Maryland Home Builder Guaranty Fund
What Is the Guaranty Fund?
The Home Builder Guaranty Fund helps Maryland consumers recover compensation for certain losses caused by their registered home builder. If your home builder did not finish your home correctly, failed to honor warranties, or broke other promises, this fund exists to allow consumers to recover certain losses, even when the builder is unwilling or unable to pay.
Who Can Seek Compensation from the Fund?
You can file a claim to seek compensation from the Guaranty Fund use this fund if:
- You signed a contract with a registered builder after January 1, 2009
- The contract was for a new home in Maryland
- You aren't related to or employed by the builder
Where Does the Money Come From?
Builders pay $50.00 into the fund for each building permit they get. Builders are permitted to pass this cost on to homebuyers.
How to File a Claim
Before filing a claim with the fund, you must:
- Write to your builder explaining the problem
- Let your builder come to your home during business hours to inspect the problem
- Give your builder a reasonable time to fix the problem
- Use your home warranty security plan first, if you have one
These sample letters may be used to provide notice to your builder:
If your builder doesn't fix the problem, you can file a complaint with the Consumer Protection Division. Your complaint should include:
- How much money it will cost to fix the problem(s)
- Factual details about the problem(s)
- Evidence that supports the claim(s), including contracts, photographs, expert reports, receipts, invoices, written communications, etc.
File a complaint
When to File Your Claim
A consumer must file a claim within whichever of these deadlines comes first:
- 2 years after discovering (or should have discovered) the loss or damage, OR
- 2 years after the new home warranty expires
What Happens After You File
After you file:
- The Consumer Protection Division’s Mediation Unit sends your complaint to the builder
- The builder has 30 days to respond
- The Mediation Unit tries to help resolve the dispute
If mediation does not resolve the dispute, the parties may mutually choose to arbitrate with the Division’s arbitrator.
If the parties do not both agree to arbitrate or cannot agree on an arbitrator, then the claimant may pursue their claim through an administrative proceeding against the Guaranty Fund.
How Much Money Can a Consumer Get from the Guaranty Fund?
The Guaranty Fund can pay up to $50,000 per claim for the acts or omissions of one registered home builder. The Fund may not pay more than $500,000 on all claims against the same registered builder, unless that builder has repaid the Fund.
What the Guaranty Fund Covers
The Guaranty Fund pays for actual losses from:
- Unfinished construction
- Broken warranties, (promises about your home,including both express warranties and implied warranties created by law)
- Failure to meet applicable building standards
- Failure by the builder to return deposits or other payments that the builder is obligated to return under the contract or applicable law
The fund does NOT compensate for:
- Attorney fees
- Consequential damages
- Court costs
- Personal injuries
- Punitive damages (extra money to punish the builder)
Home Warranties and Arbitration
If you have a home warranty security plan, you must file a claim against the warranty plan and attempt to use it first before seeking compensation from the Guaranty Fund. You can't get paid twice for the same problem.
If the new home contract includes a written agreement to submit a dispute to arbitration and the agreement allows the home builder to select the arbitrator or arbitration service, then the consumer may choose whether to submit the dispute to arbitration or to seek recovery from the Guaranty Fund.
If the contract provides for a mutually agreed upon arbitration service then the consumer and home builder must submit the dispute to arbitration before seeking recovery from the Guaranty Fund.
If an arbitrator's award is in favor of the consumer, the consumer may make a claim against the Guaranty Fund in the amount of this award, unless the home builder pays the amount awarded to the consumer within 90 days of the final arbitration award.