2006 Minnesota Statutes

326.975 CONTRACTOR'S RECOVERY FUND.
    Subdivision 1. Generally. (a) In addition to any other fees, each applicant for a license under
sections 326.83 to 326.98 shall pay a fee to the contractor's recovery fund. The contractor's
recovery fund is created in the state treasury and must be administered by the commissioner in
the manner and subject to all the requirements and limitations provided by section 82.43 with
the following exceptions:
(1) each licensee who renews a license shall pay in addition to the appropriate renewal fee an
additional fee which shall be credited to the contractor's recovery fund. The amount of the fee
shall be based on the licensee's gross annual receipts for the licensee's most recent fiscal year
preceding the renewal, on the following scale:

		Fee	Gross Receipts
		$100	under $1,000,000
		$150	$1,000,000 to $5,000,000
		$200	over $5,000,000

Any person who receives a new license shall pay a fee based on the same scale;
(2) the purpose of this fund is:
(i) to compensate any aggrieved owner or lessee of residential property located within this
state who obtains a final judgment in any court of competent jurisdiction against a licensee
licensed under section 326.84, on grounds of fraudulent, deceptive, or dishonest practices,
conversion of funds, or failure of performance arising directly out of any transaction when the
judgment debtor was licensed and performed any of the activities enumerated under section
326.83, subdivision 19, on the owner's residential property or on residential property rented by
the lessee, or on new residential construction which was never occupied prior to purchase by the
owner, or which was occupied by the licensee for less than one year prior to purchase by the
owner, and which cause of action arose on or after April 1, 1994; and
(ii) to reimburse the Department of Commerce for all legal and administrative expenses,
including staffing costs, incurred in administering the fund;
(3) nothing may obligate the fund for more than $50,000 per claimant, nor more than
$75,000 per licensee; and
(4) nothing may obligate the fund for claims based on a cause of action that arose before
the licensee paid the recovery fund fee set in clause (1), or as provided in section 326.945,
subdivision 3 .
(b) Should the commissioner pay from the contractor's recovery fund any amount in
settlement of a claim or toward satisfaction of a judgment against a licensee, the license shall be
automatically suspended upon the effective date of an order by the court authorizing payment
from the fund. No licensee shall be granted reinstatement until the licensee has repaid in full, plus
interest at the rate of 12 percent a year, twice the amount paid from the fund on the licensee's
account, and has obtained a surety bond issued by an insurer authorized to transact business in
this state in the amount of at least $40,000.
    Subd. 1a. Limitation. Nothing may obligate the fund for claims brought by:
(1) insurers or sureties under subrogation or similar theories; or
(2) owners of residential property where the contracting activity complained of was the result
of a contract entered into with a prior owner, unless the claim is brought and judgment rendered
for breach of the statutory warranty set forth in chapter 327A.
    Subd. 1b. Condominiums or townhouses. For purposes of this section, the owner or
lessee of a condominium or townhouse is considered an owner or lessee of residential property
regardless of the number of residential units per building.
    Subd. 2. Accelerated claims payment. Recovery fund claims that do not exceed the
jurisdiction limits for conciliation court matters as specified in section 491A.01 shall be paid on
an accelerated basis if all of the following requirements have been satisfied:
(a) When any aggrieved person obtains a judgment in any court of competent jurisdiction,
regardless of whether the judgment has been discharged by a bankruptcy court against a residential
building contractor or residential remodeler on grounds specified in subdivision 1, paragraph
(a), clause (2), the aggrieved person may file a verified application with the commissioner for
payment out of the fund of the amount of actual and direct out-of-pocket loss in the transaction,
but excluding any attorney fees, interest on the loss and on any judgment obtained as a result of
the loss, up to the conciliation court jurisdiction limits, of the amount unpaid upon the judgment.
For purposes of this section, persons who are joint tenants or tenants in common are deemed to
be a single claimant.
(b) The commissioner has sent the licensee a copy of the verified application by first-class
mail to the licensee's address as it appears in the records of the Department of Commerce with a
notice that the claim will be paid 15 days from the date of the notice unless the licensee notifies
the commissioner prior to that date of the commencement of an appeal of the judgment, if the
time for appeal has not expired, and that payment of the claim will result in automatic suspension
of the licensee's license.
(c) If the licensee does not notify the commissioner of the commencement of an appeal, the
commissioner shall pay the claim at the end of the 15-day period.
(d) If an appeal is commenced, the payment of the claim is stayed until the conclusion of
the appeal.
(e) The commissioner may pay claims which total no more than $15,000 against the licensee
under this accelerated process. The commissioner may prorate the amount of claims paid under
this subdivision if claims in excess of $15,000 against the licensee are submitted. Any unpaid
portions of such claims shall be satisfied in the manner set forth in subdivision 1.
    Subd. 3. Appropriation. Money in the contractor's recovery fund is appropriated to the
commissioner for the purposes of this section.
History: 1993 c 245 s 36; 1994 c 404 s 1; 1994 c 465 art 2 s 17; 1995 c 169 s 6; 2000 c 483
s 50; 2001 c 208 s 23; 2002 c 387 s 15,16; 1Sp2005 c 1 art 4 s 94