It happens all too often. A homeowner hires a contractor for a project (a cozy new fireplace comes to mind at the moment) and pays the contractor a sizeable down payment to get the ball rolling.
Then the contractor disappears without doing the work or returning the homeowner’s money. Can the homeowner do anything?
Fortunately, Minnesota’s Contractor Recovery Fund (the “Fund”) offers homeowners relief from the financial burden resulting from a licensed contractor who engages in certain types of practices. In fact, homeowners can receive up to $75,000 for their out-of-pocket losses from the Fund.
There are several threshold requirements that must be met for a homeowner to receive payment from the Fund. Specifically, the contractor must:
→ Be a licensed residential contractor;
→ Have performed, or been hired to perform, one of the following special skills: (a) excavation, (b) masonry and concrete, (c) carpentry, (d) interior finishing, (e) exterior finishing, (f) drywall and plaster, (g) residential roofing, and/or (h) general installation specialties; and
→ Have failed to perform, converted funds, or engaged in fraudulent, deceptive, or dishonest practices.
Homeowners must complete the following process prior to applying to the Fund:
→ Contact the Fund’s Administrator to confirm (a) that the residential contractor was licensed; and (b) that there are funds available to cover the losses. For example, if multiple claims have been made against the contractor, the amount of recovery available to the homeowner may be reduced.
→ Obtain a judgment against the licensed residential contractor in Conciliation Court for claims less than $15,000, or in District Court for claims more than $15,000.
→ Docket the judgment in District Court.
Applying to the Fund
Once a homeowner completes the pre-application process, they may apply to the Fund. Applications must be submitted by June 30, 2018 to obtain compensation from the Fund this year.
With the help of the Fund, Minnesota homeowners do not have to bear the whole brunt of a remodel gone wrong. Therefore, we strongly recommend that homeowners review the requirements and application process for compensation under the Fund to determine if they qualify for relief.
In addition, homeowners should take care to hire only licensed residential contractors to ensure that they have greater protection should the project go awry.