Contractor Transaction Recovery Fund
The Virginia Contractor Transaction Recovery Act provides relief to eligible consumers who have incurred losses through the improper or dishonest conduct of a licensed residential contractor. The Recovery Fund is supported entirely by assessments paid by licensed contractors, not by any tax revenues.
Filing a claim does not guarantee payment.
A person who has been awarded a judgment in a court of competent jurisdiction in the Commonwealth of Virginia against a licensed contractor may be eligible to file a claim. In addition, a property owners' association as defined in § 55.1-1800 may qualify, if it contracted with a licensee for improvements to the common areas owned by the association.
The court judgment must be obtained against an entity licensed by the Board for Contractors and must be based upon the improper or dishonest conduct of the contractor. Any language in the judgment supporting the conclusion that the court found the conduct of the licensed contractor involved improper or dishonest conduct may be used by the Board to determine eligibility for recovery from the Fund.
- "Improper or dishonest conduct" includes only the wrongful taking or conversion of money, property, or other things of value which involves fraud, material misrepresentation, or conduct constituting gross negligence, continued incompetence, or intentional violation of the Uniform Statewide Building Code (Title 36, Chapter 6 of the Code of Virginia).
- The term "improper or dishonest conduct" does not include mere breach of contract. NOTE: Any disciplinary action taken against a licensee by the Board for Contractors does not, by itself, satisfy any statutory requirements to support a Recovery Fund claim.
In situations where the licensed contractor has filed bankruptcy, the consumer must first file a claim with the proper bankruptcy court. If no distribution is made, or if the distribution fails to satisfy the claim, the consumer may then file a Recovery Fund claim with the Board. If the court order is silent on the matter of the licensee's conduct, the Board will determine whether the conduct was improper and dishonest and what amount, if any, such claimant is entitled to recover from the Fund.
The contractor must have been licensed during the period in which the improper or dishonest conduct occurred. The contract between the consumer and the contractor must involve contracting for the consumer's residence located in Virginia.
State law prohibits the following from filing a Recovery Fund claim:
- an employee, vendor, spouse or child of the contractor;
- another licensed contractor;
- a financial or lending institution; or
- anyone whose business involves the construction or development of real property.
Please note, the General Assembly, not the Board for Contractors, establishes eligibility criteria for the Recovery Fund.
State law limits a single Recovery Fund claim to $20,000. Multiple claims involving the same contractor are limited to $40,000 per biennium.
If multiple claims involving one contractor exceed $40,000, the claim amounts must be prorated.
The Recovery Fund does not pay interest, punitive damages, exemplary damages, or any amounts that do not constitute an actual monetary loss to the claimant. However, the award may include attorneys' fees and court costs.
The Contractor Transaction Recovery Fund is not funded by any tax revenues. All administrative costs and claims are funded with assessments paid by contractors.
Is it necessary to be represented by an attorney?
This decision is entirely up to the claimant. While some claimants choose to be represented by an attorney in their claim, it is not necessary in order to file a claim. If the claimant is represented by an attorney, DPOR staff will contact that attorney directly with regard to the claim. Attorney fees may be recoverable from the Fund.
Once a claim has been received by DPOR, staff will review the file to determine whether the claimant meets the eligibility requirements established by state law (§ 54.1-1120 of the Code of Virginia). If the claimant is determined eligible based on the staff review, the claim file along with a recommendation for payment will be reviewed by the full Board for Contractors at its next regularly scheduled meeting, where the Board will make a final decision on whether to approve the claim and for what amount.
If questions concerning actual monetary loss or eligibility exist, your claim may be referred to an Informal Fact-Finding (IFF) Conference to gather additional information, with a Board member presiding over the administrative proceeding. The purpose and focus of any IFF Conference, scheduled at the Board's discretion, is to determine the actual loss the claimant incurred as a result of the actions of the licensed contractor and/or any eligibility issues involved. Only the actual loss, along with attorney fees and court costs, will be considered. Special damages, consequential damages, punitive damages, etc. will not be considered. The Board member may ask questions about the claim and the information provided. Following the presentation of this information, the Board member makes a recommendation as to the amount of monetary relief, if any, to approve. The recommendation and claim file is then reviewed by the full Board at a regularly scheduled meeting, where the Board makes the final decision on whether to approve the claim and for what amount.
It is difficult to state a general time frame because each claim is different. Factors affecting the process include whether all required documentation is included with the claim form and if the civil action has been completed. The Board meets approximately every six weeks to review Recovery Fund claim recommendations.
Claimants should be aware that obtaining assistance from the Recovery Fund is not a swift process in most cases, and occurs only after all other civil legal remedies are exhausted.
When the consumer takes any legal action against a contractor, the Clerk of Court should be notified that the Board for Contractors must also receive a copy of the notice served on the licensee. An affidavit stating the acts of improper or dishonest conduct of the licensee should be included with the notice given to the Board.
After the consumer obtains a judgment from a court, the consumer must attempt to collect from the licensee by conducting debtor interrogatories. This legal action determines whether the licensee has any assets which can be sold or applied to satisfy the court judgment. If any assets are revealed by the interrogatories, the consumer must provide evidence that all legally available actions have been taken to sell the assets, and disclose amounts realized from such actions.
A Contractor Recovery Fund Claim Form must be filed with the Department of Professional and Occupational Regulation (DPOR) within 12 months after the judgment is final. Attach a certified copy of the judgment order, copies of all pleadings filed by either party (if any), a copy of the contract, a notarized affidavit stating the acts of improper or dishonest conduct by the licensee which form the basis of this claim, and evidence that debtor interrogatories were conducted (which should include the front and back of the summons for interrogatories).
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For more information, contact:
Recovery Fund Office | DPOR
9960 Mayland Drive, Suite 400
Richmond, VA 23233