Winning a judgment against a real estate broker, licensed property manager, or home improvement contractor is significant, but collecting on that judgment can be another matter entirely.
When a defendant lacks the resources to satisfy a judgment, recovery and guaranty funds administered in the District of Columbia, Maryland, and Virginia may provide an alternative source of compensation. While the requirements vary by jurisdiction and profession, these programs generally provide compensation to consumers who suffer losses because of misconduct by licensed professionals and cannot collect directly from the wrongdoer.
Claims Against Real Estate Brokers, Agents, and Property Managers
District of Columbia:
The Real Estate Guaranty and Education Fund provides eligible consumers with up to $50,000 in recovery. Before filing suit in a District of Columbia court, a consumer must notify the Mayor of the intent to pursue a claim.
The consumer must obtain a final judgment from a court of competent jurisdiction establishing that the licensee is liable for fraud, misrepresentation, deceit, embezzlement, false pretenses, forgery, failure to account for or conversion of trust funds, or a breach of real estate brokerage duties. The consumer must demonstrate that the defendant cannot satisfy the judgment.
Maryland:
The Maryland Real Estate Guaranty Fund provides eligible consumers with up to $50,000 in recovery. A consumer may file a claim with the Maryland Real Estate Commission alleging that a licensee obtained money or property through theft, embezzlement, false pretenses, forgery, fraud, or misrepresentation. Unlike some other jurisdictions, Maryland does not require the consumer to obtain a court judgment before seeking relief from the fund.
Virginia:
The Real Estate Transaction Recovery Fund provides up to $20,000 per claim and up to $50,000 for claims involving multiple transactions. Claims arising from multiple transactions involving the same licensee are capped at $100,000 during each biennial license period.
To qualify, a consumer must obtain a final judgment against the licensee for improper or dishonest conduct, including the wrongful or fraudulent taking or conversion of money, property, or other items of value, or material misrepresentation or deceit. Once a court of competent jurisdiction enters a judgment, the consumer must show that the defendant cannot satisfy it.
Claims Against Home Improvement Contractors
District of Columbia:
The District of Columbia does not maintain a contractor recovery fund. Homeowners may be able to seek assistance through the Department of Licensing and Consumer Protection or other District agencies.
Maryland:
The Maryland Home Improvement Commission Guaranty Fund may compensate homeowners up to $30,000. A consumer may file a claim for losses that arise from the restoration, repair, replacement, or completion of work that was performed improperly, incorrectly, or incompletely, or abandoned by a home improvement contractor. A consumer does not need a court judgment to seek relief.
Virginia:
The Contractors Recovery Fund provides up to $20,000 per claim and up to $40,000 during a biennial period for multiple claims involving the same contractor. The claim must arise from residential work performed on the property and involve the wrongful taking or conversion of money, property, or other items of value through fraud or material misrepresentation, or conduct amounting to gross negligence, continued incompetence, or an intentional violation of the Uniform Statewide Building Code (Va. Code § 36-97 et seq.). After obtaining a judgment from a court of competent jurisdiction, the consumer must show that the defendant cannot satisfy it.
Before filing a lawsuit or administrative claim, consult an attorney regarding the available remedies and applicable procedural requirements. Some recovery funds require notice before litigation is filed, while others impose deadlines and documentation requirements that may affect eligibility.
Selena Motley represents businesses, property owners, landlords, developers, and individuals in complex commercial, real estate, contract, tort, and general litigation matters in Washington, D.C., Maryland, and Virginia. For more information about recovery and guaranty funds, please contact her at 202-454-1631 or by email at samotley@lerchearly.com.
