HB2341 - 501R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 32-1132, Arizona Revised Statutes, is amended to read:

START_STATUTE32-1132. Residential contractors' recovery fund

A. The residential contractors' recovery fund is established, to be administered by the registrar, from which any person injured by an act, representation, transaction or conduct of a residential contractor licensed pursuant to this chapter that is in violation of this chapter or the rules adopted pursuant to this chapter may be awarded in the county where the violation occurred an amount of not more than thirty thousand dollars for damages sustained by the act, representation, transaction or conduct unless a lesser amount is prescribed by the registrar pursuant to section 32‑1134.01. An award from the fund is limited to the actual damages suffered by the claimant as a direct result of the contractor's violation but shall not exceed an amount necessary to complete or repair a residential structure or appurtenance within residential property lines. Actual damages shall not be established by bids supplied by or the value of work performed by a person or entity that is not licensed pursuant to this chapter and that is required to be licensed pursuant to this chapter. If the claimant has paid a deposit or down payment and no actual work is performed or materials are delivered, the award of actual damages shall not exceed the exact dollar amount of the deposit or down payment plus interest at the rate of ten per cent a year from the date the deposit or down payment is made or not more than thirty thousand dollars, whichever is less. Interest shall not be paid from the fund on any other awards under this chapter unless ordered by a court of competent jurisdiction. An award from the fund shall not be available to persons injured by an act, representation, transaction or conduct of a residential contractor who was not licensed pursuant to this chapter or whose license was in an inactive status, expired, cancelled, revoked, suspended or not issued at the time of the contract. No more than the maximum individual award from the fund shall be made on any individual residence or to any injured person. Notwithstanding any other provision of law, monies in the residential contractors' recovery fund shall not be directly awarded for attorney fees or costs except in contested cases appealed to the superior court.

B. Except as provided in section 32‑1152, subsection C, every person making application for a contractor's license or for renewal of a contractor's license to engage in residential contracting shall pay an assessment of not more than six hundred dollars during the biennial license period for deposit in the fund. In the event that the registrar does not issue the license, this assessment shall be returned to the applicant. END_STATUTE

Sec. 2. Section 32-1134, Arizona Revised Statutes, is amended to read:

START_STATUTE32-1134. Powers and duties of registrar

A. The registrar shall:

1. Establish assessments by rule and maintain the fund balance at a level sufficient to pay operating costs and anticipated claims using the cash basis of accounting.

2. Cause an examination of the fund to be made every three years by an independent certified public accountant.

3. File with the department of insurance an annual statement of the condition of the fund.

4. Employ accountants and attorneys from monies in the fund, but not to exceed ten thousand dollars in any fiscal year, that are necessary for the performance of the duties prescribed in this section.

5. Employ or contract with individuals and procure equipment and operational support, to be paid from or purchased with monies in the fund, but not to exceed ten per cent of the fund in any fiscal year as may be necessary to monitor, process or oppose claims filed by injured persons which that may result in collection from the recovery fund.

B. Notwithstanding section 32‑1135, the registrar may expend interest monies from the fund to increase public awareness of the fund. This expenditure shall not exceed fifty thousand dollars in any fiscal year. END_STATUTE

Sec. 3. Section 32-1134.01, Arizona Revised Statutes, is amended to read:

START_STATUTE32-1134.01. Additional payments to fund; reduction of maximum award

If at any time the balance remaining in the residential contractors' recovery fund is less than two million dollars: ,

1. Every residential contractor who paid into the fund pursuant to section 32‑1132 may be reassessed in an amount determined by the registrar pursuant to section 32‑1134 and shall make the required payment into the fund. The registrar shall suspend a residential contractor's license for failure to make the required payment until the amount owed is paid in full.

2. The registrar may reduce the maximum award authorized pursuant to section 32‑1132 to fifteen thousand dollars.END_STATUTE

Sec. 4. Section 32-1136, Arizona Revised Statutes, is amended to read:

START_STATUTE32-1136. Statute of limitations; recovery from fund

A. An action for a judgment which that may subsequently result in an order for collection from the fund shall not be commenced later than two years from the date of the commission of the act by the contractor that is the cause of the injury or from the date of occupancy. When any injured person commences action for a judgment which that may result in collection from the fund, the injured person shall notify the registrar in writing to this effect at the time of the commencement of the action. The registrar may at any time intervene in and defend any such action.

B. When any injured person recovers a valid judgment against any residential contractor for such act, representation, transaction or conduct which that is in violation of this chapter or the rules adopted pursuant to this chapter, the injured person may on twenty days' written notice to the registrar apply to the court for an order directing payment out of the fund, of the amount unpaid on the judgment, subject to the limitations stated in this article. If the injured person failed to give notice to the registrar at the time of commencement of the action as required by subsection A of this section, the court may direct payment out of the fund upon on receipt of a consent to payment signed on behalf of the registrar. If the injured person has given notice to the registrar as required by subsection A of this section, the court may direct payment out of 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 subsection B of this section subsection. If the court receives written objections by the registrar, the court shall not direct payment from the fund without affording the registrar a reasonable opportunity to present and support his the registrar's objections.

C. The injured person shall not be the spouse of the residential contractor or the personal representative of the spouse of the residential contractor.

D. The court shall proceed on an application in a summary manner and, on the hearing, the injured person is required to show that he the injured person:

1. Has given notice as required by subsections A and B of this section.

2. Has obtained a judgment which that has become final, as provided in subsection B of this section, stating the amount and the amount owing at the date of the application.

3. Has proceeded against any existing bond covering the residential contractor and has not collected upon on such bond an amount of thirty thousand dollars or more or an amount of fifteen thousand dollars or more if the award amount is reduced pursuant to section 32‑1134.01, except when the award is made pursuant to subsection E of this section or section 32‑1154.

4. Is not aware of any personal or real property or other assets of the debtor which that can be applied in satisfaction of the judgment.

E. The court shall 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 injured person by subsection D of this section. The recovery limits established under this article apply to all judgments awarded after September 1, 2002. If the injured person has recovered a portion of his the insured person's loss from sources other than the fund, the registrar, if the award is made pursuant to section 32‑1154, or the court shall deduct the amount recovered from other sources from the amount of actual damages suffered pursuant to section 32‑1132, subsection A and direct the difference, not to exceed thirty thousand dollars unless a lesser amount is prescribed by the registrar pursuant to section 32‑1134.o1, 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. END_STATUTE