Consumer Protection

VIRGINIA CONTRACTOR TRANSACTION RECOVERY FUND

The Virginia Contractor Transaction Recovery Fund is found at Va. Code §§54.1-1100 through 1127. It is designed to assist consumers who have been defrauded by home improvement and homebuilder contractors who become insolvent. The Fund is regulated and administered by the Virginia Contractors Board. 

The Act regulates building contractors by requiring most of them to obtain a license and pay a fee to the Contractor Transaction Recovery Fund. The Act applies to any contractor that accepts paid orders or contracts for performing or superintending the construction, removal, repair or improvement of any building or structure. The contractor may be an individual, partnership, or corporation. Va. Code §54.1-1100. 

It is a Class 1 misdemeanor for any person covered by the Act to engage in, or offer to engage in, contracting for home building or improvement unless that person has been licensed under the Act. 

Where a contractor has engaged in improper or dishonest conduct, the Contractor Transaction Recovery Fund may provide a basis for collection of a judgment. “Improper and dishonest conduct” is defined as fraud, material misrepresentation, or conduct constituting gross negligence, continued incompetence, or intentional violation of the statewide Building Code. 

To seek such a recovery, the consumer must first sue the contractor and receive a judgment in his or her favor from a court of competent jurisdiction. The consumer must also serve a copy of any such complaint on the Virginia Contractors Board, to notify them of his/her complaint. Va. Code §54.1-1120.1. The consumer must also include an affidavit specifying the alleged dishonest or improper conduct in the papers it serves on the Board. Under current law, the judgment need not make a finding of dishonest or improper conduct, but it would be useful if the judgment did make such a reference. The judgment should contain language, however, that supports the conclusion that the court found that the conduct of the contractor was improper or dishonest. Va. Code §54.1-1120. The consumer may still be able to recover from the fund even if he fails to comply with the above requirements. Va.Code 1123(E). 

If the consumer does obtain a judgment against the contractor, he or she must file a verified claim with the Board no later than twelve months after the court entered the judgment. Va. Code §54.1-1120.3. The claim must also include a statement that debtor's interrogatories have been conducted and a describe all assets found by the debtor, and include the other factors required in Va. Code §54.1-1120. If the contractor has filed for Bankruptcy protection, the consumer must file a claim with the Bankruptcy Court. 

The Board may then pay the claim up to $10,000 per claim, and no more than $40,000 per contractor during any biennium. The Fund will not pay interest on the unpaid judgment or punitive damages. However, the Fund will pay attorney's fees and court costs. The Board will require an assignment of the consumer's claim against the contractor to the extent of payments from the Fund, as a condition precedent to paying the consumer. 
To determine if a contractor is licensed, and subject to the Act, contact the Virginia Contractors Board, 3600 W. Broad Street, Richmond, VA. 23230, (804) 367-8511. 

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