In this subtitle, “actual loss” means the costs of restoration, repair, replacement, or completion that arise from an unworkmanlike, inadequate, or incomplete home improvement.

This subtitle does not: limit the authority of the Commission to take disciplinary action against a licensee under Subtitle 3 of this title; limit the availability of other remedies to a claimant; or require a claimant to exhaust administrative remedies before the Commission before bringing an action in court.

The Commission shall: establish a Home Improvement Guaranty Fund; keep the Fund at a level of at least $1,000,000; and submit a report detailing actions being taken to restore the balance of the Fund to a sustainable level to the Senate Committee on Education, Energy, and the Environment and the House Economic Matters Committee within 30 days of projecting that the Fund balance will be less than $1,000,000. Except as otherwise provided by law, the Commission shall deposit all money collected to the credit of the Fund with the State Treasurer for placement in a special account. The Commission shall establish and maintain within the Fund a separate account to be held with the State Treasurer for the payment of necessary expenses for expert witnesses used to resolve claims against the Fund. One–half of the money collected under § 8–620(c) of this title shall be credited to the account established in subparagraph (i) of this paragraph. One–half of the money collected under § 8–620(c) of this title shall be credited to the General Fund of the State. The State Treasurer shall invest the money in the Fund in the same way that money in the State Retirement and Pension System is invested. Investment earnings shall be credited to the Fund. The Commission shall administer the Fund in accordance with this subtitle.

Before the Commission issues a contractor license, the contractor shall pay a fee of $100 to be credited to the Fund. If the Commission finds that, because of pending claims, the amount of the Fund may fall below $1,000,000, the Commission shall assess each contractor a fee of $50. However, under this subsection the Commission may not assess a contractor more than $150 in a calendar year. If a contractor fails to pay an assessment within 60 days after notice of the assessment, the contractor license is suspended until the assessment is paid.

Subject to this subtitle, an owner may recover compensation from the Fund for an actual loss that results from an act or omission by a licensed contractor or a violation of § 8–607(4) of this title as found by the Commission or a court of competent jurisdiction. For purposes of recovery from the Fund, the act or omission of a licensed contractor includes the act or omission of a subcontractor, salesperson, or employee of the licensed contractor, whether or not an express agency relationship exists. A claimant shall comply with a written agreement to submit a dispute to arbitration before seeking recovery from the Fund. The Commission may deny a claim if the Commission finds that the claimant unreasonably rejected good faith efforts by the contractor to resolve the claim. The Commission may not award from the Fund: more than $30,000 to one claimant for acts or omissions of one contractor; more than $250,000 to all claimants for acts or omissions of one contractor unless, after the Commission has paid out $250,000 on account of acts or omissions of the contractor, the contractor reimburses $250,000 to the Fund; an amount for attorney fees, consequential damages, court costs, interest, personal injury damages, or punitive damages; an amount as a result of a default judgment in court; or an amount in excess of the amount paid by or on behalf of the claimant to the contractor against whom the claim is filed. A claim against the Fund based on the act or omission of a particular contractor may not be made by: a spouse or other immediate relative of the contractor; an employee, officer, or partner of the contractor; or an immediate relative of an employee, officer, or partner of the contractor. An owner may make a claim against the Fund only if the owner: resides in the home as to which the claim is made; or does not own more than three residences or dwelling places. A claim shall be brought against the Fund within 3 years after the claimant discovered or, by use of ordinary diligence, should have discovered the loss or damage.

To begin a proceeding to recover from the Fund, a claimant shall submit to the Commission a claim, under oath, that states: the amount claimed based on the actual loss; the facts giving rise to the claim; any other evidence that supports the claim; and any other information that the Commission requires.

The procedures for notice, hearings, and judicial review that apply to proceedings under Subtitle 3 of this title also apply to proceedings to recover from the Fund. On receipt of a claim, the Commission shall: send a copy of the claim to the contractor alleged to be responsible for the actual loss; and require a written response to the claim within 10 days. The Commission: shall review the claim and any response to it; and may investigate the claim. On the basis of its review and any investigation, the Commission may: set the matter for a hearing; dismiss the claim, if the claim is frivolous, legally insufficient, or made in bad faith; or issue a proposed order to pay all or part of the claim or deny the claim if the total claim against a particular contractor does not exceed $7,500. The Commission shall send the proposed order to the claimant and the contractor, at the most recent address on record with the Commission, by: personal delivery; or both regular mail and certified mail, return receipt requested. Within 21 days after service, receipt, or attempted delivery of the proposed order, the claimant or contractor may submit to the Commission: a written request for a hearing before the Commission; or a written exception to the proposed order. If the claimant or contractor submits a timely exception to the proposed order, the Commission may: issue a revised proposed order; set a hearing on the claim; or dismiss the claim. Unless the claimant or contractor submits a timely request for a hearing or a timely exception, the proposed order is final. At a hearing on a claim, the claimant has the burden of proof. If a subcontractor or salesperson is necessary to adjudicate a claim fairly, the Commission shall issue a subpoena for that person to appear at the hearing.

The Commission may join a proceeding on a claim against the Fund with a disciplinary proceeding against a licensed contractor under Subtitle 3 of this title, if the disciplinary hearing is based on the same facts alleged in the claim. In a consolidated proceeding, the claimant is a party and may participate in the hearing to the extent necessary to establish the claim. Notwithstanding § 8-402(2) of this subtitle, a claimant may not concurrently submit a claim to recover from the Fund and bring an action in a court of competent jurisdiction against a contractor based on the same facts alleged in the claim. If the claimant brings an action in a court of competent jurisdiction based on the same facts alleged in a pending claim, the Commission shall stay its proceedings on the claim until there is a final judgment and all rights to appeal are exhausted. To the extent that a final judgment or final award in arbitration is decided in favor of the claimant, the Commission shall approve the claim against the Fund. If a final judgment or final award in arbitration is decided in favor of the defendant, the Commission shall dismiss the claim against the Fund.

The Commission may order payment of a claim against the Fund only if: the decision or order of the Commission is final in accordance with Title 10, Subtitle 2 of the State Government Article and all rights of appeal are exhausted; or the claimant provides the Commission with a certified copy of a final judgment of a court of competent jurisdiction or a final award in arbitration, with all rights of appeal exhausted, in which the court or arbitrator: expressly has found on the merits that the claimant is entitled to recover under § 8–405(a) of this subtitle; and has found the value of the actual loss. Except as otherwise provided in this subsection, the Commission shall pay approved claims in the order submitted. If approved claims submitted to the Commission against a contractor exceed $250,000 less the amount of unreimbursed claim payments previously made for the contractor, the Commission may pay the approved claims proportionately so that each claimant receives the same percentage payment of the claims. After the Fund is reimbursed, the Commission shall pay unsatisfied approved claims. If there is not enough money in the Fund to pay an approved claim wholly or partly, the Commission shall pay the unpaid claim: when enough money is deposited in the Fund; and in the order that each claim originally was filed with a court of competent jurisdiction or submitted to the Commission.

After the Commission pays a claim from the Fund: the Commission is subrogated to all rights of the claimant in the claim up to the amount paid; the claimant shall assign to the Commission all rights of the claimant in the claim up to the amount paid; and the Commission has a right to reimbursement of the Fund by the contractor who the Commission finds responsible for the act or omission giving rise to the claim for: the amount paid from the Fund; and interest on that amount at an annual rate of at least 10%, as set by the Commission. All money that the Commission recovers on a claim shall be deposited in the Fund. If, within 60 days after the Commission gives notice, a contractor on whose account a claim was paid does not reimburse the Fund in full, the Commission may sue the contractor in a court of competent jurisdiction for the unreimbursed amount. The Commission is entitled to a judgment for the unreimbursed amount if the Commission proves that: a claim was paid from the Fund on account of the contractor; the contractor has not reimbursed the Fund in full; the contractor was given notice and an opportunity to participate in a hearing on the claim before the Commission; and the Commission directed payment based on a final judgment of a court of competent jurisdiction or a final award in arbitration; or the decision or order of the Commission is final in accordance with Title 10, Subtitle 2 of the State Government Article and there is no pending appeal. The Commission may refer to the Central Collection Unit for collection under §§ 13–912 through 13–919 of the Tax – General Article a debt owed to the Commission by a contractor on whose account a claim was paid from the Fund and who is at least 1 year behind in reimbursement payments to the Fund. For the purpose of excepting to a discharge of a contractor under federal bankruptcy law, the Commission is a creditor of the contractor for the amount paid from the Fund. If a person liable for reimbursing the Guaranty Fund under this section receives a demand for reimbursement and fails to reimburse the Fund, the reimbursement amount and any accrued interest or cost are a lien in favor of the State on any real property of the person if the lien is recorded and indexed as provided in this subsection. Interest shall continue at the rate of interest on a judgment as provided in § 11–107(a) of the Courts Article until the full amount due the Fund is paid. The lien in favor of the State created by this subsection may not attach to specific property until the State Central Collection Unit records written notice of the lien in the office of the clerk of the court for the county in which the property subject to the lien or any part of the property is located. The lien in favor of the State created by this subsection does not have priority as to any specific property over any person who is a lienholder of record at the time the notice required under paragraph (2) of this subsection is recorded. The notice required under paragraph (2) of this subsection shall contain: the name and address of the person against whose property the lien exists; the amount of the lien; a description of or reference to the property subject to the lien; and the date the Guaranty Fund paid the claim giving rise to the lien. Upon presentation of a release of any lien in favor of the State created by this subsection, the clerk of the court in which the lien is recorded and indexed shall record and index the release and shall note in the lien docket the date the release is filed and the fact that the lien is released. The notice required under paragraph (2) of this subsection and any release filed under paragraph (5) of this subsection shall be indexed with the judgment lien records maintained by the office of the clerk of the court where the notice is recorded. The clerk may collect a reasonable fee for recording and indexing each notice of lien or release of any lien under this subsection.

Except as provided in subsection (b) of this section, if the Commission pays a claim against the Fund based on an act or omission of a contractor, the Commission may suspend the contractor license until the contractor reimburses the Fund in full for: the amount paid from the Fund; and interest on that amount at an annual rate of at least 10%, as set by the Commission. The Commission may not suspend the contractor license if the Commission finds that the contractor or management personnel of the contractor: did not know of the wrongful conduct; or could not prevent the violation. Reimbursement of the Fund in full by a contractor, by itself, does not nullify or modify the effect of a disciplinary proceeding against a licensee.