Minnesota Contractor Recovery Fund

Homeowners and renters of residential property that have lost money or been otherwise damaged by a licensed residential building contractor may have recourse against the State of Minnesota Contractor Recovery Fund.

The purpose of the Recovery Fund is to compensate homeowners/renters that have been affected by a licensed contractor’s fraud, failure to perform, and/or breach of their warranties.

A sample of situations where homeowners may seek recourse against the Recovery Fund include: theft (or conversion) of funds; fraudulent, dishonest or deceptive trade practices, breach of contract, and breach of warranties (including statutory warranties under Minn. Stat. Chapter 327A).

While homeowners may seek to recover damages caused by their contractors (including, potentially, their licensed subcontractors) from the Contractor Recovery Fund, they may only do so after exhausting all other potential remedies and by having a sheriff serve a writ of execution upon the company seeking potential assets to satisfy the judgment.

The first step is obtaining a judgment (either in conciliation court for claims less than $7,500 or district court) against the builder. Depending on when the work at issue was performed, homeowners may seek to recover upto $75,000 (for work after December 1, 2007) or $50,000 (for work before December 1, 2007).  The judgment amount can be for any amount, but recovery from the fund is limited by statute and is distributed pro rata amongst all claimants.

Homeowners must be sure that their contractor was licensed at the time it performed the work at question.  If not, the Fund will not provide recourse.

After obtaining a judgment, homeowners must complete an application to the Recovery Fund (applications can be found at the Department of Labor and Industry’s website at http://www.dli.state.mn.us)  The application should outline and provide evidence of their damages, as well as their efforts to secure payment.

Applications are subject, depending upon the break between pre-/post- December 1, 2007 claims, to strict timing deadlines which may significantly delay payment by the Recovery Fund.

If you have any questions regarding the Minnesota Contractor’s Recovery Fund or your rights with regards to claims against your general contractor, contact attorney Anthony Thompson at (612)-597-4229 or online at www.MN-LAW.net.

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