Homeowners burned by contractors have another resource: the Homeowners Recovery Fund
Posted May 24
Raleigh, N.C. — A contractor walks off the job, won't return phone calls and just disappears—based on the complaints 5 On your Side gets, it happens a lot.
When a contractor walks, there's a little-known option that can help some of those homeowner's recoup money they lost. It's called the Homeowners Recovery Fund.
After other options fail, homeowners can apply to the HRF when they're wronged by a licensed contractor.
Some contractors have left kitchens unfinished, other homeowners were left without a real front door. For Landon Harper, the project was a kitchen remodel. It was paid for but never completed by the contractor.
"He called me and said, 'Uh, I don't have any more money, and I've used all your money for other jobs or to pay off stuff," Harper said.
That call came right after Harper made another payment.
"He took $10,000 from me, Dec. 22," Harper said. "I know he saw my kids. That's three days before Christmas. How could someone do that?"
At that point, he'd paid out $35,000.
An Oak Island couple was left with little more than pylons after paying their contractor $25,000 to build their retirement home.
In Franklin County, a dug-out and overgrown piece of land is all a woman has after paying contractors almost $300,000 to build her dream home.
All three victims sued their contractors and won but were never able to collect any money. A court judgment and inability to collect are two of the requirements to file a claim with the Homeowners Recovery Fund.
"It's really the last resort for them," said Frank Wiesner, executive director of the North Carolina Licensing Board for General Contractors.
Wiesner and the board oversee the HRF, which builders pay into—$9 dollars of every residential permit they pull goes into the fund.
By law, the fund must always have a balance of at least $250,000, though it's been as high as $1.4 million in 2009. The balance is significant because a victim can only be awarded up to 10 percent of the total.
The process of getting an award is much like a court hearing, although attorneys aren't needed.
Generally, industry representatives listen twice a year as victims share their often desperate and emotional stories. Contractors can tell their side, but Weisner says most don't.
Homeowners can only collect for actual losses related to construction, not attorney fees or emotional damages.
"It's not meant to be easy, and it sometimes takes years," Wiesner said.
Harper experienced that.
"Oh, it's overwhelming a little bit," Harper said.
Harper submitted a claim for $26,750. Twenty months later, the fund awarded him $20,000.
It took more than two years for the Oak Island couple to get the $19,000 they hoped for, and less than a year after the Franklin County woman asked for $289,000 dollars in losses, she got $40,000.
All three told 5 On Your Side that getting something instead of nothing was well worth the process.
"You might not get all of it back, but what do you have to lose?" Harper said.
The board gets hundreds of complaints each year, but they only hear about 20 cases.
Wiesner said if you have a problem with a licensed contractor, file a complaint with the contractor's board. He said many homeowners don't, but those complaints have actually helped some people resolve disputes with contractors.
Advice when hiring a contractor:
- Before you hire, thoroughly check them out
- Verify they are licensed and insured
- Get references from both recent projects and some from five or more years ago
- Ask clients about their experience of working with the contractor and how the work has held up
- Check to see if the person is a member of your area's Home Builders Association, which can at least show they are committed to a standard of ethics within the building industry