Defrauded homeowners could receive more from contractor recovery fund

Homeowners deceived by a licensed contractor could recover up to $25,000 more from the Department of Labor and Industry’s Contractor Recovery Fund if they have been the victim of fraud, or deceptive and dishonest business practices.

Sponsored by Rep. Michael Nelson (DFL-Brooklyn Park), HF5224 would increase the maximum payment homeowners could receive per licensee from the fund from $75,000 to $100,000.

Department of Labor and Industry Deputy Commissioner Kate Perushek testifies before the House labor and industry committee April 9 regarding HF5224, sponsored by Rep. Michael Nelson. (Photo by Michele Jokinen)

The bill was laid over Tuesday by the House Labor and Industry Finance and Policy Committee for possible inclusion in the committee’s comprehensive finance bill.

According to Kate Perushek, deputy commissioner of the Department of Labor and Industry, there is currently a $9.4 million balance in the fund, which is collected by fees on residential contractor building licenses and is used explicitly to compensate homeowners who have “suffered a financial loss at the hands of a licensed residential building contractor.”

“Increasing the maximum payout will allow homeowners to recover more of their out-of-pocket loss when a licensee fails to perform their contractual obligation,” she said.

The department estimates an additional $228,000 would be paid out of the fund each year, according to Perushek.