When a contractor abandons a construction project or engages in certain types of misconduct, homeowners can be left facing significant financial losses. In some circumstances, the Florida Homeowners’ Construction Recovery Fund may provide a source of compensation.
The Recovery Fund was established in 1993 to compensate certain homeowners who have suffered financial harm in connection with residential construction or improvement projects involving licensed contractors. However, there are specific requirements that must be satisfied before a homeowner can recover from the Fund.
Below are answers to some of the most common questions homeowners may have about the Recovery Fund.
What is the Florida Homeowners’ Construction Recovery Fund?
The Florida Homeowners’ Construction Recovery Fund is a fund established to provide compensation to certain homeowners who have suffered financial losses because of specified misconduct by a licensed contractor.
A homeowner may potentially qualify if they contracted for the construction or improvement of their residence in Florida and obtained a qualifying CILB restitution award, final judgment, or arbitration award based on certain types of contractor misconduct.
The Fund is administered through the Construction Industry Licensing Board (CILB).
Does every homeowner who has a dispute with a contractor qualify?
No. The Recovery Fund has specific eligibility requirements.
Among other things, you should determine:
- Whether the contractor was licensed;
- Whether the contract involved residential property;
- Whether the loss resulted from one of the violations identified in § 489.129(1)(g), (j), or (k);
- Whether you have a qualifying final judgment, arbitration award, or CILB restitution order; and
- Whether you made a diligent effort to collect the money owed.
Simply having a disagreement with a contractor or having an unpaid bill does not, by itself, establish eligibility for the Recovery Fund.
What types of contractors are covered?
The Recovery Fund covers certain Division I and Division II contractors licensed by the CILB.
Division I contractors include general, residential, and building contractors.
Division II contractors include contractors such as sheet metal, roofing, air conditioning, mechanical, pool and spa, plumbing, underground utility and excavation, solar, pollutant storage systems, and specialty contractors.
There are also limitations based on the type of work and when the contract was entered into. For example, certain Division II contracts entered into between July 1, 2004, and July 1, 2016, as not being covered by the Fund. You should consult with an attorney to determine if the contract and contractor are eligible for the Fund.
What types of contractor misconduct may qualify?
The Recovery Fund is intended to address certain specific violations rather than every type of construction dispute.
What if my contractor mismanaged money or engaged in misconduct?
Certain financial mismanagement or misconduct that causes financial harm to a homeowner may qualify.
Examples include situations where a contractor:
- Fails to remove a valid lien after receiving payment for the related labor, materials, or services;
- Abandons a project under circumstances identified by the statute; or
- Completes a project but requires the homeowner to pay more than the contract price without justification.
What if my contractor abandoned my project?
Contract abandonment may qualify under § 489.129(1)(j).
A project may be presumed abandoned after 90 days if the contractor terminates the project without just cause or proper notification to the owner, or fails to perform work without just cause for 90 consecutive days.
If your contractor has stopped working on your home, it is important to keep records documenting when work stopped, what work had been completed, how much you had paid, and your communications with the contractor.
What if my contractor made false statements about the project?
Certain false statements can also qualify as covered violations, including false statements concerning whether a project is bonded, whether subcontractors, laborers, and material suppliers have been paid, and whether workers’ compensation and public liability insurance are provided, when those statements result in financial loss.
Do I need a judgment before I can apply?
Generally, yes.
One of the eligibility questions is whether you have obtained a final judgment, arbitration award, or CILB restitution order. An arbitration award must be converted into a final judgment.
There are limited exceptions to the judgment requirement, including the death of the licensee and certain bankruptcy situations where the claimant is precluded from obtaining a final judgment.
Do I have to try to collect from the contractor first?
Yes. A homeowner must make a diligent effort to collect before seeking payment from the Recovery Fund.
Depending on the circumstances, this can include pursuing available bonds, sureties, guarantees, warranties, letters of credit, or insurance policies. It may also involve obtaining a writ of execution showing that there is no property available to levy or conducting a reasonable search and inquiry demonstrating that the contractor has no assets available for collection.
This means that obtaining a judgment is not necessarily the end of the process. The homeowner must also address whether the judgment can be collected.
How much money can I recover?
The amount available from the Recovery Fund is subject to statutory limits.
The Fund awards the lesser amount of the applicable judgment or restitution order, the statutory cap, and the homeowner’s actual damages.
Actual damages are calculated based on the verified amount necessary to complete the original contract and pay outstanding liens, minus the price of the original contract. If no work was performed, actual damages are based on the deposit paid to the original contractor.
Certain expenses cannot be recovered from the Fund, including post-judgment interest, attorney’s fees, court costs, medical damages, and punitive damages.
What are the current maximum recovery amounts?
For contracts entered into on or after July 1, 2024, the current maximum payments from the Fund are limited to:
- $100,000 for each Division I claim
- $30,000 for each Division II claim
There are also aggregate limits applicable to claims against individual licensees. Beginning January 1, 2025, there is an aggregate cap of $2 million for Division I licensees and $600,000 for Division II licensees for applicable contracts. Claims are paid in the order filed, subject to the applicable limits and available appropriations.
How long do I have to file a Recovery Fund claim?
Timing is important.
A claim must be made within one year after the conclusion of the applicable civil, criminal, or administrative action or arbitration award based on the underlying conduct.
Because missing a deadline can affect your ability to pursue a claim, homeowners should evaluate potential Recovery Fund claims promptly.
What documents do I need to apply?
The application requires supporting documentation, including:
- A certified copy of the final judgment, arbitration award, or CILB restitution order;
- A copy of the contract and any change orders;
- Certified levy or execution documents, asset-search information, or applicable bankruptcy information; and
- Either a signed contract with the contractor who completed the work and proof of payment or three estimates to complete the work.
Additional documentation may be required depending on the circumstances. This can include proof of payments to the original contractor, lien documentation, lien releases, information regarding the percentage of work completed compared with the amount paid, building permits, inspection reports, and certificates of occupancy.
What if my contractor filed for bankruptcy?
A contractor’s bankruptcy can affect the process.
Additional documentation may be required in bankruptcy situations, including proof that the claimant was precluded from recovery, a schedule of creditors showing the homeowner, a trustee’s No Distribution filing in a Chapter 7 case, and the debtor’s discharge or final decree.
Are there people or claims that are excluded from the Recovery Fund?
Yes. Florida law identifies several categories of excluded applicants and claims, including the following:
- The spouse of the judgment debtor or licensee, subject to the statutory provisions;
- The licensee who acted as the contractor;
- Claims involving property owned or controlled by the licensee;
- Claims involving a contractor who was not licensed at the time of the contract;
- A business associate of the licensee; and
- Certain Division II contracts entered into before July 1, 2016.
Because these exclusions can be fact-specific, homeowners should carefully evaluate their circumstances before assuming that a claim is eligible.
Can an attorney help with a Recovery Fund claim?
Yes. A Recovery Fund claim can involve more than completing an application. Depending on the circumstances, the homeowner may need to address the underlying judgment or award, collection efforts, asset searches, liens, bankruptcy proceedings, damages, and extensive supporting documentation.
An attorney familiar with Florida construction law can help evaluate whether the facts and documentation support a potential Recovery Fund claim and identify issues that may need to be addressed before an application is submitted.
Cobb & Gonzalez, P.A. represents clients in construction law, real estate, community association law, and litigation matters throughout Florida. If you are dealing with a contractor dispute and would like to discuss your potential options, contact our office at (904) 822-8001.