Sweeping homeowner friendly changes coming to the Contractor Registration Act.

Significant changes are coming to the Washington Contractor Registration statutes, intended to strengthen protections for consumers in the construction industry and to create a “Homeowner Recovery Program” to help consumers bridge the gap in recovering damages in excess of the contractor’s surety bond payout.

Effective July 1, 2023: The law provides additional protections against Contractors who damage homeowners and then try to avoid liability by closing one construction company and opening a new one.

Effective July 1, 2024: Some of the more impactful additions and revisions to RCW 18.27 include increasing the required statutory registration bonds for General Contractors from $12,000 to $30,000 and increasing the Specialty Contractor bond from $6,000 to $15,000. For homeowners that have been harmed by a contractor failing to finish the job, this change will increase the ability to recover damages and attorneys’ fees incurred in actions under RCW 18.27. While this will increase costs for all contractors, this is, unfortunately, necessary to protect homeowners against the unscrupulous contractors out there.

Effective July 1, 2026: The bill further creates a “Homeowner Recovery Account” under RCW 18.27 that is set to take effect on July 1, 2026. This account will be funded by all the fines and penalties received by L&I for violations and infractions under RCW 18.27. Under this program, homeowners who have filed suit and obtained a judgment against a contractor under RCW 18.27.040 can apply for relief from this fund if their actual damages from their RCW 18.27 claim exceed the amount they were able to recover from the contractor’s bond. This fund is available only to single-family dwellings and multi-family dwellings of 4 or fewer units (but does not include condominiums.) Residential landlords are not eligible.

Homeowners are eligible to apply if they meet the following conditions:

1. They have a final judgment against a registered contractor under RCW 18.27.040 for work done on the homeowner’s primary residence;
2. The judgment specifies the actual damages resulting from the claim against the contractor;
3. The successful lawsuit named the contractor’s bond as a party;
4. The judgment was not satisfied in full; and
5. The application for funds from the Homeowner Recovery Account was made within 90 days of the conclusion of the civil action brought under RCW 18.27.040 (3).

Payment from the Account is in addition to amounts received from the bond but cannot exceed $25,000 per contractor, per parcel. Payment from the Account is limited to actual damages and does not include attorney fees, court costs, or punitive damages.

When a homeowner is paid from this account, they assign their right, title, and interest in any final judgment of their claim against the contractor to L&I in an amount equal to the amount received from the Account. L&I can then pursue reimbursement to the Account from the contractor, an insurer, or other third parties for the full amount paid from the Account plus interest. If a homeowner’s damage award is still in excess of what is recovered from the bond and the Account, the homeowner retains the right to pursue collections on the remaining amounts due from the contractor.

Overall, the changes to RCW 18.27 are sweeping and demonstrate a clear intent from the legislature to protect residential homeowners in Washington. If you are a homeowner in Washington who has had a negative experience with a Washington contractor, or if you are a contractor wondering what impact these recent changes will have on your business, our experienced attorneys at Wolff, Hislop & Crockett would gladly assist you.