PHOENIX — The Arizona Residential Contractors Recovery Fund has about $25 million set aside for homeowners dealing with substandard work, but qualifying comes with conditions.

Arizona homeowners dealing with contractors who did poor work or abandoned a job have a financial safety net available to them. The state has more than $25 million set aside to help homeowners when contractors fall short, and the Arizona Registrar of Contractors expects more than 8,000 complaints by year's end.

"So, the Residential Contractors' Recovery Fund is kind of a safety net for consumers in Arizona who have been financially harmed by licensed contractors," said Tom Cole, Executive Director of the Arizona Registrar of Contractors.

The fund is called the Arizona Residential Contractors Recovery Fund. Contractors pay a fee that goes directly to the fund when they get their license — but not every homeowner qualifies.

"Unfortunately, sometimes Arizona contractors will get in over their head, and that seems to kind of snowball, and then they get to the point where they've got complaints against them from multiple customers," Cole said.

One key requirement: the contractor must be licensed.

"If you were dealing with an unlicensed entity in construction in Arizona, you will not qualify for the Residential Contractors' Recovery Fund," Cole said.

Another key requirement: The contractor's work must also impact the homeowner's primary residence.

There are two ways to access the fund. The first is filing a civil lawsuit against the contractor. If the homeowner wins in court, damages are awarded through a judgment.

The second is filing a complaint with the ROC. That complaint must result in the suspension or revocation of the contractor's license. "Once those allegations are confirmed and sustained and have been appealed through the process, then each one of those customers qualifies for an application for an award," Cole said.

Single claims are capped at $30,000 per homeowner. When multiple claims are filed against the same contractor, a separate cap applies. Cole says it's set by law.
"If I've got 500,000 or $600,000 worth of valid claims, I can only award 200,000 total. So, then we have to prorate those awards across the board," Cole said.

"You know, as things progress, it's more expensive to conduct a job, to do construction in Arizona, and so we're actually prorating a lot of awards out of the recovery fund, somewhere between 50 and 60% so 50 to 60 cents on the dollar for those validated awards," Cole explained.

Here's what to gather before filing a claim:

• Your contract — new and/or old
• Receipts, photos, and videos of the work
• Any other documentation that supports your claim
• Bids or estimates to fix the work

Claims must be filed within a two-year statute of limitations.

In an administrative Recovery Fund claim, the claim for payment from the residential contractor's Recovery must be submitted within two years after all proceedings.

The claims process can be tedious, but homeowners are encouraged not to give up. The ROC is available to help guide applicants through the process.