Alabama Administrative Code › Title 465 - HOME BUILDERS LICENSURE BOARD › Chapter 465-X-7 - HOMEOWNERS' RECOVERY FUND › Section 465-X-7-.02 - Procedure For Making A Claim Against The Homeowners' Recovery Fund

Current through Register Vol. 42, No. 9, June 28, 2024
(1)
			 The following procedure shall be followed by a homeowner when making
			 a claim against the Homeowners' Recovery Fund for actual economic
			 damages sustained within the State of Alabama as the direct result of
			 a licensed residential home builder's gross negligence, incompetence
			 and/or misconduct in the practice of residential home building or a
			 violation by a licensed residential home builder of the rules and
			 regulations of the Board:
(a) The
			 homeowner shall notify the Board in writing, by certified mail, at
			 the time a civil action is commenced (not later than 10 days from the
			 date on which the complaint is filed with the court) which may result
			 in liability for the Homeowners' Recovery Fund. The homeowner shall
			 include with the notice a copy of the civil complaint which has been
			 filed in the appropriate court.
(b) The homeowner shall submit to
			 the Board a sworn written complaint, on a form prescribed by the
			 Board, stating in detail the activities complained of and the
			 activities the licensee is alleged to have engaged in.
(c) When the Board receives proper
			 notice that a civil action has been commenced which may result in
			 liability for the Homeowners' Recovery Fund, the Board may, at any
			 time during the course of the proceedings, enter an appearance, file
			 pleadings and appear at court hearings, defend or take action it
			 deems appropriate either on the behalf and in the name of the
			 defendant or in its own name. The Board may seek any appropriate
			 method of judicial review. The Board may settle or compromise the
			 claim.
(d) Upon receipt
			 of the Homeowners' sworn written complaint, on a form prescribed by
			 the Board, stating in detail the activities complained of and that
			 the licensee is alleged to have engaged in, the Board will
			 investigate the matter as prescribed at
			 465-X-5-.03.
(e) In order for the Homeowners'
			 Recovery Fund to be liable to a homeowner, the homeowner shall first
			 obtain a valid judgment, excluding a consent judgment, from a court
			 of competent jurisdiction against the licensed home builder and said
			 judgment shall be based on the licensed home builder's gross
			 negligence, incompetence, and/or misconduct in the practice of
			 residential home building or a violation of the rules and regulations
			 of the Board. The licensed home builder must have been licensed at
			 the time the acts constituting gross negligence, incompetence, or
			 misconduct in the practice of residential home building were
			 committed or the violation of the rules and regulations of the Board
			 occurred and at the time the parties entered into the construction
			 contract.
(f) After a
			 homeowner obtains a valid judgment, excluding a consent judgment, in
			 a court of competent jurisdiction against a licensed home builder on
			 the grounds of gross negligence, incompetence and/or misconduct in
			 the practice of residential home building or a violation of the rules
			 and regulations of the Board, the homeowner shall, when the judgment
			 is final, make reasonable efforts to collect the judgment from the
			 licensed home builder. Thereafter, if the homeowner desires to seek
			 recovery from the Homeowners' Recovery fund, the homeowner shall:
1. File a verified claim for actual
			 economic damages in the court in which the judgment was entered;
			 and,
2. Give the Board 30
			 days written notice that the homeowner intends to apply to the court
			 for an order directing payment out of the Homeowners' Recovery Fund
			 of the amount remaining unpaid on the judgment. Said notice shall
			 include:
(i) The date the judgment
			 was entered by the court, the amount of the judgment, and the amount
			 of the judgment attributable to actual economic damages;
			 and,
(ii) An itemized
			 list of the actual economic damages incurred which forms the basis of
			 the aggrieved homeowner's claim against the Homeowners' Recovery
			 Fund. This list shall include the actual economic damages incurred by
			 the homeowner, a description of the repairs reasonable and necessary
			 to correct the damages, and an estimate, submitted by a licensee of
			 the Board holding the type license required to perform the scope of
			 the work included in the estimate, of the reasonable cost of
			 repairing the damages incurred. The homeowner shall also submit
			 copies of the contract(s) entered into by the parties and any
			 building specifications and/or construction drawings used in building
			 the residence; and,
(iii)
			 The amount owing on the judgment. In showing the amount owing on the
			 judgment, the homeowner shall show evidence of reasonable efforts
			 made by the homeowner to collect the judgment from the licensed home
			 builder/judgment debtor. The homeowner shall provide documentation
			 showing: steps taken by the homeowner to locate the licensed home
			 builder/judgment debtor; steps taken by the homeowner to discover if
			 the licensed home builder/judgment debtor has assets from which to
			 collect the judgment, including but not limited to bank accounts,
			 real and/or business property and equipment; steps taken by the
			 homeowner to determine whether the licensed home builder is insured
			 and if insured, that the homeowner has filed a claim with the
			 licensed home builder's/judgment debtor's insurance carrier; steps
			 taken by the homeowner to file a lien against the licensed home
			 builder/judgment debtor; and, steps taken by the homeowner to file a
			 garnishment against the licensed home builder/judgment
			 debtor.
(g) After expiration of the 30-day
			 notice requirement, the homeowner shall make application to the court
			 for an order directing payment out of the Homeowners' Recovery Fund.
			 When the homeowner's application to the court for an order directing
			 payment out of the Homeowners' Recovery Fund is set for hearing, the
			 homeowner shall be required to show:
1. That he or she is not the
			 spouse, child, or parent of the debtor, or the personal
			 representative of the spouse, child, or parent or a shareholder
			 officer or director of the debtor; and,
2. That he or she has obtained a
			 judgment, other than a consent judgment, based on the gross
			 negligence, incompetence and/or misconduct of a licensed home builder
			 in the practice of residential home building or a violation by a
			 licensed home builder or the rules and regulations of the Board;
			 and,
3. That the licensed
			 home builder was licensed at the time the parties entered into the
			 construction contract, and at the time of the occurrence of the acts
			 which form the basis of the complaint and which resulted in a
			 judgment for the homeowner based on the licensed home builder's gross
			 negligence, incompetence, and/or misconduct in the practice of
			 residential home building or a violation by a licensed home builder
			 of the rules and regulations of the Board and,
4. The amount of the judgment
			 awarded by the court and the amount of the judgment attributable to
			 actual economic damages, i.e., the reasonable cost of repairing the
			 damages, other than minor cosmetic damages, sustained by the
			 homeowner as the direct result of the licensed home builder's gross
			 negligence, incompetence and/or misconduct in the practice of
			 residential home building or a violation of the rules and regulations
			 of the Board. Actual economic damages shall not include interest,
			 damages awarded for pain and suffering or mental anguish, damages
			 awarded for loss of consortium, damages which are the result of acts
			 of the homeowner, court costs or attorney fees. The evidence required
			 to show actual economic damages shall include, but not be limited to,
			 an itemized list of the damages incurred, a description of the
			 repairs reasonable and necessary to correct the damages and an
			 estimate, submitted by a licensee of the Board holding the type
			 license required to perform the scope of the work included in the
			 estimate, of the reasonable cost of repairing said damages;
			 and,
5. That the
			 homeowner has joined any and all bonding companies which issued
			 corporate surety bonds to the judgment debtor as principal and all
			 other necessary parties; and,
6. That the following items, if
			 recovered by the homeowner, have been applied to the actual economic
			 damages:
(i) Any amount recovered
			 from the judgment debtor.
(ii) Any amount recovered from
			 bonding companies.
(iii)
			 Any amount recovered in out-of-court settlements.