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REFERENCE TITLE: residential contractors' recovery fund; cap |
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State of Arizona Senate Fifty-seventh Legislature First Regular Session 2025
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SB 1524 |
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Introduced by Senator Dunn
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AN ACT
Amending sections 32-1132.01, 32-1133 and 32-1139, Arizona Revised Statutes; relating to contractors.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 32-1132.01, Arizona Revised Statutes, is amended to read:
32-1132.01. Actual damages; fund; limitations; definition
A. An award from the residential contractors' recovery fund is limited to residential real properties. The fund may not issue an award covering damages to commercial property.
B. An award from the residential contractors' recovery fund may not exceed the actual damages suffered by the claimant as a direct result of a contractor's violation. Actual damages:
1. May not exceed an amount necessary to complete or repair a residential structure or appurtenance within residential property lines.
2. Must be established by bids supplied by or the value of work performed by a person that is licensed pursuant to this chapter if the person is required to be licensed pursuant to this chapter.
C. If the claimant paid a deposit or down payment and no actual work is performed or materials are delivered, the claimant's actual damages are the exact dollar amount of the deposit or down payment plus interest at the rate of ten percent a year from the date the deposit or down payment is made, but may not exceed $30,000 $60,000. Interest may not be paid from the fund on any other awards under this chapter unless ordered by a court of competent jurisdiction.
D. The maximum individual award from the residential contractors' recovery fund is $30,000 $60,000. An individual claimant may not be awarded more than the maximum individual award.
E. Monies in the residential contractors' recovery fund may not be awarded for attorney fees or costs, except in contested cases appealed to the superior court.
F. If the claimant has recovered a portion of the claimant's loss from sources other than the fund, the registrar shall deduct the amount recovered from other sources from the amount of actual damages suffered pursuant to subsection B of this section and direct the difference, not to exceed $30,000 $60,000, to be paid from the fund.
G. The claimant may not be the spouse of the residential contractor or the personal representative of the spouse of the residential contractor.
H. For the purposes of this section, "actual damages" means the reasonable cost of completing the contract and repairing the contractor's defective performance, minus the part of the contract price still unpaid.
Sec. 2. Section 32-1133, Arizona Revised Statutes, is amended to read:
32-1133. Civil recovery; statute of limitations
A. An action for a judgment that may subsequently result in an order for collection from the residential contractors' recovery fund may not be commenced later than two years after the date of the commission of the act by the contractor that is the cause of the injury or from the date of occupancy.
B. When a claimant commences an action for a judgment that may result in collection from the fund, the claimant must notify the registrar in writing to this effect within thirty calendar days after the commencement of the action. The registrar at any time may intervene in and defend the action.
C. When any claimant recovers a valid judgment against any residential contractor for an act, representation, transaction or conduct that is in violation of this chapter or the rules adopted pursuant to this chapter, the claimant, on twenty days' written notice to the registrar, may apply to the court for an order directing payment out of from the fund, of the amount unpaid on the judgment, subject to the limits stated in this article. If the claimant fails to notify the registrar within thirty calendar days after commencement of the action as required by this subsection, the court may direct payment out of from the fund on receipt of a consent to payment signed on behalf of the registrar. If the claimant gives notice to the registrar as required by this subsection, the court may direct payment out of from the fund either on receipt of a consent to payment signed on behalf of the registrar or, in the absence of any written consent, after the notice period required by this subsection. If the court receives written objections by the registrar, the court may not direct payment from the fund without affording the registrar a reasonable opportunity to present and support the registrar's objections.
D. The court may proceed on an application in a summary manner and, on the hearing, the claimant is required to show that the claimant has done all of the following:
1. Given notice as required by subsections B and C of this section.
2. Obtained a judgment that has become final, as provided in subsection C of this section, stating the amount and the amount owing at the date of the application.
3. Proceeded against any existing bond covering the residential contractor.
E. The court may make an order directed to the registrar requiring payment from the fund of whatever sum it finds to be payable on the claim, in accordance with this section, if the court is satisfied on the hearing of the truth of all matters required to be shown by the claimant by subsection D of this section. The recovery limits established under this article apply to all judgments awarded beginning September 1, 2002. If the claimant has recovered a portion of the claimant's loss from sources other than the fund, the court shall deduct the amount recovered from other sources from the amount of actual damages suffered pursuant to section 32-1132.01, subsection A and direct the difference, not to exceed $30,000 $60,000, to be paid from the fund.
F. On receipt of a certified copy of the order specified in subsection E of this section, the registrar may authorize payment from the residential contractors' recovery fund even if an appeal has been instituted but not completed.
Sec. 3. Section 32-1139, Arizona Revised Statutes, is amended to read:
32-1139. Liability of fund for each residential contractor's license; suspension of license; repayment
A. The liability of the fund shall not exceed two hundred thousand dollars $400,000 for any one residential contractor's license. If claims against the fund on behalf of any one residential contractor's license exceed two hundred thousand dollars $400,000, the claims shall be paid based on a pro rata share of the common liability, and the registrar or a court entering an order for payment after the sum of two hundred thousand dollars $400,000 has been paid from the fund shall modify the order indicating that no further recovery from the fund shall be is allowed.
B. If any amount is paid from the fund in settlement of a claim arising from the act, representation, transaction or conduct of a residential contractor, the license of the contractor shall be automatically suspended by operation of law until the amount paid from the fund is repaid in full, plus interest at the rate of ten per cent percent a year. Any person who is or was, at the time of the act or omission, named on a license that has been suspended because of a payment from the recovery fund is not eligible to receive a new license or retain another existing license, that which also shall be suspended by operation of law, nor shall and any suspended license may not be reactivated, until the amount paid from the fund is repaid as provided in this subsection.
C. After receiving an award from the fund pursuant to this article, a person is deemed to have assigned to the registrar the person's rights for recovery against the responsible residential contractor licensed pursuant to this chapter to the extent of the person's award from the fund.