Homeowners Recovery Fund

What to know if you have suffered loss at the hands of a dishonest contractor:

In order to be eligible for assistance from the Recovery Fund, claimants must be the owner or former owner of the single-family dwelling in question. The term “owner” or “former owner” includes the person who contracted with a general contractor for the construction or purchase of a single-family dwelling unit. (GS 87-15.5(1), GS 87 15.6(a), NCAC Title 21 Chapter 12A .0901(4)

  • A claimant must be able to prove to the Board that he/she has suffered a reimbursable loss (GS 87-15.5) which resulted from the dishonest (GS 87-15.5 ) or incompetent conduct (NCAC Title 21 Chapter 12A .0901) of a licensed general contractor, or an unlicensed contractor who fraudulently represented himself or herself as being licensed (GS 87-15.5(5). The loss must not have been paid in any amount by or on behalf of the general contractor, or be covered by a bond, surety agreement, or an insurance contract. (GS 87.15.5(6)
  • A claimant must exhaust all other remedies for recovery prior to being eligible for assistance from the Recovery Fund. Prior to the filing of a claim, the claimant must have sued the general contractor in civil court and obtained a judgment that has not been paid by the general contractor and remains unsatisfied. (GS 87-15.8(a)(3)
  • If the contractor filed bankruptcy during construction or during the civil action, the claimant must exhaust all remedies in the bankruptcy proceeding. This includes filing of a Proof of Claim and/or following any procedures necessary to obtain consideration in the bankruptcy proceeding. (GS 87-15.8(a)(3), Section 362 of the US Bankruptcy Code, and NCAC Title 21 Chapter 12A .0903(b)
  • The dishonest or incompetent conduct of a general contractor must have occurred on or after October 1, 1991, the effective date of the Recovery Fund Statutes (Chapter 87, Article 1A). The Recovery Fund only applies to dishonest or incompetent conduct that occurred on or after the effective date. (GS 87-15.9(2)
  • The application or claim must be made within one year of the conclusion of all civil proceedings, including appeals in connection with an unsatisfied judgment against the general contractor. Claims based upon the bankruptcy, death, or dissolution of the general contractor shall be forever barred unless application is made to the Recovery Fund within three years from the date of discovery by the applicant of the facts constituting dishonest or incompetent conduct, or within six years of substantial completion of the construction, whichever comes first. (NCAC Title 21 Chapter 12A .0904(a)

After filing a claim

After a claim has been received, Board staff will open a case file on the claim. The claim form, all attachments and materials will be copied and served on the general contractor who is alleged to be the cause of the reimbursable loss. The general contractor will have 30 days to respond to the allegations contained in the claim. (NCAC Title 21 Chapter 12A .0906(b)

The staff will process the claim to determine if the claimant has met all requirements for reimbursement set forth in the Homeowners Recovery Fund statutes and rules (§87-15.5 and 21 NCAC 12.0900). Once the claim has been processed and the assessment has been completed, staff presents the facts of the claim to the Homeowners Recovery Fund Review Committee where an initial or threshold decision will be made as to whether the claimant has successfully met all requirements for assistance from the Fund. If the Review Committee determines that the claimant has met the requirements, a formal hearing will be scheduled before the Board. (NCAC Title 21 Chapter 12A .0906) The Review Committee will not consider a claim involving the bankruptcy of the general contractor until the bankruptcy proceeding has been completed. (NCAC Title 21 Chapter 12A .0907(f)(3)

At the hearing, the claimant will appear before a panel of Board members and present information concerning their claim. The purpose and focus of this hearing is to determine the actual loss the claimant has incurred as a result of the actions of the general contractor. (NCAC Title 21 Chapter 12A .0907) Only the actual loss will be considered by the Board. Attorney fees, court costs, special damages, or consequential and punitive damages will not be considered for any award (GS 87-15.8b and NCAC Title 21 Chapter 12A .0910(b). Awards or payments from the Recovery Fund for an approved application shall not exceed an amount equal to 10 percent of the total amount in the Recovery Fund at the time the application is approved by the Board. (NCAC Title 21 Chapter 12A .0910(a)

In presenting their case to the Board, claimants are to include specific information concerning an accounting of their actual loss. Board members and counsel may ask questions about the claim and the information provided. Following the presentation of the information, the Board makes a determination as to the amount of assistance, if any, it will award for the claim. The Board’s decision is final and all awards are a matter of privilege and not of right. (GS 87-15.8b, NCAC Title 21 Chapter 12A .0908)