Real Estate Transaction Recovery Fund
The Virginia Real Estate Transaction Recovery Act provides relief to eligible consumers who have incurred losses through the improper or dishonest conduct of a licensed real estate salesperson, broker, or firm. The Recovery Fund is supported entirely by assessments paid by licensees, 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 real estate salesperson, broker, or firm ("licensee") may be eligible to file a claim. The court judgment must be obtained against an individual or entity licensed by the Real Estate Board and must be based upon the improper or dishonest conduct of the licensee. Any language in the judgment supporting the conclusion that the court found the conduct of the licensee 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 and fraudulent taking or conversion of money, property, or other things of value or material misrepresentation or deceit.
- Any disciplinary action taken against a licensee by the Real Estate Board does not, by itself, satisfy any statutory requirements to support a Recovery Fund claim.
In situations where the real estate licensee has filed bankruptcy, the claimant 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 real estate salesperson, broker, or firm must have been licensed during the period in which the improper or dishonest conduct occurred. The conduct must have occurred in connection with a transaction involving the sale, lease, or management of real property by the licensee acting in the capacity of a real estate broker or real estate salesperson, and not in the capacity of a principal.
State law prohibits the following from filing a Recovery Fund claim:
- a real estate licensee;
- the personal representative of a real estate licensee;
- the spouse or child of the licensee who is the subject of the claim (the licensee against whom the judgment was awarded), nor the personal representative of such spouse or child; or
- any lending or financial institution, nor anyone whose business involves the construction or development of real property.
Please note, the General Assembly, not the Real Estate Board, establishes eligibility criteria for the Recovery Fund.
State law limits a single Recovery Fund claim to $20,000, and also limits the total amount of claims per transaction to $50,000. Claims arising from multiple transactions involving the same real estate licensee are limited to $100,000 per biennial license period.
If multiple claims involving one licensee exceed $100,000, or if multiple claims involving the same transaction exceed $50,000, the claim amounts must be prorated.
The Recovery Fund does not pay interest, punitive damages, exemplary damages, or any amounts that do not constitute actual monetary loss to the claimant. However, the award (claim) may include attorneys' fees and court costs awarded by the court.
When a payment involving a real estate licensee is made from the Recovery Fund, in most cases, the applicable license is automatically revoked. Any licensee whose license is revoked shall not be eligible to apply for a license as a broker or salesperson until the amount paid from the Recovery Fund is repaid in full, plus interest. The Real Estate Board may also take further disciplinary action against the licensee. However, any disciplinary action taken against the licensee by the Real Estate Board does not, by itself, satisfy any statutory requirements to support a Recovery Fund claim.
The Real Estate Transaction Recovery Fund is not funded by any tax revenues. All administrative costs and claims are funded with assessments paid by real estate licensees.
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 (§ 54.1-2112 et seq.). 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 Real Estate Board at its next regularly scheduled meeting, where the Board will make a final decision on whether to approve the claim and for what amount.
When respondent licensees choose to exercise their due process right to a hearing, or if questions concerning actual monetary loss or eligibility exist, claims are referred to an Informal Fact-Finding (IFF) Conference to gather additional information. The purpose and focus of any IFF Conference, the administrative proceeding where a Board member presides, is to determine the actual loss the claimant incurred as a result of the actions of the licensee 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.
What is the basic time frame?
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. IFF Conferences are normally held monthly to hear Recovery Fund claims, and the Board itself meets approximately every eight 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 real estate licensee, the Clerk of Court should be notified that the Real Estate Board 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 Real Estate Recovery Fund Claim Form must be filed with the Department of Professional and Occupational Regulation (DPOR) within 12 months after the judgment is final. Please 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).
|RECOVERY FUND CLAIM FORM||Click here|
For more information, contact:
Recovery Fund Office | DPOR
9960 Mayland Drive, Suite 400
Richmond, VA 23233