SB 147

Under existing law, the Home Builders Licensure Board licenses and regulates persons who engage in home building and private residential construction when the costs of a project exceed $10,000

This bill would require a roofer to hold a license from the Home Builders Licensure Board when the cost of a roofing project exceeds $2,500

This bill would revise definitions and the requirements for board membership

This bill would authorize the board to collect costs relating to hearings for disciplinary actions

This bill would increase administrative fines for a violation

This bill would allow the cap on the payment amount to an aggrieved homeowner from the Homeowners' Recovery Fund when the homeowner is injured due to a violation committed by a licensee, to be set by rule

This bill would also authorize the board to revoke the license or refuse to issue a new license to the licensee and certain other license holders when the licensee has not paid a judgment claim under the Homeowners' Recovery Fund

Relating to the Home Builders Licensure Board; to amend Sections 34-14A-1 to 34-14A-8, inclusive, 34-14A-14, and 34-14A-15 of the Code of Alabama 1975; to require a roofer to hold a license from the Home Builders Licensure Board when the cost of a roofing project exceeds $2,500; to revise definitions; to revise requirements for board membership; to authorize the board to collect costs relating to hearings for disciplinary actions; to increase administrative fines for a violation; to allow the cap on the payment amount to an aggrieved homeowner from the Homeowners' Recovery Fund when the homeowner is injured due to a violation committed by a licensee to be set by rule; and to authorize the board to revoke the license or refuse to issue a new license to the licensee and certain other license holders when the licensee has not paid a judgment claim under the Homeowners' Recovery Fund.

Section 1

Sections 34-14A-1 to 34-14A-8, inclusive, 34-14A-14, and 34-14A-15, Code of Alabama 1975, are amended to read as follows:

§34-14A-1.

In the interest of the public health, safety, welfare, and consumer protection and to regulate the home building and private dwelling residence construction industry, the purpose of this chapter, and the intent of the Legislature in passing it, is to provide for the licensure of those persons who engage in home building, and private dwelling residence construction, and home improvement industries, including remodeling, and to provide home building standards in the State of Alabama. The Legislature recognizes that the home building and home improvement construction industries are significant industries. Home builders may pose significant harm to the public when unqualified, incompetent, or dishonest home building contractors builders and remodelers provide inadequate, unsafe, or inferior building services. The Legislature finds it necessary to regulate the residential home building and remodeling construction home improvement industries.

§34-14A-2.

As used in this chapter, the following terms shall have the following meanings, respectively, unless the context clearly indicates otherwise:

(1) BOARD. The Home Builders Licensure Board.

(2) CONTRACTING. Except as exempted herein, engaging in residential and private residence construction business as a contractor.

(3) HOME BUILDERS LICENSURE BOARD. The board created herein to regulate the home building and residential construction industry.

(2) COST OF THE UNDERTAKING. The total cost of the materials, labor, supervision, overhead, and profit.

(4) (3) HOMEOWNER. One A person who owns and resides or intends to reside in a structure constructed or remodeled by a licensee of the board, or who contracts with a licensee for the purchase, construction, repair, improvement, or reimprovement of a structure to be used as a residence.

(4) IMPROVEMENT. Any site-built addition or enhancement attached to or detached from a residence or structure for use and enjoyment by the homeowner.

(5) INACTIVE LICENSE. A license issued at the request of a licensee, or a building official or a building inspector, which that is renewable, but which that is not currently valid.

(6) LICENSE. A new license or a renewal Any license issued by the board pursuant to this chapter.

(7) LICENSEE. A holder of a certificate any license issued pursuant to this chapter.

(8) PERSON. Any natural person, limited or general partnership, corporation, association, limited liability company, or other legal entity, or any combination thereof.

(9) QUALIFYING REPRESENTATIVE. The individual designated by a general partnership, limited partnership, corporation, limited liability company, or not-for-profit organization applying for a license who either holds a license individually or meets the experience and ability requirements for licensure, and who is one of the following:

a. A general partner in the case of any partnership.

b. An officer in the case of a corporation.

c. A member in the case of a member-managed limited liability company.

d. A manager in the case of a manager-managed limited liability company.

(9) (10) RESIDENCE. A single unit providing complete independent residential living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking, and sanitation.

(10) (11) RESIDENTIAL HOME BUILDER. One A person who constructs a residence or structure for sale or who, for a fixed price, commission, fee, or wage, undertakes or offers to undertake the construction or superintending of the construction, or who manages, supervises, assists, or provides consultation to a homeowner regarding the construction or superintending of the construction, of any residence or structure which that is not over three floors in height and which that does not have more than four residential units, in an apartment complex, or the repair, improvement, or reimprovement thereof, to be used by another as a residence when the cost of the undertaking exceeds ten thousand dollars ($10,000). Notwithstanding the foregoing, the term includes a residential roofer when the cost of the undertaking exceeds two thousand five hundred dollars ($2,500). Nothing herein shall prevent any person from performing these acts on his or her own residence or on his or her other real estate holdings. Anyone who engages or offers to engage in such undertaking in this state any acts described in this subdivision, through advertising or otherwise, shall be deemed to have engaged in the business of residential home building.

(12) RESIDENTIAL ROOFER. A person that installs products or repairs surfaces on the external upper covering of a residence or structure that seals, waterproofs, or weatherproofs the residence or structure.

(11) (13) STRUCTURE. A residence on a single lot, including a site-built home, a condominium, a duplex or multi-unit residential building consisting of not more than four residential units or any improvement thereto.

(12) (14) TRANSACTION. The act of entering into a contract with a licensee for the purchase, construction, repair, improvement, or reimprovement of a structure to be used as a residence to engage in the business of residential home building.

§34-14A-3.

There is established the Home Builders Licensure Board to regulate the residential home building and residential construction industry. The board shall have nine members, at least one from each United States Congressional District in this state, who shall be appointed as follows: Three by the Governor, three by the Lieutenant Governor, and three by the Speaker of the House of Representatives, from a list of three qualified individuals for each position, provided by the governing body of the Home Builders Association of Alabama. Seven of the members shall be residential home builders, as defined in this chapter, with at least five years' experience as a residential home builder and each shall be a bona fide resident of the State of Alabama. One member shall be a building official or inspector currently employed by a city, county, or state governmental entity and actively engaged in inspecting or regulating residential construction in this state. One shall be a consumer member of the general public not employed by or affiliated with a licensee hereunder, and who has no spouse or immediate family member employed by or affiliated with a licensee hereunder. Each member of the board shall be a citizen of this state, and the membership of the board shall be inclusive and reflect the racial, gender, geographic, urban/rural, and economic diversity of the state. Of the initial members of this board, the appointing authorities shall designate that each appointee shall serve for an initial term of one, two, or three years, their terms of office expiring on December 31, of the years. Subsequent terms shall be for a period of three years. This appointing authority shall make an appointment to fill a vacancy for the remainder of any unexpired term from a list of three qualified persons supplied by the governing body of the Home Builders Association of Alabama. Each board member shall hold over after the expiration of his or her term until his or her successor shall be duly appointed and qualified.

§34-14A-4.

(a) Members of the board shall select from its own membership a chair, who shall preside at all meetings of the board unless otherwise ordered, and he or she shall exercise and perform all duties and functions incident to the office of chair. The board may select from its own membership a vice-chair, a secretary, and a treasurer. The offices of secretary and treasurer may be held by the same person.

(b) The board, at a minimum, shall meet on a quarterly basis and at such other times as the chair may designate; provided, however, that the board shall meet within ays after appointment for the purpose of organizing and transacting such for the purpose of transacting business as may properly come before it the board. Four members shall constitute a quorum at all meetings. The secretary of the board shall keep such records of each meeting as shall be required by the board.

(c) Members of the board may be compensated in an amount not to exceed three hundred fifty dollars ($350) per day, not to exceed 15 days per year, for attending meetings of the board or its committees and, in addition, may be reimbursed for such necessary travel expenses as are paid to state employees.

(d) The board may employ an executive director and a deputy director. The board shall have sole authority to fix the salary of the executive director. The authority to fix the salary of the executive director is not subject to subsection (b) of Section 36-6-6.

(e) The executive director may hire staff to carry out this chapter.

§34-14A-5.

(a) (1) All residential home builders shall be required to be licensed by the Home Builders Licensure Board annually. The board may issue more than one type of license.

(2) The board may issue licenses that vary in scope of work authorized, including, but not limited to, licenses without limitation and with limitation.

(3) The board may issue licenses that vary in requirements for licensure, including, but not limited to, evidence of experience and ability and financial responsibility, as determined by the cost of the undertaking.

(4) The board may charge varying fees for licenses.

(b) Any person engaged in residential home building in Washington County shall be duly licensed by the board, without a written examination testing his or her experience and ability, by meeting the licensing requirements of Section 34-14A-7, by paying the required annual license fee, and by meeting any one of the following requirements by March 1, 2007:

(1) The person submits to the board an affidavit showing that the residential home builder has constructed a minimum of one residence within the year prior to March 1, 2007, or five residences within the previous five years.

(2) The person satisfies the board of his or her building qualifications and experience.

(3) The person is currently licensed as a residential home builder by a jurisdiction in this state which requires an examination for licensure.

(4) The person is a currently licensed residential remodeler by a jurisdiction in this state, who by his or her personal affidavit can establish that his or her business did a gross remodeling dollar volume in the previous calendar year of two hundred fifty thousand dollars ($250,000) or more.

(c) (b)(1) Except as provided in this chapter, all licenses shall be issued or renewed upon the payment to the board of the annual license fee. The annual license fee shall be set by the board after it considers its cost of operation. The annual fee may be increased or decreased by the board but in no event shall the board set the annual fee at an amount which would not provide sufficient revenues to pay all the salaries, costs, and expenses incurred by the board in enforcing this chapter and promoting public health, safety, welfare, and consumer protection.

(2) The board may also charge application processing fees, inactive license fees, late fees, and fees for education requirements. The inactive fees may be waived for building officials. The board may, upon request in writing, refund fees, except the application processing fee, paid by an applicant who is denied a license or who fails to complete the application process. No fees shall be refunded to a licensee as a result of a license revocation.

(3) The annual license fee shall be for a period of onths beginning January first of each year. All license fees collected by the board shall be paid into the State Treasury to the credit of the Home Builders Licensure Board Fund and its funds shall be subject to withdrawal only upon warrant of the state Comptroller to be issued upon certification of the secretary/treasurer of the board.

(d)(c) Any funds remaining in the State Treasury to the credit of the Home Builders Licensure Board Fund at the end of each year shall be paid into the General Fund of the state on or before January 15, and in each succeeding year, except that should the board exercise its authority to establish the Homeowner's Homeowners' Recovery Fund or the Home Builders Property Acquisition Fund, or both, as provided in this chapter, any funds remaining in the State Treasury to the credit of the Home Builders Licensure Board Fund shall be paid into the Homeowner's Homeowners' Recovery Fund or the Home Builders Property Acquisition Fund, or both, of the board. The board is authorized to maintain sufficient funds to carry out the purposes of the Homeowner's Homeowners' Recovery Fund and the Home Builders Property Acquisition Fund, as set forth in Sections 34-14A-15 and 34-14A-18, including, but not limited to, the transfer of funds between the Homeowner's Homeowners' Recovery Fund and the Home Builders Property Acquisition Fund. The board is authorized, at all times, to retain a sum not in excess of two hundred fifty thousand dollars ($250,000) sufficient to meet any emergency that may arise which may affect its efficient operation.

(e)(d) No funds shall be withdrawn or expended except as budgeted and allocated according to Sections 41-4-80 to 41-4-96, inclusive, and 41-19-1 to 41-19-12, inclusive, and only in amounts as stipulated in the general appropriations bill or other appropriations bills.

§34-14A-6.

This chapter does not apply to:

(1) Any employee of a licensee who does not hold himself or herself out for hire or engage in contracting residential home building, except as such employee of a licensee.

(2) An authorized employee of the United States, the State of Alabama, or any municipality, county, or other political subdivision, if the employee does not hold himself or herself out for hire or otherwise engage in contracting residential home building except in accordance with his or her employment.

(3) General contractors holding a current and valid license, issued prior to January 1, 1992, under Sections 34-8-1 through 34-8-27 Chapter 8 of this title.

(4) Licensed real estate agents, Real estate licensees, licensed engineers, and licensed architects operating within the scope of their respective licenses on behalf of clients.

(5) a. Owners of property when acting as their own contractor and providing all material supervision themselves, when building or improving one-family or two-family residences on such property for the occupancy or use of such owners and not offered for sale. This exception may not be transferred to any other person, including, but not limited to, an agent through a power of attorney.

b. In any action brought under this chapter, proof of the sale or offering for sale of such structure by the owners of property, as provided in this subdivision, within one year after completion of same is presumptive evidence that the construction was undertaken for the purpose of sale.

(6) This chapter does not apply to mobile Mobile homes or to any structure that is installed, inspected, or regulated by the Alabama Manufactured Housing Commission or the repair, improvement, or reimprovement of any such structure, and shall not in any way change or interfere with the duties, responsibilities, and operations of the Alabama Manufactured Housing Commission as defined in Sections 24-4A-1 through 24-6-4.

(7) Agricultural buildings, except for any residence contained therein.

§34-14A-7.

(a) Any residential home builder who desires to receive a new or renewal license under this chapter shall make and file with the board 30 days prior to the next meeting of the board a written application on a form prescribed by the board. Each applicant shall be a citizen of the United States or, if not a citizen of the United States, a person who is legally present in the United States with appropriate documentation from the federal government. Such application shall be accompanied by the payment of the annual license fee required by the board. After the board accepts the application the applicant may be examined by the board at its next meeting. The board in examining the applicant shall consider the following qualifications of the applicant:

(1) Experience.

(2) Ability.

(3) Character.

(4) Business-related financial condition.

a. The board may require a financial statement on a form prescribed by the board and a public records search directly from a credit reporting agency.

b. The board may require a positive net worth or other evidence of business-related financial condition sufficient to reasonably satisfy the board of the applicant's financial responsibility.

c. The board may require that business-related judgments, judgment liens, and other perfected liens, must be satisfied and released.

d. Any information obtained by the board pursuant to this subsection relating to the financial condition of an applicant shall not be public information.

(5) Ability and willingness to serve the public and conserve the public health and safety.

(6) Any other pertinent information the board may require.

(b)(1) If the board finds the applicant qualified to engage in residential home building in Alabama, the applicant shall be issued a license. An applicant rejected by the board shall be given an opportunity to be reexamined after a new application has been filed and an additional application fee paid.

(2) A record shall be made and preserved by the board of each examination and the findings of the board pertaining to the examination. A copy of the record shall be made available to any applicant requesting it upon the payment of a reasonable fee for same to the board.

(c) The board, by rule, may require proof of and maintenance of insurance as a qualification for licensure.

(b) (d) The board is authorized to, by rule, may establish or adopt, or both, education requirements and may approve, or administer, or both, financially support the program or programs providing residential construction education to fulfill the requirements.

(c)(e)(1) Each licensee shall notify the board within 10 days after notice of the institution of any criminal prosecution against him or her. , or of a civil complaint against him or her, if the subject matter of the civil complaint involves a residential home building transaction or involves the goodwill of an existing home building business or licensee. The notification shall be in writing, by certified mail, and shall include a copy of the complaint or, if a criminal charge, the specific charge made together with a copy of any the indictment, information, or complaint, affidavit, and warrant making the charges.

(d)(2) Each licensee shall notify the board in writing by certified mail within 10 days after he or she receives the notice that any criminal verdict has been rendered against him or her, or that a criminal action pending against him or her has been dismissed, or that a civil action in which he or she was a defendant and which involved a home building transaction or the goodwill of a home building business has resulted in a judgment or has been dismissed. The notification shall be in writing and shall include a copy of the court order or other document giving the licensee such notice.

(e)(f) Each licensee shall utilize a valid written contract when engaging in the business of residential home building.

(g) When any residential home building to be performed will comply with a program designed to enhance the resiliency of the structure beyond the requirements of the applicable building codes, the licensee shall disclose this compliance to the homeowner in writing prior to the commencement of the residential home building.

(f)(1)a.(h)(1) Any licensee who desires to receive an inactive license shall make and file with the board a written application for an inactive license on a form prescribed by the board prior to the expiration of his or her current license. The application shall be accompanied by the payment of the annual inactive license fee required by the board. No act for which a license is required may be performed under an inactive license. In the event a person holding a current inactive license applies for a license, he or she may rely upon his or her inactive license as evidence of the experience and ability requirements for licensure under subdivisions (1) and (2) of subsection (a).

b.(2) A person holding an expired license who seeks to reactivate his or her license within three years of the date of expiration shall be deemed to have satisfied the experience and ability requirements for licensure if application is made within the three-year time period and all other licensing requirements pursuant to subsection (a) have been met.

(2)(3) Any building official or building inspector who desires to receive an inactive license shall make and file with the board 30 days prior to the next meeting of the board a written application for an inactive license on a form prescribed by the board. After the board accepts the application, the applicant may be examined by the board at its next board meeting. The board, in examining the applicant, shall consider the following qualifications of the applicant as satisfying the experience and ability requirements for licensure:

a. That the building inspector is an employee of the United States, the State of Alabama, or any municipality, county, or other political subdivision and, by virtue of that employment, is exempted or prohibited by law from holding a license; and

b. That the building inspector does any of the following:

1. Maintains current certification from the Southern Building Code Congress International as one of the following:

(i) Chief building official.

(ii) Deputy building official.

(iii) Building inspector.

(iv) Housing inspector.

(v) Design professional.

(vi) Plan reviewer.

2. Maintains current certification from the International Code Council as one of the following:

(i) Certified building official.

(ii) Building inspector.

(iii) Residential building inspector.

(iv) Property maintenance and housing inspector.

(v) Building plans examiner.

(vi) Design professional.

3. Possesses sufficient building qualifications and experience to receive a license, as demonstrated by satisfactory evidence presented to the board.

4.(4) In the event a building official or building inspector holding a current inactive license applies for a license, he or she may rely upon his or her inactive license as evidence of the experience and ability requirements for licensure under subdivisions (1) and (2) of subsection (a).

§34-14A-8.

(a) The board may levy and collect administrative fines not to exceed five thousand dollars ($5,000) for each violation or revoke or suspend the license of any licensee who, in the opinion of the board, has committed fraud or deceit in obtaining a license required by this chapter, or who has been guilty of gross negligence, incompetence, or misconduct in the practice of residential home building, who has engaged in the business of residential home building outside the scope of the license, or who has violated this chapter or a board rule. Should the board establish or adopt, or both, standards of practice for residential home builders within the state, as provided in Section 34-14A-12, the board may suspend the license of any licensee who, in the opinion of the board, has committed a violation of the standards of practice and may impose any other disciplinary sanctions authorized pursuant to this chapter.

(b) An original homeowner may file a consumer complaint alleging a violation of this section against any licensee hereunder. Consumer complaints shall be made in writing and sworn to by the person making the consumer complaint and shall be submitted to the executive director of the board within six years of the date of substantial completion of construction or within six years of the date the original homeowner took possession of the residence.

(c) An investigation may be initiated upon receipt of a consumer complaint or may be initiated by the board. The board may resolve violations by agreement between the board and the licensee with or without the filing of a formal administrative summons and complaint.

(d) With the consent of the licensee, the board may conduct an informal hearing without meeting the requirements of the Administrative Procedure Act if no action is taken other than a reprimand, public or private.

(e) The charges, unless dismissed without hearing by the board as unfounded or trivial, shall be heard within three months after the filing of an administrative summons and complaint by the board's executive director.

(f) A copy of the charges, with notice of the time and place of the hearing, shall be served on the licensee charged at least 15 days before the hearing date.

(g) The licensee charged may appear personally and may be represented by counsel. He or she may cross-examine witnesses against him or her and may produce evidence and witnesses in his or her defense.

(h) If, after hearing, the board votes to revoke or suspend the license of, or impose a fine upon, the licensee charged on the basis of fraud or deceit in obtaining his or her license or gross negligence, incompetence, or misconduct in the practice of residential home building, a violation of this chapter or board rule, or a violation of the standards of practice, it shall so order, and the board may impose and collect the actual costs of the hearing.

(i) The licensee may, within 30 days from the date of receipt or service of the order, file with the board written notice of his or her intention to appeal from the order of the board. Appeals from orders of the board shall be to the circuit court with jurisdiction of licensee's residence, or if the licensee is out of state, then to the Circuit Court of Montgomery County, for a determination by the court whether the decision of the board is supported by substantial evidence. If the court so finds, it shall affirm the action of the board.

(j) The board may issue a license to a licensee whose license has been revoked, and may reinstate a suspended license prior to the end of the suspension period, if four or more members of the board vote in favor of the issuance or reinstatement.

(k) In addition to any other disciplinary action authorized pursuant to this chapter section, the board may require a licensee to successfully complete education requirements to be determined by the board and may levy and collect administrative fines for violations of this chapter or the rules or regulations of the board in an amount not to exceed two thousand dollars ($2,000) for each violation for a violation of this chapter or a board rule.

§34-14A-14.

(a) Any person who undertakes or attempts to undertake the business of residential home building without holding a current and valid residential home builders license, issued by the Home Builders Licensure Board, as required by the provisions of this chapter or who knowingly presents to, or files false information with the board for the purpose of obtaining the license or who violates any law or code adopted by a county commission under this chapter shall be deemed guilty of a Class A misdemeanor.

(b) Upon notice from the board, any person who undertakes or attempts to undertake the business of residential home building without holding a current and valid residential home builders license, as required by the provisions of this chapter, shall immediately cease. Such notice shall be in writing and shall be given to the owner of the property, or to his or her agent, or to the residential home builder, or to the person doing the work, and shall state the conditions under which work may be resumed.

(c) The board may invoke a complaint procedure against any person who violates this chapter by undertaking or attempting to undertake the business of home building without holding a current and valid residential home builders license issued by the board. Whenever it appears to the board that any residential home builder has violated or is about to violate this chapter, the board may resolve the violation by agreement with the residential home builder, may initiate a complaint against the residential home builder, and may levy and collect administrative fines for violations of this chapter or the rules of the board in an amount not to exceed two thousand dollars ($2,000) five thousand dollars ($5,000) for each violation.

(d) A residential home builder, who does not have the license required, shall not bring or maintain any action to enforce the provisions of any contract for residential home building which he or she entered into in violation of this chapter.

(e) Whenever it shall appear appears to the board that any residential home builder has violated or is about to violate this chapter, the board may in its own name petition the circuit court of the county where the violation occurred or is about to occur to issue a temporary restraining order or other appropriate injunctive relief enjoining the violation.

§34-14A-15.

(a) The board is authorized to may establish a Homeowner's Homeowners' Recovery Fund from which an for the purpose of consumer protection, consumer education, and consumer awareness. An aggrieved homeowner may recover actual economic damages, not including interest and court costs, sustained within the State of Alabama state as the direct result of conduct of a licensee in violation of this chapter or the rules and regulations of the board from the Homeowners' Recovery Fund. Any payments from the Homeowner's Homeowners' Recovery Fund shall be subject to the following limitations and conditions:

(1) Payments for claims based on judgments or settlements against any one licensee shall not exceed fifty thousand dollars ($50,000) in the aggregate.

(2) Payments for claims arising out of the same transaction shall not exceed twenty thousand dollars ($20,000) in the aggregate.

(3)(1) The Homeowner's Homeowners' Recovery Fund shall make payments only to homeowners who file a complaint with the board pursuant to the requirements of subsection (b) of Section 34-14A-8.

(4)(2) The Homeowner's Homeowners' Recovery Fund shall not make payments based on consent judgments.

(5)(3) Failure of the homeowner to follow any provisions of this chapter shall preclude payment from the Homeowner's Homeowners' Recovery Fund.

(b) The board, by rule, shall determine the maximum amount of payment from the Homeowners' Recovery Fund for the following:

(1) Payments for claims based on judgments or settlements against any one licensee.

(2) Payments for claims arising out of the same transaction.

(c) Each licensee shall, on order of the board, pay a fee not to exceed sixty dollars ($60), no more than once a year, per licensee for deposit in the Homeowner's Homeowners' Recovery Fund. A licensee on inactive status shall not be required to contribute to the Homeowner's Homeowners' Recovery Fund. The annual Homeowner's Homeowners' Recovery Fund fee shall be set by the board after considering all expenses incurred by the board in defending, satisfying, or settling any claims paid from the Homeowner's Homeowners' Recovery Fund.

(d)(1) When a complaint is filed which in a court of competent jurisdiction that may result in liability for the Homeowner's Homeowners' Recovery Fund, the complainant shall notify the board in writing, by certified mail, when the action is commenced.

(2) When the notice is received, the board may 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. Any expenses incurred by the board in defending, satisfying, or settling any claim shall may be paid from the Homeowner's Homeowners' Recovery Fund.

(3) When a complainant obtains a valid judgment, excluding consent judgments, in a court of competent jurisdiction against a licensee on the grounds set out above, the aggrieved homeowner may, when judgment is final, file a verified claim in the court in which the judgment was entered and, on 30 days' written notice to the board, may apply to the court for an order directing payment out of the Homeowner's Recovery Fund of the amount remaining unpaid on the judgment.

(4) The court shall proceed on such application forthwith and, on hearing, the complainant shall be required to show that:

(1)a. 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.

(2)b. He or she has obtained a judgment, as described in this section, stating the amount of the judgment and the amount owing on the judgment at the date of the application, and, that in such action, he or she had joined any and all bonding companies which issued corporate surety bonds to the judgment debtor as principal and all other necessary parties.

(3)c. The following items, if recovered by him or her, have been applied to the actual compensatory damages awarded by the court:

a.1. Any amount recovered from the judgment debtor.

b.2. Any amount recovered from bonding companies.

c.3. Any amount recovered in out-of-court settlements.

(5) The court shall order the Homeowner's Homeowners' Recovery Fund to pay the sum it finds due, subject to the provisions and limitations of this section.

(e) In the event Should the board pay pays from the Homeowner's Homeowners' Recovery Fund any amount in settlement of a claim or toward satisfaction of a judgment against a licensee, all licenses of the licensee may be terminated by the board may revoke the license of the licensee and may no longer recognize the experience and ability qualifications of the individual licensee or the qualifying representative of the licensee for licensing purposes. The board may refuse to issue a new licensee to the former licensee or to recognize the experience and ability qualifications of the individual former licensee or the former licensee's qualifying representative until he or she the former licensee or the former licensee's qualifying representative has repaid in full, plus interest at the rate of 12 percent per annum, the amount paid from the Homeowner's Homeowners' Recovery Fund. A discharge in bankruptcy shall not relieve a person from the penalties and disabilities provided in this section.

(f) If the balance in the Homeowner's Homeowners' Recovery Fund is insufficient to satisfy a duly authorized claim or portion of a claim, the board shall, when sufficient money has been deposited in the Homeowner's Homeowners' Recovery Fund, satisfy the unpaid claims in the order that the claims were filed.

(g) The sums received by the board, pursuant to the provisions of this section, shall be deposited into the State Treasury and held in a special fund to be known as the Homeowner's Homeowners' Recovery Fund, and shall be held by the board in trust for carrying out the purposes of the Homeowner's Homeowners' Recovery Fund. These sums may be invested by the State Treasurer in any investments which are legal under the laws of this state. Any interest or other income from investments of the Homeowner's Homeowners' Recovery Fund shall be deposited into the Homeowner's Homeowners' Recovery Fund.

(h) When, on order of the court, the board has paid from the Homeowner's Homeowners' Recovery Fund any sum, the board shall be subrogated to all the rights of the judgment creditor, and all his or her rights, title, and interest in the judgment, to the extent of the amount paid from the Homeowner's Homeowners' Recovery Fund, shall thereby be assigned to the board. Any amount and interest recovered by the board on the judgment shall be deposited to the Homeowner's Homeowners' Recovery Fund.

(i) The limitations and conditions of payment from the Homeowner's Homeowners' Recovery Fund as established by Act 2002-72 shall not apply in any case where, prior to May 1, 2002, a complainant has obtained a valid judgment in a court of competent jurisdiction against a licensee on the grounds set out in this chapter."

Section 2

This act shall become effective on the first day of the third month following its passage and approval by the Governor, or its otherwise becoming law.