Florida Homeowners’ Construction Recovery Fund
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The Florida Homeowners’ Construction Recovery Fund was created under Chapter 489, Florida Statutes as a separate account in the Professional Regulation Trust Fund. The recovery fund shall be funded pursuant to s. 468.631. Its purpose is to provide relief for Florida homeowners who have been harmed by licensed Division I contractors. This post will discuss the ins and outs of the Recovery Fund and who is eligibility to receive an award.
Any claimant is eligible to seek recovery from the recovery fund after having made a claim and exhausting the limits of any available bond, cash bond, surety, guarantee, warranty, letter of credit, or policy of insurance, provided that each of the following conditions is satisfied:
(a) The claimant has received final judgment in a court of competent jurisdiction in this state or has received an award in arbitration or the Construction Industry Licensing Board has issued a final order directing the licensee to pay restitution to the claimant. The board may waive this requirement if:
1. The claimant is unable to secure a final judgment against the licensee due to the death of the licensee; or
2. The claimant has sought to have assets involving the transaction that gave rise to the claim removed from the bankruptcy proceedings so that the matter might be heard in a court of competent jurisdiction in this state and, after due diligence, the claimant is precluded by action of the bankruptcy court from securing a final judgment against the licensee.
(c) The violation was committed by a licensee.
(d) The judgment, award, or restitution order specifies the actual damages suffered as a consequence of such violation.
(e) The contract was executed and the violation occurred on or after July 1, 1993, and provided that:
1. The claimant has caused to be issued a writ of execution upon such judgment, and the officer executing the writ has made a return showing that no personal or real property of the judgment debtor or licensee liable to be levied upon in satisfaction of the judgment can be found or that the amount realized on the sale of the judgment debtor’s or licensee’s property pursuant to such execution was insufficient to satisfy the judgment;
2. If the claimant is unable to comply with subparagraph 1. for a valid reason to be determined by the board, the claimant has made all reasonable searches and inquiries to ascertain whether the judgment debtor or licensee is possessed of real or personal property or other assets subject to being sold or applied in satisfaction of the judgment and by his or her search has discovered no property or assets or has discovered property and assets and has taken all necessary action and proceedings for the application thereof to the judgment but the amount thereby realized was insufficient to satisfy the judgment; and
3. The claimant has made a diligent attempt, as defined by board rule, to collect the restitution awarded by the board.
(f) A claim for recovery is made within 1 year after the conclusion of any civil, criminal, or administrative action or award in arbitration based on the act. This paragraph applies to any claim filed with the board after October 1, 1998.
(g) Any amounts recovered by the claimant from the judgment debtor or licensee, or from any other source, have been applied to the damages awarded by the court or the amount of restitution ordered by the board.
(h) The claimant is not a person who is precluded by this act from making a claim for recovery.
There are also prohibitions to making a claim in the Fund. A claimant is not qualified to make a claim for recovery from the recovery fund, if the claimant: is the spouse of a judgment debtor or licenses or the personal representative; the claimant is the licensee; the claim is based construction contract where the licensee was acting on his own property; the contractor was not licensed; the claimant has a business relationship with the licensee; the claimant made improper payments under Florida’s Construction Lien law; or the claimant has contracted with a licensee to perform a scope of work described in s. 489.105(3)(d)-(p) (i.e. Division II contractors).
Any agreement or contract for repair, restoration, improvement, or construction to residential real property must contain a written statement explaining the consumer’s rights under the recovery fund, except where the value of all labor and materials does not exceed $2,500. The written statement must be substantially in the following form:
FLORIDA HOMEOWNERS’ CONSTRUCTION RECOVERY FUND
PAYMENT MAY BE AVAILABLE FROM THE FLORIDA HOMEOWNERS’ CONSTRUCTION RECOVERY FUND IF YOU LOSE MONEY ON A PROJECT PERFORMED UNDER CONTRACT, WHERE THE LOSS RESULTS FROM SPECIFIED VIOLATIONS OF FLORIDA LAW BY A LICENSED CONTRACTOR. FOR INFORMATION ABOUT THE RECOVERY FUND AND FILING A CLAIM, CONTACT THE FLORIDA CONSTRUCTION INDUSTRY LICENSING BOARD AT THE FOLLOWING TELEPHONE NUMBER AND ADDRESS:
The statement shall be immediately followed by the board’s address and telephone number as established by board rule. On the first violation of failure to include this language, the board may fine the contractor up to $500, and the moneys must be deposited into the recovery fund. On a second or subsequent violation, the board shall fine the contractor $1,000 per violation, and the moneys must be deposited into the recovery fund.
Any claimant who meets all of the conditions prescribed in s. 489.141 may apply to the board to cause payment to be made to a claimant from the recovery fund in an amount equal to the judgment, award, or restitution order or $50,000, whichever is less, or an amount equal to the unsatisfied portion of such person’s judgment, award, or restitution order, but only to the extent and amount of actual damages suffered by the claimant. Payment from the fund for other costs related to or pursuant to civil proceedings such as post-judgment interest, attorney’s fees, court costs, medical damages, and punitive damages is prohibited.
Upon receipt by a claimant of payment from the recovery fund, the claimant shall assign his or her additional right, title, and interest in the judgment, award, or restitution order, to the extent of such payment, to the board, and thereupon the board shall be subrogated to the right, title, and interest of the claimant; and any amount subsequently recovered on the judgment, award, or restitution order, to the extent of the right, title, and interest of the board therein, shall be for the purpose of reimbursing the recovery fund.
Payments for claims against any one licensee shall not exceed, in the aggregate, $100,000 annually, up to a total aggregate of $250,000. For any claim approved by the board which is in excess of the annual cap, the amount in excess of $100,000 up to the total aggregate cap of $250,000 is eligible for payment in the next and succeeding fiscal years, but only after all claims for the then-current calendar year have been paid. Beginning January 1, 2005, for each contract entered into after July 1, 2004, payment from the recovery fund is subject only to a total aggregate cap of $500,000. Claims are paid in the order filed, up to the aggregate limits for each transaction and licensee and to the limits of the amount appropriated to pay claims against the fund for the fiscal year in which the claims were filed. If there is a continuance of the claimant, then the claimant may lose their position in the claim
The payment of any amount from the recovery fund in settlement of a claim in satisfaction of a judgment, award, or restitution order against a licensee as described in s. 489.141, the license of such licensee shall be automatically suspended, without further administrative action, from the date of payment from the fund. The license of such licensee shall not be reinstated until he or she has repaid in full, plus interest, the amount paid from the fund. A discharge of bankruptcy does not relieve a person from the penalties and disabilities provided in this section.
Any firm, corporation, partnership, or association, or any person acting in his or her individual capacity, who aids, abets, solicits, or conspires with any person to knowingly present or cause to be presented any false or fraudulent claim for the payment of a loss under this act is guilty of a third-degree felony, punishable as provided in s. 775.082 or s. 775.084 and by a fine not exceeding $30,000, unless the value of the fraud exceeds $30,000 in which event the fine may not exceed double the value of the fraud.