You must send written notice to the Registrar of Contractors of any lawsuit you may file to collect from a contractor's cash bond or certificate of deposit. This will prevent the bond from being refunded to the contractor pending resolution of the claim. Civil judgments must specify that claim can be paid from the cash bond or certificate of deposit assigned to the Registrar of Contractors. If multiple judgments are received, cash bonds are disbursed in the order the judgements are received. It is possible that a contractor's bond could be depleted before you make recovery. It is always advisable to act promptly if a problem occurs.
Lawsuits against license bonds must be started within two years after the commission of the act on which the claim is based. If payment is made from a license bond, the contractor's license is automatically suspended by the operation of law until the full bond amount is replaced.
About Liens
The Registrar of Contractors does not regulate liens. Any questions regarding liens should be addressed with a party’s own legal counsel. Statutory information on Liens can be found in [Title 33, Chapter 7] of the Arizona Revised Statutes.
The following information is taken directly from the Arizona State Legislature's website and provided as a convenience.
The Registrar of Contractors cannot guarantee the accuracy of the following text. Inquiries about the following information should be directed to the Arizona State Legislature.
The following information is taken directly from the Arizona State Legislature's website and provided as a convenience.
The Registrar of Contractors cannot guarantee the accuracy of the following text. Inquiries about the following information should be directed to the Arizona State Legislature.