2009 Connecticut Code
Title 20 Professional and Occupational Licensing, Certification, Title Protection and Registration. Examining Boards
Chapter 400 Home Improvement Contractors
Sec. 20-432. Home Improvement Guaranty Fund.

      Sec. 20-432. Home Improvement Guaranty Fund. (a) The commissioner shall establish and maintain the Home Improvement Guaranty Fund.

      (b) Each salesman who receives a certificate pursuant to this chapter shall pay a fee of forty dollars annually. Each contractor who receives a certificate pursuant to this chapter shall pay a fee of one hundred dollars annually to the guaranty fund. Said fee shall be payable with the fee for an application for a certificate or renewal thereof. The annual fee for a contractor who receives a certificate of registration as a home improvement contractor acting solely as the contractor of record for a corporation, shall be waived, provided the contractor of record shall use such registration for the sole purpose of directing, supervising or performing home improvements for such corporation.

      (c) Payments received under subsection (b) of this section shall be credited to the guaranty fund until the balance in such fund equals seven hundred fifty thousand dollars. Annually, if such fund has an excess, the first four hundred thousand dollars of the excess shall be deposited into the consumer protection enforcement account established in section 21a-8a. Any excess thereafter shall be deposited in the General Fund. Any money in the guaranty fund may be invested or reinvested in the same manner as funds of the state employees retirement system, and the interest arising from such investments shall be credited to the guaranty fund.

      (d) Whenever an owner obtains a court judgment against any contractor holding a certificate or who has held a certificate under this chapter within the past two years of the effective date of entering into the contract with the owner, for loss or damages sustained by reason of performance of or offering to perform a home improvement within this state by a contractor holding a certificate under this chapter, such owner may, upon the final determination of, or expiration of time for, appeal in connection with any such judgment, apply to the commissioner for an order directing payment out of said guaranty fund of the amount unpaid upon the judgment for actual damages and costs taxed by the court against the contractor, exclusive of punitive damages. The application shall be made on forms provided by the commissioner and shall be accompanied by a certified copy of the court judgment obtained against the contractor together with a notarized affidavit, signed and sworn to by the owner, affirming that: (1) He has complied with all the requirements of this subsection; (2) he has obtained a judgment stating the amount thereof and the amount owing thereon at the date of application; and (3) he has caused to be issued a writ of execution upon said judgment, and the officer executing the same has made a return showing that no bank accounts or real property of the contractor liable to be levied upon in satisfaction of the judgment could be found, or that the amount realized on the sale of them or of such of them as were found, under the execution, was insufficient to satisfy the actual damage portion of the judgment or stating the amount realized and the balance remaining due on the judgment after application thereon of the amount realized, except that the requirements of this subdivision shall not apply to a judgment obtained by the owner in small claims court. A true and attested copy of said executing officer's return, when required, shall be attached to such application and affidavit. No application for an order directing payment out of the guaranty fund shall be made later than two years from the final determination of, or expiration time for, appeal of said court judgment.

      (e) Upon receipt of said application together with said certified copy of the court judgment, notarized affidavit and true and attested copy of the executing officer's return, the commissioner or his designee shall inspect such documents for their veracity and upon a determination that such documents are complete and authentic, and a determination that the owner has not been paid, the commissioner shall order payment out of the guaranty fund of the amount unpaid upon the judgment for actual damages and costs taxed by the court against the contractor, exclusive of punitive damages.

      (f) Whenever an owner is awarded an order of restitution against any contractor for loss or damages sustained by reason of performance of or offering to perform a home improvement in this state by a contractor holding a certificate or who has held a certificate under this chapter within the past two years of the date of entering into the contract with the owner, in a proceeding brought by the commissioner pursuant to this section or subsection (d) of section 42-110d, or in a proceeding brought by the Attorney General pursuant to subsection (a) of section 42-110m or subsection (d) of section 42-110d, or a criminal proceeding pursuant to section 20-427, such owner may, upon the final determination of, or expiration of time for, appeal in connection with any such order of restitution, apply to the commissioner for an order directing payment out of said guaranty fund of the amount unpaid upon the order of restitution. The commissioner may issue said order upon a determination that the owner has not been paid.

      (g) Before the commissioner shall issue any order directing payment out of the guaranty fund to an owner pursuant to subsections (e) or (f) of this section, the commissioner shall first notify the contractor of the owner's application for an order directing payment out of the guaranty fund and of the contractor's right to a hearing to contest the disbursement in the event that the contractor has already paid the owner. Such notice shall be given to the contractor within fifteen days of the receipt by the commissioner of the owner's application for an order directing payment out of the guaranty fund. If the contractor requests a hearing in writing by certified mail within fifteen days of receipt of the notice from the commissioner, the commissioner shall grant such request and shall conduct a hearing in accordance with the provisions of chapter 54. If the commissioner receives no written request by certified mail from the contractor for a hearing within fifteen days of the contractor's receipt of such notice, the commissioner shall determine that the owner has not been paid, and the commissioner shall issue an order directing payment out of the guaranty fund for the amount unpaid upon the judgment for actual damages and costs taxed by the court against the contractor, exclusive of punitive damages, or for the amount unpaid upon the order of restitution.

      (h) The commissioner or his designee may proceed against any contractor holding a certificate or who has held a certificate under this chapter within the past two years of the effective date of entering into the contract with the owner, for an order of restitution arising from loss or damages sustained by any person by reason of such contractor's performance of or offering to perform a home improvement in this state. Any such proceeding shall be held in accordance with the provisions of chapter 54. In the course of such proceeding, the commissioner or his designee shall decide whether to exercise his powers pursuant to section 20-426; whether to order restitution arising from loss or damages sustained by any person by reason of such contractor's performance or offering to perform a home improvement in this state; and whether to order payment out of the guaranty fund. Notwithstanding the provisions of chapter 54, the decision of the commissioner or his designee shall be final with respect to any proceeding to order payment out of the guaranty fund and the commissioner and his designee are exempted from the requirements of chapter 54 as they relate to appeal from any such decision. The commissioner or his designee may hear complaints of all owners submitting claims against a single contractor in one proceeding.

      (i) No application for an order directing payment out of the guaranty fund shall be made later than two years from the final determination of, or expiration of time for, appeal in connection with any judgment or order of restitution.

      (j) Whenever the owner satisfies the commissioner or his designee that it is not practicable to comply with the requirements of subdivision (3) of subsection (d) of this section and that the owner has taken all reasonable steps to collect the amount of the judgment or the unsatisfied part thereof and has been unable to collect the same, the commissioner or his designee may in his discretion dispense with the necessity for complying with such requirement.

      (k) In order to preserve the integrity of the guaranty fund, the commissioner, in the commissioner's sole discretion, may order payment out of said fund of an amount less than the actual loss or damages incurred by the owner or less than the order of restitution awarded by the commissioner or the Superior Court. In no event shall any payment out of said guaranty fund be in excess of fifteen thousand dollars for any single claim by an owner.

      (l) If the money deposited in the guaranty fund is insufficient to satisfy any duly authorized claim or portion thereof, the commissioner shall, when sufficient money has been deposited in the fund, satisfy such unpaid claims or portions thereof, in the order that such claims or portions thereof were originally determined.

      (m) When the commissioner has caused any sum to be paid from the guaranty fund to an owner, the commissioner shall be subrogated to all of the rights of the owner up to the amount paid plus reasonable interest, and prior to receipt of any payment from the guaranty fund, the owner shall assign all of this right, title and interest in the claim up to such amount to the commissioner, and any amount and interest recovered by the commissioner on the claim shall be deposited to the guaranty fund.

      (n) If the commissioner orders the payment of any amount as a result of a claim against a contractor, the commissioner shall determine if the contractor is possessed of assets liable to be sold or applied in satisfaction of the claim on the guaranty fund. If the commissioner discovers any such assets, he may request that the Attorney General take any action necessary for the reimbursement of the guaranty fund.

      (o) If the commissioner orders the payment of an amount as a result of a claim against a contractor, the commissioner may, after notice and hearing in accordance with the provisions of chapter 54, revoke the certificate of the contractor and the contractor shall not be eligible to receive a new or renewed certificate until he has repaid such amount in full, plus interest from the time said payment is made from the guaranty fund, at a rate to be in accordance with section 37-3b, except that the commissioner may, in his sole discretion, permit a contractor to receive a new or renewed certificate after that contractor has entered into an agreement with the commissioner whereby the contractor agrees to repay the guaranty fund in full in the form of periodic payments over a set period of time. Any such agreement shall include a provision providing for the summary suspension of any and all certificates held by the contractor if payment is not made in accordance with the terms of the agreement.

      (P.A. 88-269, S. 11; P.A. 89-251, S. 150, 203; P.A. 90-233, S. 2; 90-321, S. 5; P.A. 91-325, S. 2; P.A. 94-68, S. 3; P.A. 96-117, S. 3; P.A. 97-129; P.A. 99-74, S. 1, 3; P.A. 04-257, S. 105.)

      History: P.A. 89-251 amended Subsec. (b) to increase the fee for renewal of a salesman's certificate from $20 to $40 and increased the fee for renewal of a contractor's certificate from $50 to $150; P.A. 90-233 amended Subsec. (d) to delete former exclusion of attorney's fees from consideration as part of judgment amount and amended Subsec. (l) to raise maximum payment from guaranty fund from $5,000 to $10,000; P.A. 90-321 amended section to allow claims to be made against fund when contractor held a certificate within the past two years; P.A. 91-325 amended Subsec. (d) by providing for the submission of bona fide documentation to replace the hearing procedure as a means for a homeowner to be reimbursed from the fund, inserted new Subsec. (e), redesignating former Subsec. (e) as Subsec. (f) and expanding the types of proceedings in which a homeowner could recover and specifying that commissioner could only issue an order of disbursement from the fund upon a determination that the owner has not been paid, added new Subsec. (g) requiring notice to the contractor before any disbursement is made from the fund in the event that the contractor has already paid the homeowner, redesignated former Subsec. (f) as Subsec. (h) and amended it to provide that a designee of commissioner could proceed against a contractor and decide whether to exercise the powers under Sec. 20-426, order restitution and whether to order payment out of the guaranty fund, redesignated Subsec. (g) as Subsec. (i) and amended it to expand the period during which an application for disbursement from the fund could be made from one year to two years from the final determination of, or expiration of time for, appeal in connection with any judgment or order of restitution, deleted former Subsecs. (h) and (i) re hearing procedure, made technical changes in Subsec. (j), deleted former Subsec. (k), relettering remaining Subsecs. accordingly, and amended Subsec. (o), formerly (p), to permit commissioner to exercise discretion as to whether to renew a certificate if the contractor had entered an agreement with commissioner whereby payment would be made in periodic payments over a set period of time; P.A. 94-68 amended Subsec. (c) to require deposit of certain surplus moneys in the Consumer Enforcement Protection Fund, replaced "personal property" with "bank accounts" in Subsec. (d)(3), provided for the revocation of a contractor's certificate in Subsec. (o) and made technical corrections; P.A. 96-117 amended Subsec. (b) to waive the annual fee for a contractor of record; P.A. 97-129 amended Subsec. (c) to increase the amount deposited into the Consumer Protection Enforcement Fund from $150,000 to $400,000, and amended Subsec. (d) to provide that Subdiv. (3) requirements shall not apply to judgments obtained by owner in small claims court; P.A. 99-74 made gender neutral change and increased maximum allowable payment from guaranty fund from $10,000 to $15,000 for a single claim, effective May 27, 1999; P.A. 04-257 made a technical change in Subsec. (c), effective June 14, 2004.

      See Sec. 20-427a re nonrenewal of home improvement contractor's commercial motor vehicle registration for violation of section.

      Sec. 20-427 et seq. cited. 224 C. 231.

      Subsec. (h):

      Administrative adjudication under Subsec. by defendant Department of Consumer Protection concluding that plaintiff swimming pool contractor violated Home Improvement Act by failure to return homeowner's deposit after his cancellation of contract and defendant's subsequent ordering of restitution under that statute to homeowner found not to be an unconstitutional violation of separation of powers provision of state constitution. 48 CS 248. Potential reach of statute is quite wide. It authorizes commissioner to order "restitution arising from loss or damages" to not just the owner of the property to be improved but to "any person" injured by reason of a home improvement contractor's performance or offer to perform a home improvement in Connecticut. Id.