2.1 Virginia Contractor Transaction Recovery Fund & Claim Eligibility

2.1 Virginia Contractor Transaction Recovery Fund & Claim Eligibility

The Virginia Contractor Transaction Recovery Fund is a statutory consumer protection mechanism created under Va. Code § 54.1-1118 et seq. and administered by the Virginia Department of Professional and Occupational Regulation (DPOR) Board for Contractors. The Fund provides limited monetary relief to eligible consumers who obtain unpaid judgments for improper or dishonest conduct involving residential contracting. Understanding assessments, payout ceilings, eligibility, and what the Fund does—and does not—do is essential for the Virginia contractor business exam.

Statutory Funding & Mandatory Assessments

Under Va. Code § 54.1-1119:

• Initial assessment: Each initial contractor applicant is assessed $25, specifically assigned to the Fund. Board regulations confirm the $25 Recovery Fund assessment is required with each initial license application (Class A, Class B, and Class C). No Recovery Fund assessment is required for residential building energy analyst firm licenses, change of Designated Employee, change of Qualified Individual, or addition of classification/specialty alone.
• Renewal assessment: Board fee schedules require a $30 Recovery Fund assessment with each contractor license renewal.
• Minimum Fund balance: $400,000. When the Director determines the balance is or will be below that minimum, the Board assesses regulants at license renewal a sum sufficient to restore the minimum. No regulant shall be assessed a total amount of more than $50 during any biennium.
• Nonpayment: If a regulant fails to pay a required assessment within 45 days of mailing, the Director sends a second notice; if still unpaid 30 days after the second notice, the license is automatically suspended until the assessment is received.

Exam trap: older materials sometimes claim a $100 initial assessment limited to Class A and Class B. Current law is a $25 initial assessment on each initial contractor applicant, plus the $30 renewal assessment in Board regulations.

Statutory Payout Limits & Covered Damages

Under Va. Code § 54.1-1123:

What Counts as Improper or Dishonest Conduct

The statute defines improper or dishonest conduct narrowly. It includes wrongful taking or conversion of money, property, or other things of value involving fraud, material misrepresentation, or conduct constituting gross negligence, continued incompetence, or intentional violation of the Uniform Statewide Building Code. Mere breach of contract is not enough.

Claimant Eligibility Requirements & Exclusions

A claimant must be:

1. An individual whose contract with the regulant involved contracting for the claimant's residence located in the Commonwealth, or
2. A property owners' association whose contract involved improvements to common areas owned by the association.

The claimant must also obtain an unsatisfied judgment and follow the verified-claim procedures in the Act.

Statutory Exclusions (Ineligible Claimants)

The claimant shall not be:

• An employee of the judgment debtor
• A vendor of the judgment debtor
• Another licensee
• The spouse or child of the judgment debtor (or an employee of such spouse or child)
• A financial or lending institution, or any person whose business involves the construction or development of real property

Procedural Step-by-Step Claim Process

Obtaining a payout from the Fund generally requires:

1. Obtain a final judgment in a Virginia court based on improper or dishonest conduct (not mere breach of contract).
2. Pursue collection remedies as required by the Act (unsatisfied judgment pathway).
3. File a verified claim with the Board on the required form with supporting documentation.
4. Board review, which may include Informal Fact-Finding procedures under the Administrative Process Act.

License Consequences After a Fund Payment

Former automatic-revocation language in § 54.1-1126 was repealed (Acts 2013, c. 343). Current law provides:

• Under § 54.1-1125, after payment from the Fund the claimant assigns rights against the regulant to the Board to the extent of payment, and the Board may consider any amount owed for Fund repayment when deciding whether to grant a license.
• Under § 54.1-1127, the Recovery Fund article does not waive the Board's authority to take disciplinary action. Full repayment of amounts paid from the Fund does not nullify or modify disciplinary proceedings.

Candidates should not memorize an automatic, self-executing license revocation upon Fund payment—that is not current statute. Do memorize the $30,000 / $100,000 biennium limits, the $25 initial assessment, and residential-claimant eligibility.